Alaska oil producers squeezed more oil out of the North Slope in 2022
In a rare feat, oil production on Alaska’s North Slope increased slightly in 2022.
The giant oil patch has seen dwindling production for decades, with its primary field at Prudhoe Bay aging. But the Slope remains a key part of Alaska’s economy.
Industry observers said the annual increase is a positive sign, though it doesn’t meaningfully change the long-term slide in Alaska oil production. That will likely take large new fields producing oil, they say.
The bump added about 6,000 barrels of crude oil daily to the 800-mile trans-Alaska pipeline, operator Alyeska Pipeline Service Co. announced in January. The increase pushed last year’s daily oil production to 483,000 barrels.
This marks only the fifth yearly increase since 1988, when Alaska oil production peaked at more than 2 million barrels daily, four times more than today, according to Alyeska pipeline data. The last increase came in 2017.
The small bounce won’t increase Alaska revenues by much, said Larry Persily, a former deputy commissioner of the Alaska Department of Revenue, who recently left a position with Democratic U.S. Rep. Mary Peltola.
Still, it’s a meaningful accomplishment that reflects investments by Hilcorp, the operator of the Prudhoe Bay field, and ConocoPhillips, the state’s largest oil producer, he said.
“It’s a reason to be happy, but not to drop balloons from the ceiling,” Persily said.
Hilcorp has slightly reversed declining oil production at Prudhoe Bay after becoming operator there in 2020, following its acquisition of assets from former Alaska producer BP.
Hilcorp has also produced several thousand barrels more daily at its Milne Point field, injecting a polymer substance to produce viscous oil that is thicker than conventional crude oil and does not flow as easily.
The company said in a statement it’s committed to operating in Alaska for “decades to come.”
“At Milne Point, production has more than doubled since Hilcorp became operator in 2015, primarily due to increased Schrader Bluff viscous oil production,” said a statement from Luke Saugier, senior vice president for Hilcorp Alaska. “Prudhoe Bay production continues to trend upward as we invest heavily in drilling new wells, fixing old wells and improving and enhancing facility capacity.”
Persily said ConocoPhillips has brought new projects online in recent years, including at the Greater Mooses Tooth-2 in late 2021 and Fiord West Kuparuk in May.
“ConocoPhillips Alaska and other North Slope operators have invested heavily in existing fields and new developments” over the past several years, said Rebecca Boys, a spokeswoman with ConocoPhillips Alaska.
That has resulted in a more stable throughput in the Trans-Alaska Pipeline System, she said.
Betsy Haines, interim president of Alyeska, said in a statement, “The best long-term solution for safe and sustainable TAPS operations is more oil, so this increase is a notable milestone.”
Low flows of crude oil require more technical solutions to keep the oil flowing smoothly. The increase in part “reflects the innovative work of Alyeska staff and TAPS contractors in the face of declining flow,” Alyeska’s statement said.
Brad Keithley, a former oil and gas attorney, said Alaska oil flow could increase sharply if two giant new discoveries begin production.
Oil Search Alaska, a subsidiary of Australia-based Santos, expects its Pikka oil field to begin producing oil in 2026. ConocoPhillips’ Willow field awaits a contested permitting decision from the Biden administration before construction can begin.
Combined, the fields have the estimated potential during their peak production to add more than 250,000 barrels daily to Alaska production.
The fields would improve the state’s fiscal position by injecting new revenues into the budget, Persily said.
“If you can get Willow and Pikka on line, then you will see some substantial increases in not just oil production but in revenue to the state,” Persily said.