Measured on the state calendar, Alaska North Slope oil production is about to be at its lowest level since the first days after startup of the Trans-Alaska Pipeline System.
North Slope crude production averaged 499,103 barrels per day through June 24 for the 2019 state fiscal year, which ends June 30. The last time North Slope wells pumped that little oil was 1977 when oil first started flowing through TAPS in late June; production averaged 10,500 barrels per day in 1977, according to Revenue Department figures.
It jumped to 789,600 barrels per day in 1978 and peaked at 2.1 million per day in 1988.
Daily North Slope production dipped to about 501,000 barrels per day in 2015 but that was followed by two years of increases, which were celebrated by industry and state officials, as it was the first instance of production growth on the North Slope since 2002.
The 499,103-barrel average for 2019 is unlikely to improve much in the last days of the month as the combination of warm weather and scheduled maintenance makes summer the least productive season for companies on the Slope.
State production analysts in the Department of Natural Resources expected the average daily throughput to decline in their latest projection, but not this much. The Spring 2019 Revenue Forecast released in March pegged fiscal 2019 North Slope production at 511,460 barrels per day. Actual production has been off by about 2.4 percent.
However, 2019 was originally supposed to be a bounce-back year after unexpected decline in 2018. The 2019 forecast released in December estimated 526,800 barrels of oil per day from the North Slope following the 521,400 barrels produced per day last year.
In the end it means North Slope oil production this year will decline a little more than 4 percent instead of increasing about 1 percent as state officials once thought would happen.
Alaska Oil and Gas Association CEO Kara Moriarty said the unexpected decline is probably the result of several smaller factors given the complexity and diversity of North Slope operations. She noted that the long-term production trend has improved, from the industry and state’s perspectives, in recent years and the state’s forecasts are often optimistic.
“I do know that we are significantly higher than the forecasts of 2012 and 2013,” Moriarty said.
In the fall of 2012, state officials expected North Slope production would be about 421,600 barrels per day this year. At that time, the annual decline rate was in the 6 percent range.
Last year, state officials surmised the unexpected drop in oil flow could have been from higher than normal winter North Slope temperatures. Warmer weather decreases the efficiency and capacity of compressors used to process the natural gas that comes with the oil on the Slope, and thus has an impact on how much oil can be produced.
BP Prudhoe Bay Production Manager Jennifer Starck said last January actually produced some record cold temperatures at the iconic oil field, but noted that March was warmer than usual. Last March is believed to be the warmest March on record across Alaska.
“We live with the natural ambients,” Starck said.
Currently, Prudhoe Bay is producing a calendar year 2019 average of about 275,000 barrels per day compared to about 279,000 barrels per day a year ago, Starck said.
She added that BP currently has two drilling rigs working at Prudhoe and the company is also “working over” old wells. It also conducted a 3-D seismic shoot over the entire field this winter and believes it can recover another billion barrels from the basin.
While the company does what it can to buck production trends for mature fields, she stressed that production from nearly all oil fields starts naturally declines — and Prudhoe is more than 40 years old.
Hilcorp Alaska officials did not respond to questions in time for this story, but Moriarty and acting state Division of Oil and Gas Director Beckham also pointed out that Hilcorp’s Moose Pad development in the Milne Point Unit was originally slated to start producing in last fall, but didn’t come online several months later. The $400 million project is now producing about 7,000 barrels per day, according to AOGA and Hilcorp leaders have said it should peak at 16,000 to 18,000 barrels per day.
ConocoPhillips’ Greater Mooses Tooth-1 project in the National Petroleum Reserve-Alaska, which started flowing oil last October, is off to a bit of a slow start as well.
The company estimated GMT-1 could produce up to about 30,000 barrels per day at its peak; three wells are currently producing about 11,500 barrels per day.
ConocoPhillips Alaska spokeswoman Natalie Lowman wrote via email that the company’s estimates are usually a mid-range figure of what a project could produce and the smaller projects generally see more variability because production is dependent upon fewer wells.
As a counter to GMT-1, she noted that the company’s nearby CD-5 development, which started in late 2015, was first estimated to produce about 16,000 barrels per day but actual production has been more than double that.
Monthly production from ConocoPhillips’ large and aging Kuparuk River field has also been roughly 6,000 to 8,000 barrels per day less than last year, according to Department of Revenue figures.
Beckham said he had noticed the daily production totals for 2019 were approaching 500,000 barrels, but said he thinks focusing on the exact number is a bit unnecessary.
“For years, for whatever reason, that 500,000-barrel level has been somewhat of a benchmark and it’s an arbitrary number but we do have concerns about low-flow in the pipeline, although I think Alyeska (Pipeline Service Co.) has most of those covered,” Beckham said. “I think the optic is more impactful than the actual volume but I do expect that we’ll have more production online this year and as other years come up.”
Alyeska officials have said TAPS should run smoothly as currently designed down to production levels of about 300,000 barrels per day.
Brooks Range Petroleum Corp. is expected to start its small Mustang field near Kuparuk this summer, among other work.
Longer term, ConocoPhillips’ Willow, Oil Search’s Nanushuk and Hilcorp’s Liberty projects could collectively add nearly 300,000 barrels per day of production to the Slope over the next five-plus years.
The Liberty and Nanushuk projects have federal approval and ConocoPhillips is currently in the process of permitting Willow with a final environmental impact statement scheduled to be issued in 2020.
Elwood Brehmer can be reached at firstname.lastname@example.org.