www.AlaskaAlliance.com 19 Output increase touted in future on Slope projects The state of Alaska is projecting stable oil production during the next two years but there are increases expected in the future with new North Slope projects now under construction, according to the state Department of Revenue’s latest revenue and production forecast, issued in December. Near-term prospects for production growth are mixed until Pikka and Willow begin producing in 2026 and 2029. A lower oil price outlook is also putting the damper on state revenue expectations, state officials said following release of the state’s December forecast. The state revenue and natural resources departments work together on oil revenue and production forecasts. One challenge is production in the existing large fields on the slope is declining faster than anticipated. Production is expected to be 10,200 barrels per day lower this year, on average, compared with what was forecast last March, according to the production forecast. Similarly, the latest for 2026 average oil production is 12,600 barrels per day below the March forecast, according to the outlook. Current output, year-over-year oil production, is generally stable at 460,000 barrels per day to 480,000 barrels per day, depending on the season, but state officials had expected more incremental additions in producing fields to offset natural decline in the reservoirs, which are aging. However, one small new project now producing is Nuna, a previously undeveloped deposit in the Kuparuk River field. Nuna is expected to produce 20,000 barrels per day at its peak. In the state’s longer 10-year outlook, the startup of two larger fields now in construction — the Pikka project by Australia-based Santos Ltd. with Repsol, of Madrid, as a 49% partner, along with ConocoPhillips’ Willow project — are forecast to boost North Slope output to 657,000 barrels per day by 2034, the forecast said. That is a mid-case scenario. A high case is 900,000 barrels per day if more oil is found and developed. In a low case, if the new fields don’t perform as expected or oil prices go lower, the outook is status quo in production at just under half a million barrels per day, according to the forecast. The state’s estimates do not include any new production from the Arctic National Wildlife Refuge, which is being promoted by incoming U.S. President Donald Trump. ANWR is highly speculative. A lease sale was held in January but current U.S. Interior Secretary Deb Haaland placed so many restrictions on leasing that there was only modest bidding. Operations costs also are rising in producing fields. Costs are monitored by the state revenue department because they directly affect state income. Alaska has a net-profits type state production tax and the state requires producers to report production and capital costs, and also future cost estimates, in tax returns they file with the state. Lease expenditures, classified as field operation costs, were reported at $2.9 billion last year on the North Slope and are expected to amount to $2.9 billion this year and $3 billion next year before rising to $3.2 billion in 2027, according to the revenue forecast. Not all costs are allowed as deductions from the production tax, however, so the amounts reported do not include all expenses. Transportation costs for moving North Slope crude to west coast refineries are stable, with $10.53 per barrel paid in 2024. The forecast predicts $10.91 per barrel and $10.38 per barrel expected in 2025 and 2026, respectively. — Tim Bradner Photo by Judy Patrick
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