Production off, but price better than forecast

Alaska oil and gas production averaged 502,000 barrels per day in Fiscal Year 2015, the state’s budget year that ended June 30, according to preliminary data compiled by the state Department of Revenue.

That is less than the 508,000 barrels per day average predicted in the spring, 2015 production forecast update but Revenue officials expect the average to be adjusted upward in mid-August when the final numbers are calculated, according to Ken Alper, director of the department’s Tax Division.

“Historically, our average production adjusts upwards by a few thousand barrels (per day) over the preliminary estimate, so I would be reluctant to read anything into the difference with the spring forecast at this point. We will have final figures in about a month,” Alper said.

Meanwhile, the average price paid for North Slope oil was $72.90 per barrel for the fiscal year ending June 30, greater than the estimate of $67.49 per barrel in the spring revenue forecast update, he said.

The state finished the 2015 fiscal year with a deficit of $2.7 billion (see story, page 14).

“We’re more certain about the preliminary price figures (for the fiscal year average) at this early date. We believe the final average price, once we have all the details, will be within a few cents,” of the preliminary average of $72.90 per barrel, Alper said.

The 502,000 barrels per day preliminary estimate for the fiscal year is down from 531,000 barrels per day average of the prior fiscal year, but the Revenue Department is sticking with its earlier forecast that production will increase in the 2016 fiscal year as new North Slope projects now in construction are finished.

Two ConocoPhillips projects will be complete and producing by year-end, the CD-5 production pad, a satellite of the Alpine field, and the new Drill Site 2-S in the Kuparuk River field. CD-5 will peak at 16,000 barrels per day and DS 2-S will peak at 9,000 barrels per day, but it is uncertain how fast the production on both will ramp up in early 2016 after startup, ConocoPhillips has said.

Meanwhile, a liquid condensate project at Point Thomson, a large gas field east of Prudhoe Bay, will start up in early 2016, several months ahead of a mid-2016 target date set in an agreement with the state of Alaska, ExxonMobil officials told a state legislative committee recently.

Condensate production from Point Thomson is estimated at 10,000 barrels per day in the initial phase of the project, ExxonMobil said.

Alper said it was too early to assess the effects on fiscal year 2016 state revenues of the production or price averages.

11/20/2016 - 3:55pm