North Slope production dips but new oil is expected by year end

Alaska North Slope oil production is dropping due to the natural depletion of aging oilfields but new discoveries will put more oil into the Trans Alaska Pipeline System later this year, blunting the decline for now.

North Slope oil fields dropped 5,563 barrels per day in production in June compared with June, 2019, reflecting the natural decline. It was the last year before upsets caused by COVID-19 disrupted markets.

There were big drops between 2019 and 2021 in the Kuparuk River and Alpine fields, with a decline of 13,751 barrels per day in Kuparuk and 16,833 barrels per day in Alpine. This was partly offset by production gains in the larger Prudhoe field over the same period of 25,079 barrels per day, which offset the declines in the other two fields.

The increase at Prudhoe Bay over 2019 is mainly due to the aggressive redevelopment work in th4 field by Hilcorp, the operator, despite one drill rig also being laid off in the field in 2020.

The company has now put one rig back to drilling new wells in the Alpine field and one rig back to “workovers,” or major maintenance on wells, in the Kuparuk field. Hilcorp Energy will also put one rig back to drilling in Prudhoe Bay later this year.

The Kuparuk and Alpine field reduction also reflect decision by ConocoPhillips last year to lay down drill rigs in both fields and to do a voluntary cutback in oil production in response to low oil prices.

There was also a seasonal decline in production from May to June this year influenced by warmer temperatures on the slope, which make oil processing plants less efficient.

Total slope production was down 6,926 barrels per day on average in June compared with May. or 474,662 barrels per day in June compared with 481,588 barrels per day in May.

Prudhoe Bay, the slope’s largest field operated by Hilcorp Energy, was down 1,492 barrels per day in average daily production compared with May. The Alpine field, operated by ConocoPhillips, was down 2,953 barrels per day in June from May. However, the Kuparuk River field, also operated by ConocoPhillips, held generally even at 114,653 barrels per day, up slightly from May.

The small Lisburne field, operated by Hilcorp, was off 2,690 barrels per day in June at 19,835 b/d compared with 22,525 barrels per day in May. The Lisburne production figure includes output from a number of smaller satellite accumulations that are processed in the Lisburne production facility in the Prudhoe Bay field.

New projects are on track to add new slope production, however. ConocoPhillips’ new GMT-2, in the National Petroleum Reserve west of the Alpine field, is in the final stage of construction and will begin operations late his year, company officials said in briefings to Alaska business leaders.

GMT-2 will add 30,000 barrels per day to slope production at its peak, according to ConocoPhillips.

Also, a new, specialized “extended-reach” drill rig, Doyon Drilling Co.s Rig 26, has started drilling of horizontal production wells to reach Fiord West, an undeveloped accumulation in the Alpine field that is cut off from infrastructure by a river channel.

Horizontal wells are drilled laterally to an oil accumulation that is some distance from the surface location of the drill rig.

Fiord West will be produced though horizontal wells and will be connected to established field pipelines at an existing Alpine field production pad. The project will add about 20,000 barrels per day at peak when production begins in early 2022, ConocoPhillips has said.

In a June 30 call to analysts the company also said it is investigating development of a newly discovered accumulation in the Kuparuk field it has named “Coyote.”

On another new ConocoPhillips project, Willow, in the National Petroleum Reserve-Alaska, company officials restated their intent in the call to analysts to wait on beginning construction until an Alaska federal court rules on lawsuits on the project brought against the U.S. Bureau of Land Management by conservation groups.

A court hearing is expected late this summer, analysts were told. If developed, Willow could add over 120,000 barrels per day of new production from the slope.