A year ago, when oil prices started to slip, who knew the price per barrel would plunge more than 50 percent? Given the current low price environment, tough financial times for the state and industry, and continued low projected prices for next year, it is prudent to concentrate on sound business principles like cost control, capturing value through efficiencies, and strategic planning for the future when prices recover.
We will weather this storm together, focusing on the many positive activities and accomplishments recent investments have precipitated and letting that inform us about how to do our work better in this price stressed climate. The Division of Oil and Gas remains committed to doing the very best job possible to support our industry through this time of low prices and fiscal uncertainty. We will continue to improve our business processes and guidance documentation while actively engaging our lessees to ensure we understand their challenges. Together, we will chart the best course for the industry and the state during this turbulent economic storm.
While the times are challenging, new activities and developments will put new gas and oil online in the near term and return very exciting rewards from past investments. Here’s a look at what’s going on, keeping Alaska’s oil and gas industry moving forward.
New investment and production
•Industry continues to invest - $7 billion in North Slope investment in calendar year 2014, a $1 billion increase over CY2013.
•Areawide Lease sales for fiscal year 2015 yielded approximately $60.5 million showing strong interest in the North Slope and Cook Inlet.
•Point Thomson is moving forward with modules installed. The Point Thomson oil pipeline ties into the Badami pipeline, which connects to TAPS.
•New interest announced in Smith Bay with Caelus Energy acquiring 75 percent interest in the Tulimaniq leases and planning to drill in 2016.
•Caelus Energy sanctioned the Nuna project after royalty modification was approved in early 2015 and construction is underway.
•Furie received Cook Inlet discovery royalty relief on the KLU No. 3 and continues to move forward to production with the installation of the first new platform in Cook Inlet in 14 years.
•BlueCrest Energy formed the Cosmopolitan Unit near Anchor Point and construction is underway to support new oil production in early 2016
•State, through AIDEA, continues investment in the Southern Miluveach Unit Mustang project.
•Repsol’s new Pikka unit was approved on North Slope, with encouraging exploration results indicating significant development potential.
New infrastructure
•Conoco completed the bridge over the Colville River to access CD-5, and the first oil production will occur in October.
New exploration
•Accumulate Energy is drilling their Icewine No. 1 exploration well on the North Slope to investigate shale oil potential.
•Hundreds of miles of both 2D and 3D seismic data submitted to the state through tax credit incentive programs have been received, along with exploration well data.
In 2015, the division has worked on improving processes and providing oil and gas research and information to assist producers and consumers alike. The division’s Resource Evaluation Section completed and published the “Updated Engineering Evaluation of Remaining Cook Inlet Gas Reserves.” In May of this year permit and bond application packets were standardized, streamlined and made available online. The Miscellaneous Land Use Permits will follow before the end of this calendar year.
When the state and industry work together, great things happen. The Division of Oil and Gas is committed to continuous improvement in serving our customers, and creating efficiencies while staying focused on a positive, bright future for Alaska’s oil and gas industry.
