Oil production in Cook Inlet will continue to decline as North Slope holds steady, state says

a Cook Inlet oil platform
An oil platform in Cook Inlet. (Rashah McChesney/Alaska’s Energy Desk)

Alaska is expecting to see an average of 501,000 barrels of oil produced per day on its lands and waters through the next five years — representing a slight increase due to an expected new slate of projects on the North Slope. The Alaska Division of Oil and Gas made that forecast Monday, during a presentation to the Alaska House Finance Committee.

Travis Peltier is a petroleum reservoir engineer with the division. He told committee members the vast majority of oil production in Alaska — about 492,000 barrels per day — will come from the North Slope.

But he said the few thousand barrels per day produced in Cook Inlet have an important use in the state.

“Oil from the Cook Inlet basin is critical to the supply of in-state refineries,” Peltier said. “So a lot of usage comes out of the oil that we generate in the Cook Inlet itself.”

The production forecast is part of a group of presentations requested at the start of each legislative session, to help the Legislature determine how to shape the budget for the next fiscal year.

Oil production in Cook Inlet doesn’t factor much into the state’s budgeting process, since it contributes relatively little revenue.

The basin produced an average 9,406 barrels of oil a day in the last fiscal year, according to the division’s presentation, down from a recent peak of 16,585 barrels in fiscal year 2016. The division estimates those numbers to hold somewhat steady over the next five years, with a gradual decline over the next decade.

a bar graph of Cook Inlet oil production
An estimate of average barrels of oil produced daily from Cook Inlet, spanning the 2016 through 2022 fiscal years. (From Alaska Department of Natural Resources)

The division also said one unit in Cook Inlet, the Middle Ground Shoal, is still offline after a Hilcorp-owned fuel gas pipeline running to the unit sprung a leak in 2021. That platform was responsible for about 930 barrels of oil a day.

“And production from that field is currently suspended,” Peltier said. “So zero production is coming out of there right now.”

In its presentations to the Legislature, the division takes note of projects that have the potential to add significant amount of oil production to the state. The division didn’t note any new projects in the inlet.

But Hilcorp and south Peninsula-based BlueCrest are exploring some potential oil prospects in the Ninilchik area, according to a new activity map from the division.

Producers on the North Slope, on the other hand, are planning 17 new exploration and development projects in the next few years, according to the presentation, including the Willow and Pikka projects. That’s as oil prices remain high and companies bounce back from the pandemic.

The North Slope averaged 476,490 barrels of oil per day in the last fiscal year. It’s seen relatively little decline for an aging oil field due to field maintenance, according to the division.

Gas forecast coming down the pike

The department’s presentation was just about Alaska oil and didn’t include any information about Cook Inlet gas.

A highly anticipated forecast on the gas supply in Cook Inlet is coming out shortly, said Sean Clifton with the Division of Oil and Gas — hopefully by the end of the week.

That forecast will come amid warnings from producer Hilcorp that it is uncertain about the future of its natural gas supply and could reconsider future contracts with gas-reliant Railbelt utilities like Homer Electric Association.

Ben Boettger is an energy organizer for Cook Inletkeeper and for the Alaska Public Interest Research Group. He said it’s important that Alaskans have access to that forecast and he’s glad the information will be available soon.

“Gas prices and gas availability really, really affect us all, in very fundamental ways,” Boettger said. “And people need to have good information about it.”

He said a lot has changed since the last time there was a public update on gas availability in the inlet, in 2018.

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