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Alaska oil output edging back up
North Dakota production rises, but Helms says it’s short-lived; rigs down from 52 in March to 11 today, expects fewer by winter Kay Cashman Petroleum News
North Dakota passed Alaska in 2012 to become the second leading oil producer in the United States behind Texas. Today Alaska production is edging back to 500,000-plus barrels per day as ConocoPhillips Kuparuk River and Alpine output comes fully back online.
Alaska North Slope oil production started the year averaging almost 515,000 bpd, but began dropping in May (433,840 bpd) and then in June (349,339 bpd), as reduced demand from the coronavirus pandemic and a steep drop in oil prices took their toll, the largest hit an average of 40,000 bpd from ConocoPhillips fields in June.
Today the ANS oil price seems to be holding steady between $40 and $45 per barrel, down from $68 in January but up from $19 in mid-April. The result is oil fields are being put back online - the next will likely be the North Slope Badami field, operated by Glacier Oil and Gas subsidiary Savant Alaska.
Less and less ND drilling In North Dakota producers have been struggling to keep drilling rigs running, with oil companies idling wells and halting drilling plans in March after prices collapsed due to the brief oil price war between Saudi Arabia and Russia that was in part aimed at quashing the U.S. shale industry and the coronavirus pandemic that drastically reduced demand for oil.
North Dakota produced about 890,000 barrels of oil per day in June, slightly above May but still far below a peak output of nearly 1.5 million barrels per day in February.
Alaska’s output peaked in 1988 at 2 million barrels day. Predictions are it will remain stable at just above 500,000 bpd and then in 2025 or so start to increase to 700,000 bpd with additional production from new fields, including Oil Search’s Pikka development (135,000-plus bpd at peak) and ConocoPhillips Willow field (160,000 bpd at peak).
North Dakota Department of Mineral Resources Director Lynn Helms said Aug. 14 that the number of drilling rigs running in North Dakota dropped from 52 in March to only 11 in the field today. Helms said the rigs still running are mostly operated by big producers that are just trying to stay active, to ensure they will have workers and equipment in place whenever prices recover. He offered a grim outlook for the state’s oil patch, saying the earliest rigs could come back is late 2021.
Flush production Helms said the department is “pretty confident” that the state topped 1 million barrels a day in July and that he expects similar results in August. However, he attributes that to “flush production,” or an increase due to curtailed wells coming back online. (The number of producing wells in North Dakota increased from 12,834 in May to 13,167 in June.)
But drilling is moving in the opposite direction, Helms said. “We don’t want to get people too excited when next month we sit down and say, whoa, production’s up 300,000 barrels a day. That’s temporary. And the following month, production’s up 250,000 barrels a day. That’s temporary. That’s that flush production, coming back from having restricted what we were doing. It’s kind of like falling off the diet wagon.”
The state had 12 drill rigs operating in June, down from 17 in May. There were 11 drill rigs operating in the state Aug. 14, and Helms said he wouldn’t be surprised if that moves into single digits as winter arrives.
Helms also said that uncertainty over a Trump win in the presidential race has some producers increasing drilling on federal land while they still have support from the White House.
EPA rollback welcomed The industry in North Dakota was celebrating Aug. 13 when the Environmental Protection Agency rolled back Obama administration rules designed to limit greenhouse gas emissions from oil and gas fields and pipelines.
“We appreciate the EPA’s work on updating these regulations to reduce the unnecessary burden they placed on our industry,” said Ron Ness, president of the North Dakota Petroleum Council. “In these past months we have been hit with a price collapse and decreased demand due to COVID, so getting relief from burdensome regulations will go a long way to help our industry recover.”
- The Associated Press contributed to this story
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