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Alaska boosts revenue forecast State projects ANS crude average at $28.14, adds 35 million to NPR-A production Kristen Nelson Petroleum News Editor-in-Chief
The Alaska Department of Revenue is now projecting North Slope crude oil delivered to the West Coast to average $28.14 a barrel for fiscal year 2003, up from the fall Revenue forecast of $25.94 a barrel.
Commissioner of Revenue Bill Corbus said April 10 when the department presented its 2003 spring forecast that the increase is due to price volatility caused by the Iraq war and problems with production from not just Iraq, but also Venezuela and Nigeria.
Corbus said the department expects production from all three countries to return to past levels. The Organization of Petroleum Exporting Countries, he said, will then face the challenge of preventing a worldwide oil glut.
The department is projecting an ANS West Coast price of $25.28 a barrel for FY 2004 and $21.67 for FY 2005. The FY 2004 projection is an increase from the $23.25 a barrel the department projected in its fall forecast; the FY 2005 projection is down from $22 a barrel projected last fall.
For 2006-10, Corbus said, the department believes that the price will be about $22 a barrel, the bottom of the $22-$28 per barrel OPEC range. These numbers are the same as the department's fall forecast.
The department had used a post-1985 average of $16.50 to $17.50 a barrel for long-term forecasting. Due to OPEC's success “over the past four years in maintaining the OPEC basket price within its target price band” of $22 to $28 per barrel, the department began with its fall forecast to use the $22 per barrel bottom of OPEC's target range as the base case long-term oil price forecast. Production: 21 percent from new fields by 2010 ANS production is expected to average just under a million barrels a day for FY 2003 and to remain at about that level through 2010, gradually rising to just a little more than a million barrels a day, virtually the same as the fall 2002 forecast.
Corbus noted that by 2010 the department expects 21 percent of production to come from new fields — some of those already discovered, and some not yet discovered. He said the state expects the exploration program to continue and new fields to be discovered.
The department said its production forecast is “virtually unchanged” from the fall, but the spring numbers are a little lower.
The FY 2003-FY 2010 Alaska North Slope fall production forecast averaged more than a million barrels per day, ranging from 956,000 bpd in FY 2008 to 1,091,000 bpd in FY 2009. The average of the spring forecast for FY 2003-FY 2010, however, is 990,125 bpd, ranging from a low of 957,000 bpd in FY 2008 to a high of 1,031,000 bpd in FY 2009.
The 21 percent production from new fields by 2010 is also down from the department's fall forecast, which projected 26.9 percent of the state's production to come from new oil in FY 2010.
The significant change there is in projections for production from the National Petroleum Reserve-Alaska, which are now more conservative than they were in the fall. The spring forecast includes NPR-A production beginning in FY 2009 at some 3,000 barrels per day and increasing to 20,000 bpd in FY 2010. The fall forecast, however, showed NPR-A production beginning a year earlier and coming on stronger: 30,000 bpd in FY 2008; 65,000 bpd in FY 2009; 90,000 bpd in FY 2010. Production forecast more difficult Production forecasting is “somewhat more difficult,” the department said, because of “increased downtime in the newer, high-productivity fields at Alpine and Northstar. In order to keep production costs low and the footprint small, these fields are produced with very little equipment redundancy, so as a result, mechanical disruptions can affect production for the entire field.” The department said it is continuing to monitor that situation and has adjusted its production forecast to take this into account.
The other change the department noted in its spring forecast is delayed development — beyond FY 2007 — of NPR-A discoveries. There were two adjustments for NPR-A: production was shifted out two years “as the permitting timelines and construction planning have become clearer.” The department also added 35 million barrels to its projected recovery from NPR-A.
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