Alaska trims expectations for North Slope oil output

REUTERS

ANCHORAGE

OIL production from Alaska’s North Slope has fallen faster than expected, even though the fiscal impact was offset by higher prices, according to a semiannual forecast released on Friday by the Alaska Department of Revenue.

The forecast puts average North Slope production at 538,300 barrels per day over the current fiscal year, 14,500 bpd lower than the average the department predicted in December. State Revenue Commissioner Bryan Butcher said maintenance problems took a toll on oil output, which had totaled 579,100 bpd in fiscal 2012.

“The flow was a lot lower than we had anticipated,” Butcher said in an interview.

State officials had hoped production would rebound significantly later in the fiscal year that runs through the end of June 2013, but “it did not,” Butcher added.

The effect on state coffers was limited, however, because North Slope (ANS) prices wound up higher than the department expected, Butcher said. State revenues this fiscal year will wind up only about $35 million lower than anticipated, despite the steeper-than-expected drop in production, he said. That compares with total expected oil revenues of $6.87 billion.

ANS prices are expected to average $109.21 per barrel in fiscal 2013, according to the forecast. North Slope production will continue its steady decline through the foreseeable future, dropping to 526,600 bpd in fiscal 2014, before sliding to 344,500 by fiscal 2022, according to the forecast. North Slope oil output is far below peak production of about 2.1 million bpd reached in 1988.

BP, ConocoPhillips and Exxon Mobil Corp are among the largest oil producers in the state.

The only new production predicted in the forecast period is from the Point Thomson field, expected to come on line in 2016, and fields in the National Petroleum Reserve-Alaska, expected to come on line in 2018.

ANS spot prices are expected to average $109.61 a barrel in fiscal 2014 and rise to an average of $123.34 a barrel in fiscal 2022, according to the forecast.

Oil output in southern Alaska’s Cook Inlet, a mature basin that began producing in the 1950s, is also expected to continue its decline, from 10,400 bpd this fiscal year to an expected average 5,600 bpd in fiscal 2022, according to the forecast.

About 90 percent of the state government’s unrestricted revenues come from oil taxes, royalties and fees.

Alaska has no personal income tax and no statewide sales tax.