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Alaska North Slope Production Dropping Faster than Anticipated

Oil production from Alaska’s North Slope oil fields is declining faster than expected. State officials have admitted they have been too optimistic in their production forecasts, and produced a new, more conservative estimate.

Forecasted FY ’06 North Slope production of 853,000 barrels per day is down 6.9% from the Fiscal ’05 average of 917,000 barrels per day. FY 2006 production is down more than 54% from the peak output of 2 million barrels per day achieved in Fiscal 1988.

The Alaska Department of Revenue anticipates that production will continue to decline over the next decade with volumes falling to 772,000 barrels per day in 2016, an average annual decline of 1.5% per year from FY 2006 to FY 2016.

While our revenue picture has improved, I remain concerned about the continued decline in oil production. The information released today forecasts that there will be 117,000 barrels per day less in oil production in FY 08 compared to the last fiscal year [FY 2005]. High prices, to a large extent, have masked the impact of a downturn in production on state revenues.

—Alaska Governor Frank Murkowski

Some drop in production was expected due to the natural decline of large, maturing oil fields, but the decline this year is steeper than anticipated due to unanticipated field maintenance problems and unexpected delays in some development projects, according to the chief state petroleum economist, Michael Williams (Alaska Journal of Commerce).

The forecast is based on the assumption of new oil fields coming online to offset the continued decline from mature fields such as Prudhoe Bay and Kuparuk.

By 2015, about half of the oil expected to be produced will come from fields that have not yet been developed...

—Alaska Journal of Commerce

At least some percentage of that forecast new production is unlikely to appear.

The US Senate narrowly passed (51-49) a budget bill last week that contained provisions that would lead to drilling the Arctic National Wildlife Refuge (ANWR) as a mechanism to raise $3 billion for the federal government.

Comments

Lance Funston

Better get drilling in ANWR then... Only hope to keep those Alaskans in snowmobiles and SUVs.

Rafael Seidl

With just 3% of the world's population, the US uses 25% of the oil. We need technology and policies designed to reduce demand before drilling in the ANWR to maintain domestic supply should even be considered. It is simply not true that economic growth absolutely requires an equal or greater growth in energy consumption.

For the state of Alaska, of course, oil production is a political imperative if the state income tax is to remain negative. Without that, the population would likely fall.

t

I have never understood the drive to drain America first. But then I am not a current or former oil man. No amount of drilling is going to get us even close to independence. Even Bush knows this. So, why not drain Saudi Arabia first and save our oil for critical needs that cannot be met with alternatives. But that would require a long term perspective.

We may have passed the peak. So, by all means,let's hasten the day where the situation will become truly critical.

Our national energy strategy appears to be drill until there's nothing left to drill. Future generations,if any, will say, "what we're they thinking"?

Al

With one the highest level of oil consumption in absolute terms and per capita terms, the US would deplete ANWR reserves just like the Alaskan ones which don't look as if they'll last very long. The Nothern slope is in similar trajectory. Western economies industrialized by explopiting easily accessible and affordable oil. That trend thugh doesn't seem guaranteed in future: decreasing domestic supplies will likely push prices up, edge some out of the market, affect quality of lifestyle and intensify global geopolitical wrangles.

Such considerations have driven many to vouch for alternatives which may seem expesive today but are likely to be very affordable once inevitable production decline arrives.

Harvey D

Rafael...your assumption that economic growth does not require equivalent or greater energy or oil consumption growth is correct. In 2005 the world economic growth was about 4% with only a 1% growth in oil consumption. The same could happen to energy consumption growth. With a bit more effort we could get economic growth with zero or negative oil/energy consumption growth. We have to become more efficient consumers. There is still a lot of room for improvement. We could start by getting rid of our gas guzzling 4 x 4 monsters, use more efficient buses, trucks, trains, airplanes, ships, TVs, appliances, houses, offices, plants etc. The list of possibilities is very long.

tom deplume

What were they thinking? It is more profitable to use the capital equipment you already have than investing in new equipment. Every alternative, including conservation, requires new equipment to produce the more efficient products. New equipment is invested in only after the competition makes it neccesary such as Toyota hybrids.

Dick Cheney

Sorry guys, the gas-guzzling American lifestyle is simply non-negotiable.

t

Tom. You think we're not investing in new equipment to do all this new drilling? And when I say drilling, I'm including all the gas wells we've had punched here in the west the last few years. Drill rigs are in short supply.

Amory Lovins has shown that we can spend billions of dollars in conservation and efficiency measures before it is cheaper per barrel to purchase oil.

Besides, short term profit doesn't necessarily equate into long term prudence. The market doesn't give us the correct signals until it is too late.

Sour Doh!

Snowmachines not snowmobiles.

Adrian Akau

In a few decades when the oil supply becomes truly critical, I don't think we will have to worry about gas guzzlers or changing our life style because gas guzzlers will be museum pieces like the horse and buggies of the past and life styles will have to adapt to other energy sources as a matter of survival.

adrianakau@aol.com

Lucas

Somebody needs to start designing a good modern Buggy. With rubber tires, good springs and shock absorbers it might not be too bad.

t

Make that modern buggy out of carbon fiber. We also need to start putting stables in all those new homes out in the suburbs.

Charly

A horse needs food. Are you sure a horse is more fuel efficient than a very efficient car

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