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Fall Revenue Sources Book out; forecast down from preliminary
Kristen Nelson Petroleum News
Bruce Tangeman, commissioner of the Department of Revenue, released the Fall 2018 Revenue Sources Book Dec. 14. A preliminary forecast, released Dec. 3 by outgoing Revenue Commissioner Sheldon Fisher, pegged Alaska North Slope crude oil prices at an average of $76 per barrel for fiscal year 2019, which ends in June, and $75 per barrel for FY 2020, which begins in July.
The Dec. 14 release estimates FY 2019 ANS crude oil at an average of $67.96 per barrel, with a forecast of $64 in FY 2020.
“In recent weeks, oil prices have dipped below the mid-$60s from a multi-year high price of over $85.00 per barrel at the beginning of October 2018,” Tangeman said in a letter to Gov. Mike Dunleavy accompanying the release of the Revenue Sources Book. “This forecast accounts for these recent swings in price. As a result, the revenue forecast is based on an annual average ANS oil price of $67.96 per barrel for FY 2019 and $64.00 per barrel for FY 2020.”
The Revenue Sources Book estimates FY 2019 North Slope production at 526,800 barrels per day, compared to 529,800 bpd in the preliminary forecast. ANS volumes for FY 18 (518,400 bpd) and the FY 20 (533,200 bpd) are the same.
Petroleum revenue Total petroleum revenue, $2.450 billion in FY 2018, is forecast to be $2.714 billion in FY 2019 (up 11 percent) from FY 2018 and $2.245 billion in FY 2020 (down 17 percent from FY 2019).
Those numbers are based on the forecast prices and volumes, and also on lease expenditures.
North Slope operating lease expenditures were $2.649 billion in FY 2018 and are estimated to be $2.715 billion in FY 2019 and $2.823 billion in FY 2020. Capital expenditures were $1.729 billion in FY 2018 and are estimated to be $1.901 billion in FY 2019 and $2.604 billion in FY 2020.
Revenue said that in recent years companies have reduced spending in response to oil market developments and changes in state tax policy. “Looking forward,” the department said, “there are several potential new developments on the horizon that could lead to increased investment in future years, such as Mustang, Pikka, Willow, and others. This forecast tentatively includes some production from several of these new opportunities.”
Production forecast The department lists production by groups of fields and pools, and because its forecast goes out to 2028, some of the fields are not yet in production.
Prudhoe Bay production, including natural gas liquids from the Central Gas Facility shipped to the trans-Alaska oil pipeline, averaged 218,200 bpd in FY 2018, and is forecast to average 221,900 bpd in FY 2019, dropping to 218,400 bpd in FY 2020.
Prudhoe Bay unit satellites - Aurora, Borealis, Midnight Sun, Orion, Polaris, Sag River, Schrader Bluff and Ugnu, along with the Milne Point field - averaged 41,800 bpd in FY 2018 and are forecast to average the same in FY 2019, dropping to 40,500 bpd in FY 2020.
The Greater Point McIntyre Area (Lisburne, Niakuk, Point McIntyre, Raven, West Beach and West Niakuk) averaged 30,500 bpd in FY 2018, is forecast to average 25,900 bpd in FY 2019 and 22,100 bpd in FY 2020.
Kuparuk averaged 82,800 bpd in FY 2018, is forecast to average 79,700 bpd in FY 2019 and 82,500 bpd in FY 2020.
Kuparuk satellites (Meltwater, NEWS, Tabasco, Tarn and West Sak) averaged 27,500 bpd in FY 2018 and are forecast to average 36,500 bpd in FY 2019 and 35,500 bpd in FY 2020.
Endicott (including Minke, Sag Delta, Eider and the Badami field) averaged 8,100 bpd in FY 2018 and is forecast to average 9,100 bpd in FY 2019 and 8,100 bpd in 2020.
Alpine (including Fiord, Nanuq, Qannik and Fiord West and the Mustang field which is not yet online) averaged 64,600 bpd in FY 2018 and is forecast to average 58,400 bpd in FY 2019 and 70,600 bpd in FY 2020.
Offshore fields - Northstar, Oooguruk and Nikaitchuq and the not-yet-developed Liberty - averaged 40,400 bpd in FY 2018 and are forecast to average 38,600 bpd in FY 2019 and 33,600 bpd in FY 2020.
The National Petroleum Reserve-Alaska averaged 100 bpd in FY 2018 and is forecast to average 10,400 bpd in FY 2019 and 15,400 bpd in FY 2020.
Point Thomson averaged 4,400 bpd in FY 2018 and is forecast to average 4,500 bpd in FY 2019 and 6,600 bpd in FY 2020.
Other fields (Pikka, Placer, Smith Bay, Guitar and Narwhal), which the department says are under evaluation and are outside other areas discussed in the forecast, are not forecast to have production in the next few years. Volumes from these projects first shows up at 200 bpd in FY 2023 and reaches 71,900 bpd by the end of the forecast period, FY 2028.
- KRISTEN NELSON
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