Industry outlines plans for 2015 North Slope projects

Despite lower oil prices, major North Slope producers BP and ConocoPhillips are moving forward with new oil-producing projects worth billions of dollars, company executives told the Alaska Resources Conference in Anchorage last month.

Trond Erik Johansen, President of ConocoPhillips Alaska, said his company just signed a contract for a high-tech specialized coiled-tubing drill rig that will search for new oil beneath the North Slope. It’s the second new rig and the fourth overall that the company will add to the North Slope since oil production tax reform was passed by the Legislature in 2013.

In addition to its new rigs, other projects have been approved with new production in late 2015. Johansen also reviewed projects in the National Petroleum Reserve which could yield tens of thousands of barrels in new production per day. BP is on track to add an additional drilling rig to its operations in 2015 and another in 2016. New projects continue to move forward throughout the Prudhoe Bay unit, including construction of 25 miles of new pipelines for delivering more oil to TAPS, starting in 2017. The first new pad at Prudhoe Bay in more than a decade and the expansion of two existing pads is underway. New development equates to more than 200 million barrels of additional oil and the drilling of more than 115 wells, according to BP’s Alaska President, Janet Weiss.

Trond-Erik Johansen

X

Kara Moriarty

X

Janet Weiss

Much of BP’s work at Prudhoe Bay focuses on stemming the production decline by extracting more oil from reservoir rocks. Weiss noted that for many years North Slope production has been declining six to eight percent per year, but the decline rate has now been cut by more than half.

Economist Neal Fried called the oil industry an employment “rock star” that is steadily growing on the North Slope. The Slope’s employment has been growing steadily over the past years, in part due to large maintenance projects, but the jump in jobs in the past year is one of the highest in a decade, Fried noted.

“There were more people in Prudhoe Bay this year than there ever have been in the history of our state,” Fried said.

Kara Moriarty, President and CEO of the Alaska Oil and Gas Association, said the increase in jobs is a direct result of oil tax reform and the Point Thomson project, which the Parnell administration advanced through a settlement agreement with ExxonMobil. First production there is expected in 2016.

She said a third of Alaskan jobs are tied to the oil and gas industry and for every one industry job, 20 more are generated through industry spending. She also reported the industry paid $6.9 billion in taxes and royalties last year. She noted the new tax policy generates more revenue to the state at low prices than the old regime.

Caelus Energy Alaska, which took over the Oooguruk Unit, is expanding the gravel island at the offshore field. Pat Foley, the company’s Senior Vice President, said preliminary work is beginning on the Nuna satellite to Oooguruk and exploration on properties far from its existing acreage is planned.

Spanish oil producer Repsol plans to spend $240 million on its exploration work this winter, according to Bill Hardham, Alaska Operations Manager. The company plans to drill three exploration wells and conduct two well tests on its leases in the Colville River Delta, as well as a 3-D seismic survey on state and federal acreage.

In his presentation before the RDC conference, Greg Lalicker, President of Hilcorp, said his company will adopt the same strategy as it has been applying in the Cook Inlet basin, where it has launched a multitude of small development and upgrade projects that have doubled oil production from aging fields that the company acquired.

“It’s going to be literally hundreds of little fields over many, many years,” Lalicker said. Hilcorp purchased a large slice of BP’s interests in four North Slope oil fields and the company is going to file a new proposed plan for the development of the Liberty offshore oil field in the Beaufort Sea.

Hilcorp acquired a 50 percent interest in Liberty and is now the field operator. It also acquired all of BP’s interests in the Endicott and Northstar fields, and a 50 percent interest in the Milne Point field.

Outgoing Governor Sean Parnell also spoke at the conference and reflected on his accomplishments. “The policies and work we’ve done together have knit together new opportunities for Alaskans,” Parnell said. He acknowledged criticism he took in setting a goal in 2011 of boosting North Slope production to one million barrels per day. Parnell said he believes that goal is still possible. “If you shoot for one million, you’ll more likely get there than if you did nothing and not set a goal,” he said. “I think we’re on our way.”

Return to newsletter headlines