North Slope oil operators are ratcheting up production again after cutting back in May and June due to market conditions.
ConocoPhillips ended a one-month voluntary curtailment of 100,000 barrels per day in North Slope fields it controls and was increasing production on July 1.
Earlier, Alyeska Pipeline Service Co. had imposed an involuntary throughput decrease in oil shipped through the Trans Alaska Pipeline System, establishing in effect a production cut on all slope producers. This was to reduce a buildup of crude oil held in storage tanks I Valdez. Had the tanks been filled to capacity Alyeska would have had no choice but temporary suspending pipeline operations.
That was averted, however.
Oil markets appear to be improving and oil held in tanks at the Valdez Marine Terminal was 2.37 million barrels on July 1. On several days in April oil in storage was around 5.5 million barrels. The tanks have a working capacity of about 6.6 million barrels, so the drawdown reflects a steady schedule of tankers arriving to load crude oil for west coast refineries.
Production from the slope averaged 393,322 barrels per day in June compared with 427,676 barrels per day in May and 490,676 barrels per day in April. ConocoPhillips began increasing production in the Kuparuk River field in late June and on June 30 total slope production was 427,658 barrels.
By July 1 it had climbed to 450,343 barrels. The increase really came in the Kuparuk field, owned and operated by ConocoPhillips, where the company had increased output from a June average of 66,322 barrels per day to 102,443 barrels July 1, according to the revenue department data.
Before the reduction, in April, Kuparuk was averaging 121,933 barrels per day.
Production at the Alpine field, the other field where ConocoPhillips is owner and operator, has been slower to ramp up. Alpine was producing 55,716 barrels per day on average in April. In June it was down to an average of 21,815 barrels per day. By July 1 ConocoPhillips had increased Alpine to 45,929 barrels per day.
Through this period production in the other North Slope fields, the largest being Prudhoe Bay and Milne Point, was not greatly affected because owners in those fields such as BP, ExxonMobil and Hilcorp Energy chose not to reduce production except for the pro-rata share of the temporary cutback ordered by Alyeska Pipeline.
Although ConocoPhillips is a major owner in Prudhoe Bay BP (now Hilcorp) and ExxonMobil own substantial shares. Under the operating rules of the field one owner cannot unilaterally cut its share of production.
One other, smaller oilfield, Badami, which is 25 miles east of Prudhoe, also shut down production temporarily because oil prices had fallen to below the per-barrel cost. Badami is the only field where operations were curtailed in total, except for maintenance.
There is no information on when its owners, Glacier Oil and Gas and Arctic Slope Regional Corp., will restart operations.
ExxonMobil continued has production of liquid condensates at the Point Thomson field further east of Badami, averaging about 9,000 barrels a day in recent weeks.
Production rates are important for state revenues because the royalty paid to the state as landowner ranges between one sixth and one eighth of the oil produced. Alpine field production is also important to Arctic Slope Regional Corporation and other Alaska Native corporations because ASRC owns part of the subsurface mineral rights at Alpine.
Under terms of the Alaska Native Claims Settlement Act of 1971, 70 percent of ASRC’s royalty revenue must be shared with other Alaska Native regional and village corporations.