Introduction

Approximately 90 percent of Alaska’s income is generated through oil and gas exploration, development, and production, including lease sales, with most of the revenue generated from activities on the North Slope of Alaska. Petroleum exploration in northern Alaska began in the early 1900s with field parties sponsored by the U.S. Geological Survey (USGS). Prompted by reports of oil seeps in the Cape Simpson area and concerns about domestic fuel supplies, President Warren Harding established Naval Petroleum Reserve Number 4 (PET-4) in 1923. This area was later renamed the National Petroleum Reserve-Alaska (NPR-A) in 1977.

Fuel shortages during World War II prompted the first intensive government-funded exploration program in the National Petroleum Reserve – Alaska by the Navy from 1944 to 1952. This drilling produced eight oil and gas discoveries: Umiat, Fish Creek, South Barrow, Simpson, Meade, Wolf Creek, Gubik, and Square Lake.

With Alaska achieving statehood in 1959, petroleum exploration shifted to state lands on the North Slope in the area between the National Petroleum Reserve – Alaska on the west and the Arctic National Wildlife Refuge (ANWR) on the east. State lease sales in 1964 and 1965 were followed by the discovery of the enormous Prudhoe Bay field in 1968. With 13.7 billion barrels (Bbbl) of original oil reserves, Prudhoe Bay is the largest oil field ever found in North America. North Slope oil accounts for about 12 percent of all U.S. oil production (5.36 million barrels per day [MMbpd; EIA 2010]). Known North Slope natural gas deposits are also huge, with original proven reserves in the Prudhoe Bay field of 26 trillion cubic feet (Tcf) and about 35 Tcf for the North Slope.

Due to the remote location and harsh weather, and lack of an ice-free year-round port at Prudhoe Bay, it was not economically feasible to explore and develop fields near Prudhoe Bay until the Trans-Alaska Pipeline System (TAPS) and associated Haul Road (now called the Dalton Highway) were constructed in 1977 to transport oil to a year-round ice-free port at Valdez and to transport oil field supplies between Fairbanks and Prudhoe Bay. About 250 trucks in winter, and 160 trucks in summer, use the highway each day.

Despite its large size, the amount of oil produced at Prudhoe Bay and nearby fields has been declining since the mid-1980s, from a peak of about 2 million barrels (bbls) per day to about 640,000 bbls today. Of particular concern is the TAPS flow rate, which must be greater than 300,000 bbls per day to operate safely, efficiently, and economically (U.S. Energy National Energy Technology Laboratory [NETL] 2007). It is projected that unless new oil discoveries are made and fields developed above current projections, the flow rate could drop below 300,000 bbls per day in 2025, and the TAPS may have to be shut down. A decrease in flow also could substantially impact Alaska’s economy and the nation’s efforts to gain greater energy independence.

Although the focus of oil and gas exploration and development on the North Slope has been near Prudhoe Bay, surveys done intermittently since the 1940s have shown extensive hydrocarbon resources in the northern foothills of the Brooks Range, about 100 miles southeast of Prudhoe Bay (Map 1). Much of the attention has been focused on the North Slope Foothills State Lease Sale Area (Foothills Area; ADNR 2011), between the Dalton Highway and Umiat. Oil was confirmed at Umiat in 1943, and gas at the Gubik fields in the late 1940s and early 1950s. The USGS has identified 17 gas plays that are known or postulated oil or gas accumulations on state lands within the Foothills Area. An estimated 200 to 300 million barrels of oil (MMBO) or more occur in the vicinity of Umiat, and about 32,000 billion cubic feet of natural gas is believed to be found in or near the Gubik fields (Alaska Department of Natural Resources 2009). However, like Prudhoe Bay prior to 1977, exploration and development of these fields have been difficult and limited to a few exploration wells due to the remote location of the fields and lack of an all-season access road into the Foothills Area.