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.