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ANS crude production in forecast range
Division of Oil & Gas tells Senate Finance average is 490,000 for first 5 months of fiscal year, just 2% below production forecast Kristen Nelson Petroleum News
The Department of Natural Resources’ Division of Oil and Gas updated the Senate Finance Committee on crude oil production figures at the committee’s first meeting of the new legislative session.
In a Jan. 22 presentation by DNR Deputy Commissioner Sara Longan and reservoir engineer Maduabuchi Pascal Umekwe, the committee was told that for the first five months of the fiscal year, July through November, production averaged about 490,000 barrels per day, just 10,500 bpd, 2.14%, below the fall 2019 production forecast.
Umekwe told the committee the production forecast is developed by a team within the division whose daily duties include interacting with operators, giving those employees a good understanding of what goes on in the fields.
The production average for the five months, about 490,000 bpd, falls within the range of forecast which the division provided, he said.
Modest decline on North Slope Looking at North Slope production over the last five fiscal years, there were two years of consistent growth in production, from FY2015 to FY2017, followed by two years where decline averaged about 2%.
In details on the presentation slides the division said gains from FY15 through FY18 at Prudhoe Bay and Kuparuk were due to drilling and improvements in operational efficiency but said further efficiency improvements result in smaller production increases.
Prudhoe, operated by BP Exploration (Alaska), has returned to its pre-2016 decline, a modest 2% from FY18 to FY19, the division said.
At ConocoPhillips Alaska operated Kuparuk River there has been a strong decline in recently drilled wells as well as in base production.
Pending the second expansion at CD5 and Fiord West development, ConocoPhillips’ Colville River has seen a decline, while Eni’s Nikaitchuq had what the division called a production upset caused by a prolonged pipeline repair.
At the Hilcorp Alaska operated Northstar and Milne Point, on the other hand, the news was positive, with Northstar production up 9% on two consecutive fiscal years of growth, and Milne Point up 14%, FY18 to FY19.
On the eastern side of the Slope, the ExxonMobil Production-operated Point Thomson has seen year-on-year growth, the division said, which suggests facility challenges are being mitigated.
The division listed near future projects as additions of the Raven Pad at Milne Point, CD5 2X and Fiord West at Colville River, Nuna at Kuparuk and GMT2 in the National Petroleum Reserve-Alaska.
Umekwe said there will be 2020 quarter 1 drilling at the second expansion at CD5, CD5 2X, adding about 10 wells and an estimated addition of more than 10,000 bpd.
GMT2, sanctioned in October 2018, is under construction, Umekwe said, with first oil expected at year end 2021 and expected to peak at 35,000 to 40,000 bpd.
Pikka, Willow and Liberty are on the division’s list for future projects with first oil from 2022 through 2025.
Production forecasting Umekwe said that in forecasting production the focus is on accuracy, with distinctions between currently producing fields with oil from existing wells and those under development - production expected to come online this fiscal year - where there is more uncertainty than for currently producing volumes. Under development includes projects that add incremental oil to existing fields or fields with first oil within a year. The third category is under evaluation, projects more than 12 months out, he said.
There is a relatively small uncertainty range with currently producing fields because they are online, while under development has more uncertainty and forecasts there always miss the mark, Umekwe said, whether on the high or low side.
With under evaluation volumes, he said, there are also commercial risks and the chance development won’t happen within the 10-year window, including uncertainty in the start of sustained production and reservoir performance uncertainties. CD5 exceeded the projected production rate, Umekwe said, while GMT1 didn’t meet the expected rate.
In near-term production, focus is on capturing impacts of scheduled maintenance, he said, and on engaging operators on near-term plans, drilling schedules and rig commitments.
For long-term projections, Umekwe said the division tries to keep in touch with operators on their field development plans and applies engineering judgment.
Comparing the state’s forecast with producers’ outlooks, he said the state’s method in generating forecasts incorporates risks around timing. If a project is planned for 2022, the operator will reflect that in their estimates, he said, but the state doesn’t take that as a given - it still applies risk. There are lots of projects, projects really close to coming online, that didn’t come online, he said. Then explorers of fields that are not online often don’t provide volumes - the state includes those projects, he said, but risks them.
The goal isn’t to replicate numbers from the operators, Umekwe said, but to try to provide reliable numbers.
-KRISTEN NELSON
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