North Slope production to rise with new fields
Compared to the Department of Revenue’s Spring 2025 Revenue Fore - cast, which was released in March, the (North Slope) oil price forecast de- creased by $2.52 per barrel for FY 2026 and $5 per barrel for FY 2027. Driven by the revised outlook of oil price and production, the state’s Undesignated General Fund (UGF) revenue forecast decreased by $181 million for FY 2026 and $119 million for FY 2027. The UGF revenue is the largest part of the state budget except for pass-through federal funds and is the amount the Legislature controls through its appropriations.
in the U.S. Pacific Northwest, are ex - pected to remain generally stable. “In FY 2025, transportation costs for North Slope oil averaged $10.55 per barrel; they are expected to average $10.58 in FY 2026 and $10.07 in FY 2027,” fore - casters said. However, “The good news on production is tempered by moderate expectations for oil prices. The revenue forecast is based on ANS oil prices of $65.48 per barrel for FY 2026 and $62 for FY 2027, with longer term prices assumed to be $75 by FY 2036. The oil price forecast is based on futures mar- ket prices through FY 2033, followed by an assumption that prices will increase with inflation thereafter.”
may experience technical problems and underperform compared with ini- tial expectations, state officials have said in past briefings. Despite this, total North Slope production will rise. “From FY 2027 through FY 2034, oil production is expected to increase each year as production from new fields under development and from new drilling on existing fields significantly exceeds projected declines from ex- isting wells,” state forecasters said in their report on new revenue. State forecasters also pay close at - tention to trends in industry spending and transportation costs as these af- fect revenues. That’s because Alaska’s income is partly under its net-profits type state production tax, where many expenses are allowed as deductions, as well as royalty income, where pipeline and tanker transportation costs from the North Slope can be deducted. As expected, the development of new fields is resulting in rising capital ex - penditures by companies on the North Slope and these are expected to remain. “In FY 2025, allowable oil and gas lease expenditures (which can be de- ducted) amounted to an estimated $9.2 billion statewide, including $8.7 billion of spending on the North Slope. Allowable lease expenditures are ex- pected to decrease in FY 2026 to $8.8 billion statewide, including $8.2 bil - lion of spending on the North Slope,” forecasters noted. However, industry spending is ex - pected, both statewide and for the North Slope, to remain above $7 bil - lion per year for the remainder of the forecast period,” or through FY 2027, forecasters said. “These high lease expenditures re- flect continued high levels of activ - ity on the North Slope led by major investments in new developments,” forecasters noted. “Additionally, oil - field costs continue to see significant inflation globally, while high levels of North Slope activity have further in - creased competition for service pro- viders and Alaska remains a remote, high-cost jurisdiction.” Transportation costs, which include oil transit costs on the Trans Alaska Pipeline System and in tanker sail - ing from the Valdez Marine Terminal in south Alaska mainly to refineries
Projection: Output will hike during next budget year Alaska state forecasters are pre- dicting lower oil production in the state’s current budget year but an in - crease next year following the start of the new Pikka oil field in early 2026, according to a long-range production forecast included in the state’s annual revenue forecast released in December. Pikka is expected to see a buildup to its expected peak of 80,000 barrels per day in its first phase of output by mid- 2026. Additional increases will come when Pikka moves into a second phase of development and after ConocoPhil- lips starts up its Willow field, now un - der construction, in 2029. In the state’s fiscal year 2025, which concluded last June 30, Alaska North Slope oil production averaged 468,000 barrels per day but is expected to dip to an average of 457,000 barrels per day in FY 2026, the current year that ends next June. The decline is mainly due to expected decreases in the large, aging North Slope producing fields, accord - ing to the state forecast. It is projected to increase to an av- erage of 517,800 barrels per day in FY 2027, which begins July 1, before in - creasing to 621,200 barrels per day by FY 2036, state forecasters noted. In volume, “oil production forecast decreased by 7,000 barrels per day for FY 2026 and increased by 28,400 bar - rels per day for FY 2027,” compared with the most recent earlier estimates from December. The estimates of future production are conservative and include assump- tions that some new wells, and fields,
— Tim Bradner
Photo Courtesy Santos Ltd.
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THE LINK: The Official Magazine of the Alaska Support Industry Alliance | WINTER 2026
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