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 ex- pected in the future with new North Slope projects now under construc- tion, according to the state Depart- ment of Revenue’s latest revenue and production forecast, issued in December. Near-term prospects for produc- tion 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 re- sources departments work together on oil revenue and production fore- casts. 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 produc- tion 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 ex - pected 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 pro - duce 20,000 barrels per day at its peak. In the state’s longer 10-year outlook, the startup of two larg- er fields now in construction — the Pikka project by Australia-based Santos Ltd. with Repsol, of Madrid, as a 49% partner, along with Con- ocoPhillips’ Willow project — are forecast to boost North Slope output to 657,000 barrels per day by 2034, the forecast said.
Photo by Judy Patrick
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 mil- lion barrels per day, according to the forecast. The state’s estimates do not in- clude any new production from the Arctic National Wildlife Refuge, which is being promoted by incom- ing 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 leas- ing that there was only modest bid- ding. Operations costs also are ris- ing in producing fields. Costs are monitored by the state revenue department because they direct- ly affect state income. Alaska has a net-profits type state production
tax and the state requires produc- ers to report production and capi- tal costs, and also future cost esti- mates, 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 bil- lion in 2027, according to the reve- nue forecast. Not all costs are allowed as de- ductions from the production tax, however, so the amounts reported do not include all expenses. Transportation costs for moving North Slope crude to west coast re- fineries 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
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