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ConocoPhillips reaffirms Alaska production cut even as TAPS ramps flows back up
ALASKA
CONOCOPHILLIPS, the largest oil producer in Alaska, has reaffirmed a plan to cut output by around 100,000 barrels per day (bpd) in the state in June. The figure represents around half of ConocoPhillips’ oil production in Alaska.
The decision to cut output by this amount was first announced on April 30, and will be implemented despite Alyeska Pipeline Ser- vice’s move to ease temporary restrictions on oil flows through the Trans-Alaska Pipeline System (TAPS).
Alyeska had first imposed the restrictions, which initially translated into a 10% cut to pro- duction on Alaska’s North Slope, in late April as the coronavirus (COVID-19) pandemic crippled oil demand. This was subsequently increased to 15% of production on May 8, as the company sought to avoid a storage capacity crunch in the town of Valdez, from where the crude is shipped to refineries on the US West Coast by tanker.
On May 15, Alyeska moved to ease the restriction so that it now equates to 5% of North Slope output, or 25,000 bpd. This had come in response to early signs that demand was creep- ing back up as lockdowns across the world were being cautiously eased.
“It is a big deal to be able to adjust a proration and get back to business, where every barrel that producersintendtomove,wecanmove,”anAly- eska spokeswoman, Michelle Egan, was quoted by Alaska Public Media as saying on May 19.
“That’s what we’re here for.”
No timeline has been given for when the
restrictions could be removed altogether.
Larry Persily, a journalist and former deputy commissioner at the Alaska Department of Rev- enue, described the easing of restrictions on the TAPS as “the first sliver of good news for Alaska North Slope oil producers”, indicating that the
state’s crude had a place to go.
“It’s more of an indication that there’s capacity
on the West Coast, at the refineries and in stor- age,” he was reported by Alaska Public Media as saying. “So they’re going to up production because there’s a place to put it. There’s someone who wants it. And prices are higher.” He warned, however, that there was still plenty of bad news for Alaska’s oil industry.
Indeed, ConocoPhillips’ planned produc- tion cut is included in this spate of bad news. The company’s output rampdown is scheduled to begin in late May, and forms part of a broader move to scale back its production across the US and elsewhere. ConocoPhillips said previously that the curtailment was not anticipated to affect operations on the TAPS.
The company has not specified when it would restore production, saying any extension of the curtailment would be determined on a month- by-month basis.
Alyeska is jointly owned by ConocoPhil- lips, BP and ExxonMobil – all North Slope producers.™
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w w w . N E W S B A S E . c o m Week 21 28•May•2020