North Slope producers do better than expected in sustaining production

North Slope oil operators did better than expected in sustaining production last year, but the decline rate is expected to steepen this year.

Production from the Slope declined 3.9 percent over a 12-month period of 2008, compared to the same months in 2007, figures provided by the Alaska Department of Revenue indicate. The state revenue department had forecast a 5.8 percent decline.

Production performance on the North Slope was aided by high crude oil prices over the two years, which stimulated operators to step up the pace of drilling of new production wells and to push enhanced oil recovery projects.

Cook Inlet production did not fare as well. The data showed that Cook Inlet oil production declined 9.1 percent between the two years.

For 2009 the Department of Revenue is forecasting a 3.5 percent North Slope production decline.

One North Slope producer disagrees with that, however. In a presentation to the Resource Development Council in Anchorage, Doug Suttles, president of BP Exploration Alaska Inc. indicated the decline may be greater, reaching 6 percent to 8 percent.

The steeper decline rate will result if North Slope operators cut expenditures in 2009, which is considered likely with current low oil prices.

Cathy Foerster, a commissioner with the Alaska Oil and Gas Conservation Commission, agrees this may happen.

“If you reduce spending in the producing fields you’;re going to see an effect on production,” she said.

Suttles said BP plans to reduce drilling by 10 percent on the North Slope in 2009. ConocoPhillips Alaska Inc., another North Slope operating company, is still reviewing its plans, company spokeswoman Natalie Loman said.

The two major North Slope operating companies employ a number of strategies to sustain production, including drilling of new production wells as well as waterflood and enhanced oil recovery programs.

The production data from the state compares total liquids production for 12-month periods covering two years, from November 2006 through October 2007, and November 2007 through October 2008. Final figures for November and December 2008, were not available at the time the analysis was done, Department of Revenue economist Jennifer Duval said.

Production of crude oil and natural gas liquids from the North Slope totaled 258.839 million barrels for the 12-month period from November 2007 through October 2008 and 269.355 million barrels for the November 2006 through October 2007 period, the revenue department figures showed.

Offshore oil fields in Cook Inlet produced 5.410 million barrels in the November 2007 through October 2008 period compared with 4.923 million barrels in the November 2006 through October 2007 period.

11/15/2016 - 1:18pm