Producers 2020: One word: uncertainty

Alaska oil patch weathers one of the strangest years in its history.

Eric Lidgi

for Petroleum News

Uncertainty was the key word in the Alaska oil patch in 2020.

The business of producing hydrocarbons has always favored those who can stomach an unhealthy amount of uncertainty. But even so, this year made it hard to look ahead.

The emergence of the coronavirus pandemic prompted economic shutdowns around the world, leading to a cliff-like drop in global demand followed by an oil price crash that quickly turned bizarre. Alaska North Slope crude oil traded at a negative price in late April 2020, something few in the oil patch had ever witnessed. The drop in demand led to a drop in production and proration of trans-Alaska oil pipeline throughput.

All told: any plan of development submitted before April was soon irrelevant, or at least contingent. The development forecasts in this edition of The Producers aim to be as complete and accurate as possible, given the impossibility of forecasts at the moment.

Though felt by all companies, the uncertainty of 2020 impacted different companies in different ways. Size was of course a major factor. Some companies are better prepared to weather long stretches of uncertainty than others. But, interestingly, commodity and basin also seemed to matter. The North Slope fared differently than Cook Inlet, and locally distributed natural gas fared differently than liquids bound for markets outside the state.

The shutdown arrived with summer on its heels. Always resourceful, many companies used the time to conduct maintenance work that would have required shutdowns anyway.

One shining bit of certainty did emerge from the storm of 2020. After years of rumors and months of behind the scenes work, Hilcorp Alaska LLC, under the Hilcorp North Slope name, became the newest operator of the Prudhoe Bay unit, assuming the title long held by BP Exploration (Alaska) LLC.

The move is historic and promises to be hugely consequential. But of course, even in the best of times, it is hard to predict what might happen in the Alaska oil and gas business.