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The PBU partners originally believed that they might be able
to recover and to market natural gas reserves located in the
Prudhoe Bay field. To date, however, studies conducted by the
PBU partners and by State and Federal agencies indicate that
natural gas recovery from Prudhoe Bay will not be economically
viable given the projected low price of natural gas relative to
the high cost of recovering, producing, and transporting natural
gas from the Prudhoe Bay field to world markets. In 1987, Exxon
“debooked” (removed from “proved undeveloped” to “uneconomic”)
the natural gas reserves in the Prudhoe Bay field. In 1988, the
U.S. Department of Energy (DOE) agreed with that decision and
reduced its estimate of North Slope natural gas reserves by 24.6
trillion cubic feet.
The extensive Prudhoe Bay oil field production facilities
and the TAPS pipeline from Prudhoe Bay to Valdez, Alaska, were
designed for the recovery, processing, and transportation of
crude oil, not natural gas, and it is not anticipated that any
significant portion of the Prudhoe Bay oil field production
facilities and the TAPS pipeline would be usable or modifiable
for the eventual recovery and transportation of natural gas from
the Prudhoe Bay field should recovery of the Prudhoe Bay natural
gas someday become economically viable. That is, it is
anticipated that separate, new wells, processing, and
transportation facilities would have to be constructed for the
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