Alaska’s oil production has remained relatively flat in recent years, but there could be changes on the horizon as new fields come online on the North Slope.
The state House Finance Committee heard an update from the Department of Natural Resources on Wednesday. They were told that the legacy fields — those that are currently producing oil — are still the backbone of the state’s oil production.
“But as we go out, you know, five-to-six years out, projects that are expected to come online beyond this fiscal year begin to play a more important role,” said DNR Commercial Analyst Maduabuchi Pascal Umekwe.
There are new projects coming online, like Hilcorp’s Milne Point Moose Pad, ConocoPhillips’ CD5 expansion and Greater Mooses Tooth 2. There are also new discoveries in development, like Oil Search’s Pikka.
But just how much oil those new fields will bring to the state over the next several years is difficult to predict.
Over the next two years, the state is forecasting that new fields will bump production up to more than 533,000 barrels per day on the North Slope by 2020 — that could translate to more than $2 billion for the state.
Still, production from those legacy fields is declining. Umekwe told lawmakers that it’s not easy to predict when a new field will come online, or how much oil they will produce. That means the range of predictions gets more uncertain in the future. By 2027, the state could be producing close to 700,000 barrels per day, or fewer than 400,000.
The production forecast is primarily used by the Alaska Department of Revenue to predict how much money the state will get over time. Lawmakers use that to build the budget.
DNR has been forecasting oil production for the state since 2016. Before that, the state used a private contractor.
But during its first year on the job, DNR was criticized after it predicted an unprecedented — and inaccurate — drop in oil production.
That prediction was better last year: Umekwe showed the House Finance Committee its forecast of last year’s production. It was off by fewer than 1,500 barrels.
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