Climate change may now be a factor in declining North Slope oil production.
Oil output is running 14,000 barrels per day below last year for 2019 year-to-date, according to data from the Alaska Department of Revenue. Warmer winter temperatures last winter and spring, which affects the efficiency of oil process plants, were a factor in the lower output as well as facilities being off-line for maintenance, state officials said. ANS production has averaged 487,537 barrels per day from January through August compared with 501,587 b/d for the same period of 2018.
Shorter periods of winter cold causes production plants to lose efficiency and process less oil and also impedes companies in building winter ice and snow roads to drill exploration wells and serve remote “roadless” fields. Winter warming across the Arctic is an effect of climate change, University of Alaska scientists have said in briefings. The 2018-2019 winter was significantly warmer, said Jim Beckham, acting state oil and gas director.
In the long run, gradual warming will create unstable permafrost, creating problems for production infrastructure built on the land surface.
Maintenance schedules have also affected output across several fields this year. “We have had several (maintenance) turnarounds at facilities and TAPS in the last month or so,” said Jim Beckham, acting state oil and gas director. At the Nikaitchuq field (operated by Eni Oil and Gas) maintenance work on a subsea production pipeline required shut-in of production wells over a two-month period,” this spring, Beckham said.
Production from the large Prudhoe Bay field dropped to 189,515 barrels per day in August from 256,388 barrels per day in July, according to the revenue department data. Meg Baldino, spokesperson for Prudhoe operator BP, said major plant maintenance work was done in August was a factor. “BP had planned maintenance at Prudhoe Bay this summer,” The work is focused on piping replacements, facility maintenance and other improvement projects,” she said.
Beckham also said the gradual production decline in mature fields is no surprise. “A year-on-year decline of existing production is generally expected for individual fields unless stemmed by new production and aggressive well maintenance operations,” he said. There are two new producing projects on the slope in the first half of 2019, ConocoPhillips’ GMT-1 in the National Petroleum Reserve-Alaska and Hilcorp Energy’s Moose Pad in the Milne Point field, but the new production is not yet enough to offset the declines in other fields.
The North Slope fields has historically seen annual declines of five percent to six percent although production has been held generally at about 500,000 barrels per day in the last two years. Beckham said the average for the 2018 calendar year was 512,000 barrels per day, and despite the lower production year-to-date 2019 may wind up looking better by December. “Prudhoe Bay is actually holding steady when you compare the first half of 2019 to the average across 2018, and it’s possible it may exit the year in that fashion,” he said. Prudhoe still accounts for over half of total ANS output.
“The Kuparuk field is down by about 6 percent over the same period,” he said, but that may be explained by lower production from the small Oooguruk field, which is counted in the Kuparuk total. “Oooguruk has just undergone a change in ownership and drilling activities were curtailed last year prior to that change in ownership,” Beckham said.
The Department of Revenue production data is drawn from the volumes of processed liquids, crude oil as well as natural gas liquids, metered as they are shipped through pipelines and reported to the revenue department. Fluids from small satellite fields are comingled with those from large fields when shipped through pipelines but are allocated by the state for tax and royalty through test measurements.
Despite the near-term decline North Slope operators expect to see substantial increased production by 2025 and 2026 when two large new fields are expected to be on-line. These include “Pikka” being developed by Oil Search, of Papua New Guinea along with its partner Repsol, based in Madrid, and Willow, being planned by ConocoPhillips. The two are expected to add about 250,000 b/d of new production, with Pikka operating by 2024 and Willow by 2025 or 2026.
A smaller new project, ConocoPhillips’ GMT-2, now in construction, will be producing by 2021, ConocoPhillips has said. It will add about 40,000 barrels per day of new production.