|
Revenue’s spring forecast shows prices up, offshore production delayed Alaska North Slope crude is expected to continue at 1 million barrels per day through the end of the decade, as new oil and satellite fields come on production Kristen Nelson PNA Editor-in-Chief
Commissioner of Revenue Wilson Condon said April 15 that while the department has raised its expected average Alaska North Slope crude oil price for the fiscal year ending June 30 to $20.50 a barrel, up $1.70 a barrel from the fall forecast, only a “modest reduction” is expected in the amount the state will have to draw from the Constitutional Budget Reserve to balance.
The budget gap is still close to $1 billion and the department expects the budget reserve to run out in October 2004, Condon said.
“Although the higher oil prices have slightly reduced our withdrawal of funds from the Constitutional Budget Reserve Fund, it is not enough to give us much breathing room in dealing with Alaska’s fiscal problem,” Condon said. “The higher prices are certainly good news, but they reduce the total three-year draw from the Budget Reserve by only $143 million for Fiscal Years 2002-2004.” Offshore delay On the production side, the department said it had made modest adjustments in the fall forecast, including a three-year delay of all Beaufort Sea development as a result of BP’s announcement: that it is shelving the Liberty project. The department said that delay includes the Sandpiper field.
Revenue also said it has increased Alpine’s production rate and reserves, reflecting the potential of the West Alpine development as well as ongoing facilities debottlenecking and expansion. Prudhoe Bay production was reduced by 5,000 barrels per day starting in late 2004 “to adjust our expectations for fewer new opportunities in the field.”
Long-term recovery from Kuparuk was increased because of “continued excellent enhanced oil recovery response.”
Production estimates from Tarn were increased as a result of “successful development drilling and strong reservoir performance.” Meltwater production was slowed because of drilling delays.
ANS to stay above 1 million bpd The department said it expects that new discoveries and developments will keep North Slope production over 1 million barrels per day through fiscal year 2011, after which production is expected to decline 5.6 percent a year.
Northstar, and increased production from Alpine and satellite field developments, along with National Petroleum Reserve-Alaska development, heavy oil from Kuparuk and Prudhoe and additional satellite development will all contribute to keeping ANS production above 1 million bpd.
Cook Inlet production is expected to increase from 29,400 barrels a day in fiscal year 2001 to 32,250 barrels a day this fiscal year and 37,200 barrels a day in fiscal year 2003. Forest Oil Corp.’s Redoubt Shoal field is expected to begin production midway through fiscal year 2003. Thomson in 2008 Some fields might perform better than expected or begin production sooner than expected — and there could be discoveries not included in production estimates, Revenue said.
On the down side, the department is projecting production from fields not yet developed. Some 40 percent of new oil, 124,000 bpd by fiscal 2010, comes primarily from the east side of the North Slope.
If these field developments are deferred or cancelled, the state could lose $65 million in fiscal year, some 10 percent of projected petroleum revenue, the department said.
East-side fields expected to begin production in this decade include: Point Thomson, Sourdough and Liberty in fiscal year 2008; Yukon Gold in fiscal 2009.
Sandpiper, northwest of Northstar, is expected to begin production in fiscal 2010.
Revenue said Point Thomson would begin production at 20,000 bpd and then product at 30,000 bpd though the end of the decade. Sourdough and Yukon Gold would begin at 10,000 bpd and then increase to 15,000 bpd. Liberty would begin production at 35,000 bpd, increase to 55,000 bpd and then decline to 52,000 bpd. Sandpiper would begin production at 12,000 bpd. Wellhead value will decline Revenue said that new shipping requirements — more expensive double-hulled tankers required by the Federal Pollution Act of 1990 and the use of smaller vessels to replace the older vessels —are increasing the marine transportation cost.
Along with marine transportation costs, pipeline transportation costs, both for the trans-Alaska pipeline and for feeder pipelines, are also deducted to arrive at the ANS wellhead value, which is the basis for the state’s production taxes and royalties.
Based on projected ANS West Coast prices and transportation costs, the ANS wellhead value is expected to fall from an actual $22.83 a barrel for fiscal 2001 to $16.39 a barrel for fiscal 2002 and $11.57 a barrel by fiscal 2010.
| 