North Slope production still in long term decline with timing uncertain on major new projects

Alaska North Slope production showed its normal seasonal decline in June, according to Alaska Department of Revenue data.

Warmer weather on the North Slope makes oil and gas processing facilities less efficient and plant maintenance in summer takes some facilities offline.

Meanwhile, two major new projects that could significantly boost production now face timing uncertainties.

A revised federal environmental review that could get ConocoPhillips’ Willow project moving again has been delayed.

The new Supplemental Environmental Impact Statement for Willow, which was halted by a federal judge’s decision, was due to be published by the U.S. Bureau of Land Management on June 24, according to sources, with that date then revised to July 1.

As of July 6 the document has not been released, although it could happen any time. ConocoPhillips, the developer at Willow, is anxious for the new review to be published so that public hearings can be scheduled and a timetable for the final document, and new permits for Willow, can be established.

Willow’s previous permits and environmental review were voided by in a court decision after conservation groups filed lawsuits. The new review may include a plan for a reconfigured project intended to satisfy the federal court order.

The state of Alaska and the North Slope Borough, both which have a stake in new revenues from Willow, are watching the process carefully. No information is available on what is causing the delay.

Pikka, a second new North Slope project, is due for an investment decision from Oil Search and Repsol, its owners, by mid-summer, but there Is no certainty on that.

Meanwhile, North Slope production continues a long-term decline. Production in June averaged 455,342 barrels per day, down from a 492,554 barrels per day average in May, data from the state revenue department indicated.

Year-over-year June production was down from an average 474,662 barrels per day in June 2021 and 480,225 barrels per day in June 2019, the last year before the pandemic affected oil markets and Alaska production.

Among the major producing fields on the North Slope, the Prudhoe Bay field, operated by Hilcorp Energy, averaged 280,264 b/d in June, down from 311,514 barrels per day in May; the ConocoPhillips-operated Kuparuk River averaged 101,517 barrels per day in June compared with 104,871 barrels per day in May and 114,653 barrels per day year-over-year, from June 2021.

The Alpine field, also ConocoPhillips-operated, averaged 53,935 barrels per day in June, down from 57,794 barrels per day in May but up from 46,336 barrels per day year-over-year from June 2021.

Longer-term production data shows a gradual, continued decline in the North Slope producing fields despite some smaller new projects coming online.

For example, March data, used to remove seasonal fluctuations due to summer maintenance, shows total North Slope production at 489,303 barrels per day in March 2022 was down from a 565,058 b/d average in March 2017 and a 564,350 barrels per day average three years earlier, in March 2013.

March is a cold weather month in northern Alaska where production facilities operate at peak capacity.

The long-term decline of the North Slope is expected. The major producing fields are mature and have been producing for decades.

Of the two pending new projects the most advanced is Pikka.

Pikka’s initial production would be 80,000 barrels per day with an ultimate expansion to 120,000 barrels per day.

Three smaller new projects are now producing on the slope with production being ramped up gradually. These include GMT-2 also in the NPR-A as well as Fiord West, in the ConocoPhillips-operated Alpine field, which is on state lands, and Narwhal, a small new field south of Alpine also ConocoPhillips-operated, and on state lands.

Fiord West and Narwhal have a started limited production, but expansion of both projects awaits a review by ConocoPhillips of problems encountered drilling long extended-reach horizontal production wells by Fiord West.