December 15, 2005 --- Vol. 11, No. 101December 2005

Revenue forecast: prices up, volume down

Prices being paid for Alaska North Slope crude oil are up, Revenue Commissioner Bill Corbus said today, but ANS production continues a decline that began in 1988.

The department’s fall revenue forecast, released today, forecasts ANS crude oil production averaging 865,000 barrels per day for fiscal year 2006, a 5.6 percent decrease from FY ’05 when production averaged 917,000 bpd. Over the next decade volumes are projected to continue to decline, averaging 800,000 bpd in 2016, which represents an annual average decline of 0.75 percent per year from FY ’06 to FY ’16.

Crude oil prices on the West Coast are projected at $57.30 per barrel for FY ’06, a 32 percent increase over $43.43 per barrel for FY ’05. ANS crude oil prices are forecast to decline to $40.95 per barrel in FY ’07. Beyond 2008, prices are forecast at $25.50 per barrel.

The forecast updates production volume details including decreases due to unplanned disruptions, maintenance or repair work that may reduce crude oil flow, and also includes, for the first time, an extensive discussion of natural gas supply and demand.

Lower Foothills opened for tundra travel

The Alaska Department of Natural Resources opened state lands in the lower foothills of the North Slope to oil and gas exploration Dec. 14. The department said in a statement issued today that the decision allows the use of vehicles that are not approved for year-round tundra travel.

This is, the department said, the earliest opening for the foothills area this decade and is based on measurement standards developed by the Division of Mining, Land and Water through a scientific study completed in 2004. The new snow depth and soil temperature standards developed through the study allow the department to length the oil and gas winter exploration season without increasing impact on the tundra, Commissioner Mike Menge said in a statement.

The department said that monitoring of some of the early exploration activity allowed last winter season, followed by additional study this summer, showed that last year’s early opening did not result in any increased impact on the tundra. The department said it will continue to monitor the effect of exploration based on the new standards developed.

The department said it will continue to collect data in the upper foothills areas to determine when opening standards have been met.

The east and west coastal areas of state-owned lands on the North Slope were opened to oil and gas exploration activity Dec. 6, the earliest opening since 1995.

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