North Slope production returned to normal summer levels in July as ConocoPhillips restored production at its Kuparuk River and Alpine fields following a temporary reduction in June. Slope production averaged 477,896 barrels per day in July, up from an average of 393,387 barrels per day.
State officials and others, however, are closely watching for effects of curtailed drilling and “workover” activity on aging wells that were curtailed this spring by both ConocoPhillips and BP when crude oil prices plunged to near zero.
Drilling and workovers to repair older wells is normally a routine practice to sustain production in aging fields. All three of the slope’s largest fields, Prudhoe, Kuparuk and Alpine, are now several decades old.
In a response to oil market conditions, ConocoPhillips imposed a 100,000 barrels per day cut in June from the two fields where it is majority owner and operator, to take crude oil supply off the market.
For July, slope production returned to normal levels for mid-summer.
The Kuparuk field produced at an average daily rate of 121,595 barrels per day in July, up from a 66,282 barrels per day average during the June cutback. The Alpine field produced 51,621 barrels per day in July on average, compared with an average of 21,815 barrels per day in June.
Prudhoe Bay, the largest field on the slope, produced an average 287,341 barrels per day in July against 286,200 barrels per day on average in June.
In contrast with Kuparuk and Alpine, where ConocoPhillips is the owner or dominant owner, Prudhoe is owned by ExxonMobil and Hilcorp Energy as well as ConocoPhillips, and all three companies have to agree on a production curtailment, which they did not do so for June.
July was more or less normal for summer operations on the North Slope, which is a time when warmer temperatures in northern Alaska cause production facilities to be less efficient than in the cold winter months.
The long-term production from these large, mature fields is gradually declining but a year-over-year production comparison with summer of 2019 is complicated because of facility “turnaround” schedules.
Turnarounds are major maintenance projects done in summer. Productuion plants are taken offline and production drops temporarily.
State officials and others are concerned over other issues, however, mainly on the effects of curtailed development drilling and the well workovers, for production stimulation and repairs on wells.
BP and ConocoPhillips both cut back on drilling and well work earlier this year when crude oil prices crashed. Both companies laid down all rigs working in the Prudhoe Bay, Kuparuk and Alpine fields.
Ongoing drilling of development wells and well stimulations and repairs are important in helping sustain production and soften the natural decline of producing fields.
But at very low oil prices field operators cut expenses to preserve cash and drilling and well work often suffer. There is a lost production, however.
In a briefing to state legislators earlier this year state Division of Oil and Gas petroleum analysts said the cutbacks in drilling in North Slope producing fields is expected to add one a half percent to the natural decline rate, which have averaged 5 percent over time.
Curtailments of well workovers and repairs, if they continue, could have a greater effect. In the large Prudhoe Bay field, which produces over half of total slope production, the loss of this activity could add another 5 percent to the decline rate, according to one state analyst.
The cumulative effect of this on Prudhoe Bay – 5 percent of natural decline; 5 percent for no wellwork and another one and a half percent for no drilling – could result in a 10 percent or more decline at Prudhoe, the analyst said, who asked not to be identified because he was not authorized as an official spokesperson.
However, Hilcorp Energy took over as Prudhoe Bay operator July 1 and Hilcorp has a reputation for tackling mature, declining assets with aggressive redevelopment.
Crude oil prices are gradually rising but whether it is enough is to get people working again is unknown. Alaska North Slope crude oil is still in the $40-per-barrel range.
Hilcorp is being particularly watched as to whether it can get drill rigs back working and resume workovers at Prudhoe Bay.
The company has demonstrated its capabilities in increasing production in older field both at Milne Point, on the North Slope, and in Cook Inlet in southern Alaska.
Also, Hilcorp has kept two rigs working at Milne Point while BP and ConocoPhillips laid off rigs.
However, Hilcorp has dominant positions in Cook Inlet and Milne Point. It’s different at Prudhoe, where ExxonMobil and ConocoPhillips own about two thirds of the fields and must pay that share of any increased expenditure, which means the decision is not Hilcorp’s alone.