North Slope production held steady in March; New discovery tested south of the Prudhoe Bay field

Alaska North Slope production held steady in March at 479,867 barrels per day, on average compared with February’s average of 480,069 barrels per day, according to Alaska Department of Revenue production data.

Meanwhile, there was some good news from a production test on a new discovery in an area south of Prudhoe Bay. 88 Energy, an Australian independent, achieved a steady flow of high quality oil from a discovery well drilled last winter. The well is near where another company, London-based Pantheon Resources, has also discovered oil.

I terms of production, total output from the slope was slightly lower in March year-over-year, against the March 2023 average of 483,671 barrels per day, according to the revenue department.

Three of the four major producing fields of the slope were essentially even with February with the exception of ConocoPhillips’ Alpine field, which showed a decline of 2,352 barrels per day, om average during March. Alpine had been showing recent increases due to incremental additions with new projects.

Over previous years, however, most North Slope fields were down substantially over the due to the natural decline of aging producing reservoirs with the exception of the large Prudhoe Bay field, which showed increases due to intensive field redevelopment work by Hilcorp Energy, Prudhoe’s part-owner and operator.

In March North Slope fields were down 31,571 barrels per day, since March, 2019, or from 511,640 barrels per day, to 479,867 barrels per day,.

Additional production of 20,000 barrels per day is expected in 2025, however, with the completion of construction at Nuna, a smaller ConocoPhillips project in the Kuparuk River field. Substantially more oil is anticipated in mid-2026 when Australia-based Santos Ltd. finishes the first phase of its Pikka project on the western North Slope. Pikka will add 80,000 barrels per day, that year. Santos has about 1,100 employed on Pikka construction this winter.

ConocoPhillips is also busy with construction of its larger Willow project in the federally-owned National Petroleum Reserve west of the Alpine field and other North Slope producing fields, which are on state of Alaska lands. About 1,800 construction workers will be busy with Willow this year, ConocoPhillips said.

Construction at Pikka and Willow are providing a welcome uptick in business for Alaska-base oil services and support companies which have been in a slump since 2016, when crude oil prices collapsed which was followed by the pandemic in 2020, when oil demand collapsed.

Exploration and testing of new discoveries is also underway. Apache Corp. and Colorado-based independent Armstrong Oil and Gas are engaged in an aggressive drilling program with three new text wells east of Prudhoe Bay. Three more tests are planned for next winter, the companies have said.

88 Energy was testing its Hickory 1 discovery well in the central North Slope south of the Prudhoe Bay field and announced April 1 that a multi-day production flow test showed a 70 barrels per day, production rate of light 40-degree API gravity oil from the first of several reservoir intervals to be tested.

Other reservoir intervals in the well are also being tested. The 70 barrels per day result is from a 20-foot-thick reservoir internal. These rates would increase if the discovery is developed through techniques like multi-stage fracturing and the drilling of multiple horizontal production wells.

A similar development plan is being pursued by Pantheon Resources on its nearby acreage. Both finds appear small but are in locations near the existing Trans Alaska Pipeline System which will improve their economics if 88 Energy and Pantheon move toward development. Both companies see considerable upside, they say, due to large apparent resources-in-place.

In another longer-run development, the U.S. Department of the Interior, or DOI, said April 1 it will complete a Supplemental Environmental Impact Statement, or SEIS, by mid-year for a new lease sale in the Arctic National Wildlife Refuge in the far northeast of Alaska. This will be followed by a federal Record of Decision in the third quarter of the year for the leasing in the refuge, also known as ANWR.

DOI gave its schedule for the two documents in a status report filed with a U.S. federal court in Anchorage in connection with a lawsuit filed over ANWR leasing.

The new lease sale is the second ANWR lease offering required under the 2017 Tax Cut and Jobs Act, which was passed by Congress during the Trump administration.

The first lease sale held in 2020 drew few bids mainly because of opposition to ANWR exploration by the Biden administration. A state of Alaska development corporation bid on and won seven tracts in the first sale but the leases were later invalidated by the Interior Department due to weaknesses the Environmental Impact Statement prepared by the Interior Department under Trump.

The new Supplemental Environmental Impact Statement being prepared will replace that, presumably establishing new more restrictive stipulations on leases sold.

The upcoming lease sale is again expected to draw light bidding, although AIDEA, the state agency, has said it will seek leases again. However, bidding in the sale is likely to be affected by the outcome of the November presidential election.

If Biden is reelected he is likely to continue to oppose development in the refuge, which will depress bidding. Trump is seem as more exploration-friendly, and his election would likely encourage bids.

Even then, however, industry sources say it is unlikely that major companies like Chevron, BP and ExxonMobil, which have access to geologic knowledge in the region, will want to wade into a continued legal and political quagmire over ANWR even if leases are won and Trump is elected in November.