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EIA estimates Alaska oil production could cease by 2026

Alaska’s once-vaunted oil production could fall to nil as early as 2026, according to new estimates by the US Energy Information Administration (EIA)

Depending on long-term oil prices and maintenance costs for the Trans-Alaska Pipeline System (Taps), the flow of North Slope crude could dwindle to a trickle and cease altogether if the the pipeline is decommissioned.

The projected lifetime of the system depends on future investment and, ultimately, future oil prices, says the EIA in its 2012 Annual Energy Outlook.

In its reference case, Alaskan output dips to around 250,000 barrels per day (b/d) by 2035 from a peak of about 1.8 million b/d in the early 1990s. Under its high-case outlook, output is maintained around 700,000 b/d past 2030, before falling sharply thereafter.

Virtually all of the oil is loaded on tankers and shipped to California, where it is refined for the local market.

The forecast assumes that the North Slope oilfields would be plugged and abandoned, and Taps would be decommissioned, when throughput was at or below 350,000 b/d and total North Slope oil production revenues were at or below $5 billion per year.

The EIA notes that low flow rates on crude-oil pipelines cause operational issues, particularly in the frigid Arctic.

On 15 June, the pipeline operator - Alyeska Pipeline Service Company - released the TAPS Low Flow Impact Study that identified the following problems that might occur as North Slope oil production progressively declines below 600,000 b/d. Among the problems were potential water dropout from the crude oil, which could cause pipeline corrosion; potential ice formation in the pipe if the oil temperature were to drop below freezing; potential wax precipitation and deposition; and potential displacement of the buried pipeline due to soil freezing and thawing, as pipeline operating temperatures decline

Other potential operational issues at low flow rates include: sludge drop-out; reduced ability to remove wax; reduction in pipeline leak detection efficiency; pipeline shutdown and restart; and the running of pipeline pigs that both clean and check pipeline integrity.

The onset of low flow problems could begin around 550,000 bbl/d, absent any mitigation. As the types and severity of problems multiply, the investment required to mitigate those problems is expected to increase significantly. At some point, it becomes cheaper to shut it down.

Prudhoe Bay is by far America’s largest onshore oilfield, estimated to contain 25 billion barrels. Discovered in the 1960s, it came on production in 1977 and formed the linchpin of US efforts to increase its energy security.

Production peaked around 2m b/d in 1998, but has been in steady decline, falling to 562,000 b/d in 2011 according to the EIA.

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