North Slope oil decline leaves Alaskans somber
Chron.com | North Slope oil decline leaves Alaskans somber
North Slope oil decline leaves Alaskans somber
Production slide highlights nation's energy problems
By TAREK EL-TABLAWY
Associated Press
NEW YORK - Alaskan North Slope oil production, once heralded as a domestic mother lode, has hit a new output low ? embodying the precarious balance confronting the U.S. as it struggles for energy security in an era of volatility in the international oil market.
The decline in Alaska is led by a slump in output from the once-mammoth Prudhoe Bay field, which has been producing since 1969. At its height in fiscal 1988, the field produced an average of 1.6 million barrels per day; but in fiscal 2005, it was down to 381,000 barrels per day. Overall production in the North Slope has dropped to an average of 916,000 barrels per day from 2.01 million barrels in the same period.
In Alaska, re-boosting output is as much dictated by politics as it is by geology.
While President Bush's administration has pushed for opening a pristine refuge believed to hold about 10 billion barrels of recoverable crude oil, environmentalists argue such a move would only temporarily delay the inevitable while ruining the delicate Arctic habitat.
Money and emotions
For Alaskans, Prudhoe's decline in particular, and the North Slope's in general, transcends politics and raises fiscal and emotional issues. Each year, state residents receive a substantial dividend from an investment account built over the year by a portion of oil tax revenues.
Those dividends, based on market investment performance, have ranged from a record $1,964 per resident in 2000 to $845.76 in 2005.
State officials have been negotiating with three major oil producers to build a North Slope natural gas pipeline to markets in the Midwest they hope will compensate for losses from the decline in oil. State officials say oil is expected to account for at least 74 percent of Alaska's unrestricted general purpose revenue through 2013. However, Alaska officials said Friday that negotiations have been halted for the next few weeks.
The fall in the North Slope comes even with the startup of the Northstar and Alpine fields which, with a combined pro- jected output of over 200,000 barrels per day, many hoped would partially offset the decline in Prudhoe Bay.
Only delaying the inevitable
Prudhoe "was one of the last great fields in America," said Bill Samuelson, an analyst with Houston-based consultancy Purvin & Gertz.
Projections for new fields slated to come on-stream over the next 10 years are expected to do little but temporarily offset the decline. North Slope output, according to the state, is pro- jected to drop to about 833,000 barrels per day by 2015, with 50 percent of that production coming from new fields.
The steady decline, both in domestic crude production and in Alaskan output, has fueled repeated efforts by the Bush administration, as well as by Alaska's congressional delegation, to open the Arctic National Wildlife Refuge east of Prudhoe to oil development.
The government estimates that 10.4 billion barrels of recoverable crude may sit untapped in the refuge.
Many Alaskans back the push for opening the reserve, where only one exploratory well has been drilled. But there are caveats.
"It's important to understand that no one has really gone there and punched holes in the ground to see if there's anything in there," said Michael Williams, the Alaska Department of Revenue's chief economist, referring to the lack of extensive drilling to accurately determine the volume of oil there.
North Slope oil decline leaves Alaskans somber
Production slide highlights nation's energy problems
By TAREK EL-TABLAWY
Associated Press
NEW YORK - Alaskan North Slope oil production, once heralded as a domestic mother lode, has hit a new output low ? embodying the precarious balance confronting the U.S. as it struggles for energy security in an era of volatility in the international oil market.
The decline in Alaska is led by a slump in output from the once-mammoth Prudhoe Bay field, which has been producing since 1969. At its height in fiscal 1988, the field produced an average of 1.6 million barrels per day; but in fiscal 2005, it was down to 381,000 barrels per day. Overall production in the North Slope has dropped to an average of 916,000 barrels per day from 2.01 million barrels in the same period.
In Alaska, re-boosting output is as much dictated by politics as it is by geology.
While President Bush's administration has pushed for opening a pristine refuge believed to hold about 10 billion barrels of recoverable crude oil, environmentalists argue such a move would only temporarily delay the inevitable while ruining the delicate Arctic habitat.
Money and emotions
For Alaskans, Prudhoe's decline in particular, and the North Slope's in general, transcends politics and raises fiscal and emotional issues. Each year, state residents receive a substantial dividend from an investment account built over the year by a portion of oil tax revenues.
Those dividends, based on market investment performance, have ranged from a record $1,964 per resident in 2000 to $845.76 in 2005.
State officials have been negotiating with three major oil producers to build a North Slope natural gas pipeline to markets in the Midwest they hope will compensate for losses from the decline in oil. State officials say oil is expected to account for at least 74 percent of Alaska's unrestricted general purpose revenue through 2013. However, Alaska officials said Friday that negotiations have been halted for the next few weeks.
The fall in the North Slope comes even with the startup of the Northstar and Alpine fields which, with a combined pro- jected output of over 200,000 barrels per day, many hoped would partially offset the decline in Prudhoe Bay.
Only delaying the inevitable
Prudhoe "was one of the last great fields in America," said Bill Samuelson, an analyst with Houston-based consultancy Purvin & Gertz.
Projections for new fields slated to come on-stream over the next 10 years are expected to do little but temporarily offset the decline. North Slope output, according to the state, is pro- jected to drop to about 833,000 barrels per day by 2015, with 50 percent of that production coming from new fields.
The steady decline, both in domestic crude production and in Alaskan output, has fueled repeated efforts by the Bush administration, as well as by Alaska's congressional delegation, to open the Arctic National Wildlife Refuge east of Prudhoe to oil development.
The government estimates that 10.4 billion barrels of recoverable crude may sit untapped in the refuge.
Many Alaskans back the push for opening the reserve, where only one exploratory well has been drilled. But there are caveats.
"It's important to understand that no one has really gone there and punched holes in the ground to see if there's anything in there," said Michael Williams, the Alaska Department of Revenue's chief economist, referring to the lack of extensive drilling to accurately determine the volume of oil there.
posted by Marcel at 12:59 AM
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