US oil production is way up since the low 5 years ago. Yet Alaska’s north slope production has been declining by about 4% per year to about 530,000 barrels/day. New activities may increase production.
In just the past two years, US crude oil field production is up 40% from 5.8 million barrels per day (mbd) to 8.1mbd. Much of the surge in production is attributable to fracking of old oil wells that deplete in a few months after they are tapped for a second time. Horizontal drilling and advanced seismic technologies also have led to productivity gains.
ConocoPhillips is increasing production and exploration in Alaska, due to the recent change in the State’s tax structure. Even though the tax is much more competitive than it was under the old ACES structure, Alaska’s taxes are higher than both North Dakota and Texas by about 10 percent.
ConocoPhillips has begun work on an additional rig at Kuparuk, which is already producing approximately 1,300 barrels of oil per day (BOPD) and has created 700 indirect jobs. There are also plans for a new drill at Kuparuk which is estimated to produce 8,000 BOPD and create 200-300 direct jobs. The first oil from this site would be produced in 2015. ConocoPhillips is planning a new NPR-A development, which is in the permitting process. This project would create 400 jobs during the construction phase alone and has the potential for over 30,000 BOPD, with first oil being produced in 2017.
BP is one of the biggest oil producers in the state. They operate 13 oilfields on the North Slope (including Prudhoe Bay, Endicott, Northstar and Milne Point), which account for about two thirds of Alaska oil production. BP also holds the greatest ownership share in the 800-mile long Trans-Alaska Pipeline System (TAPS). BP is actively pursuing new ways to develop remaining, more challenging North Slope resources including heavy and viscous oil, light oil from smaller, more remote fields, and natural gas.
The Point Thomson project, operated by ExxonMobil on behalf of itself, BP, ConocoPhillips, and other minor owners, is a remote natural gas field located on Alaska’s North Slope, approximately 60 miles east of Prudhoe Bay. It is estimated to hold about 25 percent of known North Slope natural gas. The project is designed to initially produce 10,000 barrels per day of condensate at start-up in the winter of 2015/2016. A pipeline is being installed with capacity of 70,000 bpd and will connect to the trans-Alaska pipeline.
ConocoPhillips is the only major actively exploring for oil on the North Slope. Repsol has 3 discoveries announced. Pioneer Natural Resources has a discovery of 75-100 M barrels of oil. So there could be more North Slope oil come into production in a few years to staunch the decline in Alaska’s oil production.