North Slope production drop continues but new oil coming later in year

North Slope oil production is continuing to drop with most of the decline from the large, aging Prudhoe Bay field, now 42 years old.

Slope production dropped about 10,000 barrels per day in January in monthly average production compared with January 2019, according to Alaska Department of Revenue data. Similar declines were seen in December and November in year-over-year comparisons. Average production from the slope was 514,887 barrels per day for January compared with 525,075 barrels per day for January 2019, according to the data.

Some good news, however, is that new production will be coming later this year from Fiord West, a new “satellite” pool in the Alpine oil field being developed by ConocoPhillips. Drilling of long, extended-reach horizontal production wells to Fiord West will begin in late spring with the new Doyon Drilling Co. Rig 26, which is now on the slope.

Using the new rig ConocoPhillips will be able to reach Fiord West from existing production pads in the field, which avoids the need to build separate pads and pipelines. Fiord West is also cut from the existing field infrastructure by river channels.

December saw a total North Slope production drop of 12,661 barrels per day in monthly average compared with December 2018, and November output declined 14,943 compared with November 2018. The bulk of the decline was in the large Prudhoe Bay, which produces over half of total North Slope production.

On year-over-year comparisons Prudhoe dropped 5,990 barrels per day in January; 8,852 barrels per day in December and 18,454 barrels per day in November, according to the revenue department data.

Other fields on the North Slope, such as the Alpine and Lisburne fields showed declines at more modest rates over the three-month period, but the Kuparuk River field, the second largest on the slope, gained in production all three months compared with the same periods of 2018.

BP is the operator at Prudhoe Bay and in the process of selling its Alaska holdings including Prudhoe to Hilcorp Energy, a privately-held major independent that operates several small fields on the slope as well as Cook Inlet offshore fields in south Alaska. State officials said one bright spot for the slope is in the smaller Milne Point and Northstar fields near Prudhoe that are owned and operated by Hilcorp. While most of the slope’s older fields are in decline Hilcorp boosted production substantially at the Northstar and Milne Point, two smaller fields near the large Prudhoe Bay.

Pascal Umekwe, a commercial analyst for the state Department of Natural Resources, said Milne Point output is up 14 percent from last year mainly due to Moose Pad, a new project in the field. Northstar, an offshore field six miles off the coast has seen annual 9 percent production increases over the last two years, Umekwe said in an e-mail.

Rejuvenating aging fields is what Hilcorp specializes in and state officials are hoping the company will do the same for the large, 43-year-old Prudhoe field when Hilcorp takes over as operator, which is expected in mid-2020. Hilcorp’s entry into Cook Inlet in 2012 brought about a similar renaissance in production from very mature Inlet fields.

Production declines in large, mature fields like Prudhoe Bay are expected although in recent years BP has been able to hold Prudhoe flat or with only small decreases due to work in rehabilitating older wells as well as drilling.

Part of the recent decline in Prudhoe is due to a shutdown of rigs drilling of new production wells in 2017 and 2018 due to low oil prices, a BP manager said, speaking on background. Drilling was restarted in 2019 but the effect on field production from the earlier suspension is now being felt, the manager said.

Alaska’s long-term production forecast is for slope output to decline to an average of 492,000 b/d through state Fiscal Year 2020, the current budget year that ends June 30, and to average 490,500 in FY 2021, the budget year beginning July, state analysts said in December when they released the forecast. The projection includes crude oil as well as natural gas liquids produced and blended with crude for shipment through the Trans Alaska Pipeline System.

Steeper declines are expected by FY 2024, however, when slope production is expected to average 434,300 b/d, before increasing again as the impact of new production is felt from several projects now in development. The forecast predicts a return to 494,500 b/d by 2029.

Total crude oil production from Alaska’s North Slope averaged 496,900 barrels per day in FY 2019, the state budget year ending last June 30. The forecast expects Alaska North Slope production to remain relatively stable in coming years, with production of 492,100 barrels per day in FY 2020 and 490,500 barrels per day in FY 2021.