North Slope production holding steady; boost expected by year-end

Alaska North Slope oil production is holding steady, for now.

Oil output was almost even in September compared with August as producers wrapped up major maintenance on field production facilities for the year.

Production averaged 472,165 barrels per day in September compared with an average of 472,265 barrels per day in August, according to Alaska Department of Revenue data.

The long-term production trend is still down as major producing fields in northern Alaska age. In September 2015 North Slope producers averaged 493,540 barrels per day. In September 2010 production averaged 635,466 barrels per day.

Two new ConocoPhillips projects are expected to be online by the end of the year or early 2020, however, to offset decline at least temporarily.

In its initial flush days the slope produced over 2 million b/d but in the late 1980s a long, gradual decline began the large Prudhoe Bay field, largest in Alaska, and North America, and a few years later in the Kuparuk River field, the second largest field.

In September, however, Prudhoe Bay field operator Hilcorp Energy boosted production to 298,208 b/d on average, up from 242,809 b/d in August, a month when some facilities were off-line for maintenance.

The gain at Prudhoe in September largely offset a decline that month in the Kuparuk River field, owned and operated by ConocoPhillips, where production dropped from an average of 122,138 barrels per day in August to 105,988 barrels per day in September mainly due to continued facility maintenance.

Production at the Alpine field, also ConocoPhillips-owned and operated, also dropped from averages of 55,493 barrels per day in August to 47,123 barrels per day in September.

As colder winter months set in oil and gas processing facilities on the slope operate at peak efficiency and production increases, and that will happen again later this year.

For example, production earlier this year in January saw production averaging in the 500,000 barrels per day range which can be expected again.

However, the winter boost is lower each year as long-term decline continues. In January 2020, for example, the slope averaged about 425,000 barrels per day. Five years earlier, in January 2015, the average was about 550,000 barrels per day.

Companies have several new projects, however, that will offset decline temporarily and may even boost production in the short term.

ConocoPhilips has two new projects nearing completion, Fiord West in the Alpine field and GMT-2 in the National Petroleum Reserve-Alaska, which are planned to be on-line late this year or early in 2022, the company has said in presentations.

Fiord West is expected to produce 20,000 barrels per day at peak and GMT-2 is projected to peak at 35,000 barrels per day to 40,000 barrels per day Production on both projects will gradually ramp up in 2022, so the effect will be to offset decline on the large fields and to possibly increase overall production for the short term.

Two larger new slope projects face continued uncertainties, however. ConocoPhillips’ Willow project in the NPR-A is stalled by legal actions brought conservation groups, and Pikka, planned by New Guinea-based Oil Search with Repsol as partner, faces uncertainties due to the planned acquisition of Oil Search by Australia-based Santos as well as an effort by both Oil Search and Repsol to bring a new partner in the Pikka development.

If developed, Pikka and Willow would boost slope production by several hundred thousand barrels per day, but Final Investment Decisions on both await resolution of uncertainties.

Meanwhile, work is continuing on final engineering and design on both projects, Oil Search and ConocoPhlllips say.