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Year-to-date North Slope production shows sharp falloff

North Slope production Alaska North Slope production is running 17,402 b/d below 2017 for the first 10 months of the year, compared with the same 10-month period of January through October, 2017, according to data provided by the state Department of Revenue.

The annual average for the year to date totals 505,184 b/d for the 10-month period compared with 522,586 b/d for the same period of 2018, the data shows.

The figures are taken from production tax reports filed by producer companies, according to Dan Stickel, the state’s chief petroleum economist.

The revenue department is preparing its annual production and state revenue update report and forecast for 2018. The full report is usually issued in late November or early December.

October 2018 is showing a particularly sharp drop, with slope production averaging 512,000 b/d compared with a 538,000 b/d average for October 2017.

The state data did not indicate which of the producing fields are running below last year or if any particular problem is affecting one or more of the fields.

Stickel could not comment on why the declines are occurring and operators of the fields, such as BP for Prudhoe Bay and ConocoPhillips for the Kuparuk River and Alpine fields, could not comment.

Typically, the summer months, from June through August, show production drops because of scheduled maintenance on production facilities but the 2018 data shows a falloff beginning last March and continuing through October.

However, it could also be that warmer than usual winter temperatures last winter and so far this fall is affecting the performance of field processing plants, which typically are more efficient in colder weather.

There is also some belief that the benefit of short-term measures taken in late 2016 and 2015 to sustain production amid cuts in drilling of production wells are wearing down, and that the impacts of cuts in the fields are now being felt.

The downturn is surprising because North Slope producers have been successful in keeping production generally flat over the last three years even with the drop in crude oil prices since 2015.

ConocoPhillips said facility maintenance and warmer temperatures have affected production at fields it operates but have not been major factors in comparing year-over-year numbers.
“Our 3Q production of 165,000 BOED was almost flat compared with 3Q 2017 and down 11% compared to 2Q 2018, primarily due to major summer turnaround (facilities maintenance) and warmer temperatures impacting compression efficiency and gas handling. Third quarter is almost always lower due to those factors,” ConocoPhillips spokesperson Natalie Lowman said.
“Also the Alpine (field) turnaround involved major maintenance that lasted almost 30 days, the longest in some years,” she said.

The drop in oil prices has had a substantial impact on field work. Prices for Alaska North Slope crude declined from over $100 per barrel in early and mid-2015 to $40 and below within six months, causing cutbacks in drilling and other field support work.

Prices have since recovered, although only in recent months, to the $70-plus range.

Despite the 2018 decline the development of new discoveries on the slope is expected to have a leveling effect, and possibly increase production. ConocoPhillips recently began production at its GMT-1 project in the National Petroleum Reserve-Alaska and has started construction of a second NPR-A development, GMT-2, that will be producing in 2021.

Hilcorp Energy is also expected to bring on its new Moose Pad project in the Milne Point field in 2019.

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