Oil prices plummeted last spring as the country ground to a halt and demand for oil tanked.
Larger oil and gas companies can typically keep business afloat during hiccups like those. But for smaller companies, COVID-related burdens and high fixed costs were harder to bear. That’s why Glacier Oil and Gas officials said the company suspended operations in Cook Inlet in the spring of 2020.
But now that prices have largely bounced back, the independent producer is bringing its wells online again, said Chief Operating Officer David Pascal. Glacier, a subsidiary of Cook Inlet Energy, owns two fields on the west side of the inlet.
Larry Persily, who has worked in and reported on Alaska’s oil and gas industry, said it makes sense that smaller producers would suspend operations when they can’t make as much money. At the worst point in the collapse last year, North Slope producers cut back their output by 20%
“There’s no point producing a finite resource that you’ve paid a lot of money to lease if you’re not going to make any money or make pennies,” he said. “So if you can afford it, you just wait until prices come back up.”
This fall, when Glacier brought its facilities back online, Alaska oil prices were climbing amid global supply shortages.
Prices tumbled again this month, likely due to the emergence of the omicron variant of the coronavirus. Pascal said the company is watching the situation.
Persily said current prices are still profitable when compared to how low they were last year.
“As I’m looking yesterday, Alaska North Slope Crude was at $76 a barrel,” Persily said. “That is still very good.”
He said prices in Cook Inlet typically track with the North Slope. When Glacier Oil and Gas suspended operations last spring, North Slope crude was averaging less than $30 a barrel.
Glacier employs about 40 full-time contractors and employees in Cook Inlet. It also owns assets on the North Slope.
Pascal said the company produced close to 1,300 barrels of oil from both Cook Inlet fields last month. He said they’ve bumped up production in December.