North Slope Oil is Drying Up

North Slope Oil is Drying Up
North Slope Oil is Drying Up

The Alaskan Pipeline System is very close to shutting down because of declining production on the North Slope. Since peaking at 2 million barrels per day in 1988, production has declined to just over 500,000 bbd. The pipeline requires a flow of at least 500,000 barrels or else pressure becomes too low, water begins to precipitate and freeze and problems with was also begin to develop. Production is now perilously close to that level.

The Energy Information Administration projects three possible scenarios. If oil prices rise in the next few years, production levels may increase enough to keep the pipeline in operation. It production drops below 500,000 bbd, however, investment will be required to mitigate the problem. If flow falls below 350,000 bbd, the costs of mitigation become prohibitive.

The graph illustrates the three scenarios. The long blue line traces the decline in output since production peaked at 2 million bbd in 1988. The red line shows how flow could continue if oil prices rise. The continued blue line past 2012 shows continued flow with mitigation. The green line shows what happens if oil prices fall. Transport becomes impossible and the pipeline system closes down completely. EIA projects this could occur as early as 2026.

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