Alaska predicts slowing decline in oil output

Reuters News
Posted: Apr 06, 2012 10:39 PM
Alaska predicts slowing decline in oil output

ANCHORAGE, Alaska (Reuters) - Oil production from Alaska's North Slope will decline by about 3 percent annually over the next decade, a slower rate than in recent years, according to a semi-annual forecast released on Friday by the Alaska Department of Revenue.

The department's spring forecast predicted that production through the current fiscal year, which ends June 30, will average 580,000 barrels per day, a 3 percent decline from production in the previous fiscal year.

Production will fall to 563,000 barrels per day in fiscal 2013, another 3 percent decline, according to the forecast. That fall will continue through the coming decade, it said.

The department's forecast also predicts that prices will average $114.59 per barrel in the current fiscal year and fall to $110.44 per barrel in Fiscal 2013.

The forecast anticipates production from new fields offsetting a deeper reduction n "currently producing sectors", where output will fall by 7 percent in the current fiscal year, 12 percent in Fiscal 2013 and decline by an average rate of 8 percent over the coming decade.

North Slope oil production peaked in 1988 at 2.1 million barrels per day. Oil flow through the Trans Alaska Pipeline System averaged 609,805 barrels per day in February and 617,509 barrels per day for the year to date, according to Alyeska Pipeline Service Co., the system's operator.

Annual production has fallen about 6 percent or more in recent years, according to state records.

Alaska depends on oil taxes, royalties and fees for 90 percent of its unrestricted state revenues. High prices are good for the state treasury, but production falls are troubling, Revenue Commissioner Bryan Butcher said in a statement.

"While higher than anticipated oil prices have given Alaska a strong revenue outlook, the long-term health of the state's finances and Alaska's economy depends on stemming the continuing decline in North Slope oil production," Butcher said.

(Reporting By Yereth Rosen; Editing by Ron Popeski)