State sees 3.8 percent oil production decline next year
Alaska North Slope oil production is expected to average 689,000 barrels per day this year, a decline of 3.8 percent from last year, state revenue forecasters said in a revenue forecast released in Juneau Dec. 9.
For 2010, the department anticipates further production declines to 665,000 barrels per day, the report said. The production decline from existing fields will be partially offset by production coming from new fields.
It is anticipated that Nikaitchuq, a new field being developed by Eni Oil and Gas, will begin producing oil in 2009, and Oooguruk, operated by Pioneer Alaska Inc., which began producing in 2008, will see increased production rates, the department said in a press release.
Continued development in the Colville River Unit, west of Prudhoe Bay, and ongoing exploration in the National Petroleum Reserve-Alaska and other areas of the state is also expected.
The state’s assessment on production is in contrast with more conservative views of producing companies. Doug Suttles, president of BP Exploration (Alaska) Inc., told an Alaska business group Nov. 19 that his company anticipates decline rates of 6 percent to 8 percent in the large producing fields of the North Slope, which provide the bulk of production.
On revenues, the state said its fiscal year 2008, which concluded June 30, will go down as a record revenue year for Alaska with estimated general fund revenue totaling nearly $10.8 billion, the report said. Oil revenues contributed 93 percent of the income.
The revenue forecast for the current fiscal year was estimated at $6.75 billion, and for 2010 it is estimated at $5.28 billion.
In fiscal 2009, oil revenues will contribute 90 percent of the state’s overall revenues, and in 2010 oil will contribute and 88 percent.
Non-oil revenues are forecasted to total $700 million in fiscal 2009 and $648 million in 2010. These estimates are down from $780 million in fiscal 2008.
But the revenue prediction did not factor in recent oil price trends, which have seen decreases of 40 percent since the estimates were put together.
The report assumed oil prices in the range of $62 a barrel through the first half of 2009 and prices averaging $74.21 a barrel through the latter part of the year and early 2010.