North Slope Oil Output In January Down 7.9% YOY - Bloomberg

[hatrack]

Oil production from Alaska’s North Slope dropped 7.9 percent in January from a year earlier as output from wells declined and new ones weren’t added.

Production averaged 576,959 barrels a day last month, down from 626,155 in January 2012, the state tax division said on its website. December output was 582,150 barrels a day.

Alaska’s North Slope has been yielding less oil every year since 2002 as output from wells naturally declines. The shrinking supply has spurred refiners on the U.S. West Coast, including Tesoro Corp. (TSO) and Phillips 66 (PSX), to pursue rail shipments from the U.S. Midwest and prompted Flint Hills Resources LLC to shut a crude unit at its North Pole refinery in Alaska.

“We haven’t had any new fields come online this month,” Ed King, petroleum economist for Alaska’s tax division in Anchorage, Alaska, said by telephone. “So we just continue to see the same natural decline we’ve seen in previous months.”

EDIT

http://www.bloomberg.com/news/2013-02-01/alaska-january-crude-output-down-7-9-percent-from-year-earlier.html

[Tippy]

1. Watch the price JUMP...

[Arctic Dave]

2. North Slope oil corporations have intentionally slowed production

to justify their 2 billion dollar tax cuts. A lot of politics are going on right now. The governor(oil lobbyist, not a joke) is trying for higher office and if he can say his give away "worked" to spur growth the he looks like the hero.

We are also in the lag time between exploration and production. We have a number of companies drilling right now but it take more time then in the south to get fields on line.

[NickB79]

5. Intentionally slowing production, since 2002?

Alaska’s North Slope has been yielding less oil every year since 2002 as output from wells naturally declines.

[Arctic Dave]

7. The production curve has been down through natural decline

but the major companies have been intentionally shelving projects recently to help pass the 2 billion dollar give away.

On the other hand we have several smaller outfits that are drilling and producing without the help little help from the majors. Since there is very little infrasctucture up here the smaller outfits have to pay to use the infrastructure in place and they are being bent over by the big guys.

Also, since we do have very little infrastructure, unlike down south, it can take several years to bring oil to market.



I have worked on the North Slope for twenty years.

[NickB79]

3. Too little oil in the pipeline, and the flow stops

http://www.adn.com/2011/03/26/1777379/cooling-of-low-flow-oil-could.html

In February Alyeska Pipeline Service Co. president Tom Barrett told the Alaska House Resources Committee that the trans-Alaska oil pipeline system, known as TAPS, had come close to the brink of a major outage when forced into a winter shutdown after an oil leak in January at Pump Station 1 at the northern terminus of the line.

And on March 18 Barrett was back in Juneau talking to the House Finance Committee, reiterating his concerns about declining oil flow through the line and saying that the pipeline is already at a point where cooling of the slowly flowing oil as it travels from Prudhoe Bay to Valdez could lead to a major disruption in pipeline operations.

"A lot of people have asked me at what point will the declining flow of crude oil become a problem for TAPS, for Alyeska," Barrett said. "And the response is simple -- the problem exists out there now. This is not something facing us down the road; it's not theoretical; it's an issue we confront at TAPS daily, today. And without increased throughput in the line, our challenges of operating the line safely will increase over time."

Read more here: http://www.adn.com/2011/03/26/1777379/cooling-of-low-flow-oil-could.html#storylink=cpy

Long before the oil reserve runs dry, the pipeline will be inoperable.

Either we retrofit the pipeline with heating elements, or we ship the oil via tanker. Any way you look at it, Alaskan oil will soon be much more expensive to produce.

[Arctic Dave]

8. TAPS is in not in any danger of "freezing up" any time soon.

Considering we are only using half the pump stations to flow the oil. Shutting them down was a "cost savings plan" and can easily be restarted to boost flow.

[NickB79]

9. So Tom Barrett was lying? If so, why?

I've never worked in the oil industry, but how does restarting mothballed pumping stations address the lack of volume in the system? Do extra pumps increase the speed at which the oil moves through the pipeline?

[Arctic Dave]

10. During the senate hearings they said that TAPS is good for another

twenty years. That came from the people operating it.

I can look up the video later but I'm watching the game now.

Bringing up other pump stations can speed up the oil and allow for it to be reheated.

[4dsc]

4. Great example of peak oil

I would hope this turns into a good lesson about peak oil but when it comes down to it who really cares?

[NickB79]

6. We've already had several good examples

The North Sea fields and Cantarell are two glaringly clear examples in recent years, yet no one wants to pay attention.

Not until the pipeline freezes up and the flow of oil stops will anyone in the US get the message, and then I'm virtually certain they'll misinterpret the message itself by shouting "Drill, baby, drill!" as a solution.