Another billion barrels - focus on Alaska's oil industry.

• Author: Tyson, Ray

After last year's unmerciful beating, employment in what remains of the state's beleaguered oilfield service industry rebounded during the first half of 1993, regaining much of the turf it lost in 1992. But other leading oil indicators, production and crude prices, were running well below expectations moving into the last half of the year.

Representing about 85 percent of state income, North Slope oil production decreased five out of the first six months of the year, largely because of disruptions caused by field and maintenance work and unseasonably warm temperatures that affect gas-operated machinery in the Arctic.

Averaging 1.634 million barrels a day for the first six months of 1993, crude production was about 31,000 barrels a day below official state forecasts for the year and about 100,000 barrels below last year's average daily rate. Additional hits were expected during the third quarter of the year as workers prepared to install GHX-2 gas-handling modules.

A two-season project, GHX-2 ultimately will serve to boost daily output from the supergiant Prudhoe Bay field by roughly 100,000 barrels when fully operational late next year. The first sealift, containing three of the largest modules ever delivered to Alaska, arrived on the North Slope in early August.

While the GHX-2 project at Prudhoe Bay and start-up of the new Point McIntyre field are expected to temporarily stem the production slide, the long-term forecast calls for rapidly falling output after 1995, as Prudhoe Bay, -- which accounts for about three-fourths of Alaska's oil production--slips farther into natural decline.

Price Predicament

More difficult to predict are oil prices, a huge factor that can play havoc with Alaska's oil-dependent state budget, set in advance of royalty and tax collections. A forecast miscue of even $1 per barrel translates to roughly $150 million in income.

As the state moved into its new fiscal year July 1, oil prices were lagging about $2 a barrel behind the amount required to support this year's $2.5-billion operating budget. Chuck Logsdon, the state's chief petroleum economist, says world markets are a little nervous.

"There's a feeling that oil prices are going to go up in the future. At the same time, there's plenty of oil available right now. You've got this tension, so it's created a fairly volatile but weak market," he says.

For one, oil analysts explain, Kuwait's desire to further increase production to pay for war damage, and Iraq's...