CRUSHING NEWS FOR ALASKA’S ECONOMY
ConocoPhillips Alaska today announced it is planning to curtail oil production of approximately 100,000 barrels per day gross for the month of June from the Kuparuk River Unit and Western North Slope (Greater Mooses Tooth and Colville River Units).
That’s one fifth of the entire pipeline flow, approximately.
The ramp-down to reduce production will begin in late May and is part of broader curtailments in the Lower 48 and other areas.
Any extensions of the curtailment beyond June will be determined on a month-to-month basis, the company said in a statement. The curtailment is not expected to impact operations of the Trans-Alaska Pipeline.
This decision was made in response to extremely low oil prices resulting from global oil demand destruction caused by the impacts of the COVID-19 pandemic, combined with a global oversupply of oil.
The curtailment will essentially leave the oil stored in the reservoirs, available for resumption of production at a later date. The actions ConocoPhillips Alaska is taking with this production curtailment underscore the extraordinary challenges currently facing the oil and natural gas industry in Alaska and elsewhere.
During the first quarter of 2020, ConocoPhillips Alaska produced 218,000 net equivalent barrels per day within the state of Alaska.
On the bright side, if ConocoPhillips sold those barrels now, they’re nearly worthless. Alaska North Slope crude was selling for $10.67 a barrel as of three days ago. The break even point for a barrel of oil in Alaska is about $40.
But while it’s in the ground, it will get a higher price later. Alaska will get its royalty share out of it eventually, but not this year.
The company is posting losses for the first-quarter of $1.7 billion, or ($1.60) per share, compared with first-quarter 2019 earnings of $1.8 billion, or $1.60 per share.
The company also announced a quarterly dividend of 42 cents per share, payable June 1, 2020, to stockholders of record at the close of business on May 11, 2020.