Oil production at Cook Inlet will continue to decline as North Slope holds steady, state says

An oil rig in Cook Inlet. (Rashah McChesney/Alaska Energy Board)

Alaska expects to see an average of 501,000 barrels of oil produced per day on its land and waters over the next five years, which is a slight increase due to a new slate of expected projects on the North Slope. The Alaska Division of Oil and Gas made that forecast Monday, during a presentation before the Alaska House Finance Committee.

Travis Peltier is an oil reservoir engineer in the division. He told committee members that the vast majority of oil production in Alaska, about 492,000 barrels per day, will come from the North Slope.

But he said the few thousand barrels a day produced at Cook Inlet have important use in the state.

“Oil from the Cook Inlet basin is critical to supplying the state’s refineries,” Peltier said. “So a lot of the use is coming from the oil that we generate at Cook Inlet.”

The production forecast is one of a group of submissions requested at the beginning of each legislative session, to help the Legislature determine how to shape the budget for the upcoming fiscal year.

Oil production in Cook Inlet does not count much in the state’s budget process, as it brings in relatively little revenue.

The basin produced an average of 9,406 barrels of oil per day in the last fiscal year, according to the division’s filing, down from the recent peak of 16,585 barrels in fiscal 2016. The division estimates those numbers will hold somewhat steady for the next five years. , with a gradual decline over the next decade.

a bar chart of Cook Inlet oil production
An estimate of the average barrels of oil produced daily from Cook Inlet, covering fiscal years 2016 through 2022. (From the Alaska Department of Natural Resources)

The division also said a unit at Cook Inlet, Middle Ground Shoal, is still offline after a Hilcorp-owned fuel gas pipeline leading to the unit leaked in 2021. That rig was responsible for about 930 barrels. of oil per day.

“And production from that field is currently suspended,” Peltier said. “So zero production is coming out of there right now.”

In its filings with the Legislature, the division takes note of projects that have the potential to add a significant amount of oil production to the state. The division did not notice any new projects in the cove.

But Hilcorp and southern-based BlueCrest are exploring some potential oil prospects in the Ninilchik area, according to a new activity map from the division.

Producers on the North Slope, on the other hand, are planning 17 new exploration and development projects in the coming years, according to the filing, including the Willow and Pikka projects. That’s while oil prices remain high and businesses are recovering from the pandemic.

Ladera Norte averaged 476,490 barrels of oil per day in the last fiscal year. Relatively little decline has been seen for an aging oil field due to field maintenance, according to the division.

Gas Forecast Going Down The Pike

The department’s presentation was only about Alaskan oil and did not include any information about Cook Inlet gas.

A much-anticipated forecast for gas supply at Cook Inlet will be out shortly, said Sean Clifton of the Oil and Gas Division, hopefully by the end of the week.

That forecast will come amid warnings from producer Hilcorp that it is unsure about the future of its natural gas supply and may reconsider future contracts with gas-dependent Railbelt utilities such as the Homer Electric Association.

Ben Boettger is an energy organizer for Cook Inletkeeper and the Alaska Public Interest Research Group. He said it’s important that Alaskans have access to that forecast and he’s glad the information is coming soon.

“Gas prices and gas availability really affect all of us, in very fundamental ways,” Boettger said. “And people need to have good information about it.”

He said a lot has changed since there was last a public update on gas availability in the cove, in 2018.