Alaska oil and gas: North Slope explorers, developers busy this year.

• Author: Liles, Patricia
• Position: OIL & GAS

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Alaska's major players on the North Slope are finishing up a busy spring exploration season, despite the continued decline in global crude oil and natural gas prices through the first few months of 2009.

BIG 3 PRODUCE

BP Exploration (Alaska) Inc., ConocoPhillips and ExxonMobil--the big three of Alaska's North Slope producers--are all spending millions of dollars in the first few months of 2009 on a variety of exploration or development projects. Among these projects are facility expansion to accommodate Liberty, development of additional Alpine satellites, National Petroleum Reserve Alaska exploration drilling, and Point Thomson development drilling.

OTHER EXPLORERS

Other activity on the North Slope this year includes drilling at Badami by newcomer Savant Alaska, an exploration well near Prudhoe Bay drilled by independent UltraStar Exploration, and continued preparation for offshore exploration in the Beaufort Sea by Shell.

Further inland, Chevron continued exploration drilling on its White Hills prospect, which encompasses oil and gas leases on more than 450,000 acres of state lands, according to the company's 2008 annual report. Anadarko continued exploring for natural gas in the western foothills of the Brooks Range.

SPENDING INCREASES

All of this exploration and development activity is contributing to increased spending by North Slope developers and operators, as reported by the State Department of Revenue in its spring 2009 revenue forecast, released April 10. In that report, state officials forecast a total of $2.15 billion in capital spending for the fiscal year 2009, which ends June 30. That's an increase of more than $200 million in North Slope capital spending reported for the previous fiscal year.

State revenue officials expect capital spending on the North Slope to continue increasing in the next fiscal year. They forecast a jump of $821 million in capital spending, for a total of just under $3 billion for capital investment by North Slope developers in fiscal year 2010.

Operating expenditures follow a similar pattern of increases over the three-year period, with $2.086 billion forecast for the fiscal year 2009 and $2.357 billion estimated for the fiscal year 2010.

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PRODUCTION DECLINES

Despite the increased capital spending, North Slope oil production is forecasted to continue its annual decline, according to the report. From fiscal year 2008 through 2018, daily production on the North Slope is expected to decrease from 717,000 barrels per day to 575,000 barrels per day, a mirror of the declining production rate during the last decade or more.

Revenue from that North Slope production is expected to decline substantially, from the $6.8 billion reported in fiscal year 2008 to an anticipated $2.939...