Alaska oil prices rise smartly, but planned production cuts will continue

Prices for Alaska’s oil are headed up smartly, a relief to state officials and community leaders where the petroleum industry is important to the local economy.

Alaska North Slope oil closed at $37.07 per barrel on May 26, according to Alaska Department of Revenue data. That’s sharply up from recent low prices that were as low as $10 per barrel or less.

World oil markets were rising with reports of increasing fuel use as the economy in developed nations, including the U.S., showed signs of improvement.

The price still isn’t at the point where drilling and other oil field activity on the North Slope will resume, at least to get back to levels prior to shutdowns in March amid concerns for the spread of COVID-19 virus. Companies working on the slope say prices I the range of $50 per barrel or more will probably be needed.

Not all companies cut back, however.

While ConocoPhillips and BP laid down seven drill rigs in the Alpine, Kuparuk River and Prudhoe Bay fields, another producer, Hilcorp Energy, kept two rigs working in the Milne Point field, where it is field operator.

Hilcorp also continued development of new projects at Milne Point, for example expansion of polymer injections to help boost production of viscous, or thick, oil. ConocoPhillips is also continuing construction of its GMT-2 production project in the National Petroleum Reserve-Alaska.

However, Oil Search, a Papua, New Guinea company, is delaying its large, multi-billion-barrel Pikka project until oil prices improve.

Meanwhile, despite rising prices ConocoPhillips is sticking with a plan to reduce North Slope production from two fields where it is majority owner and operator, the Kuparuk River and Alpine fields.

North Slope oil production dropped to 406,747 barrels on May 26, according to revenue department data.

Prior to the reductions about 480,000 barrels per day were being produced and shipped in the Trans Alaska Pipeline System.

ConocoPhillips said it is voluntarily reducing its Alaska production by 100,000 barrels per day in June and even with market improvements that will continue, company spokesperson Natalie Lowman said.