Construction spending to rise 4 percent in 2018

Construction spending will rise 4 percent in Alaska in 2018 to $6.6 billion, pushed up by a recovery in capital spending by oil and gas companies. However, with oil taken out of the total, all other construction will be down 2 percent, to $4.1 billion, according to the latest annual construction forecast prepared by the University of Alaska Anchorage’s Institute of Social and Economic Research. ISER does the work yearly for the Associated General Contractors of Alaska and the Construction Industry Progress Fund.

Oil spending, on new projects, is expected to rise 15 percent to $2.55 billion. “After falling by half in the last two years, spending by the petroleum industry will start to recover because of the rise in the price of oil and more support for the industry from the federal and state governments,” ISER said. Mining capital outlays are forecast to rise 6 percent, to $239 million. Expenditures for other basic industries and for utilities are forecast to rise 10 percent and 4 percent respectively. However, construction spending in health care, commercial building and new residential will drop, according to the ISER data. Public sector spending will drop 1 percent in 2018, with increases in defense-related projects (up 11 percent); highways (up 6 percent) and airports, ports and harbor spending offset by a 20 percent decline in school facility spending, a 16 percent drop in other local and state projects and a 1 percent decline in non-defense federal projects.

Production from Alpine, Kuparuk oil fields increased in 2017

Despite the wobble in oil prices over the last week there’s more good news from the North Slope. Producers there are continuing to expand output with new projects coming online. The latest we have is that ConocoPhillips expanded production at its Alpine field by 7.2 percent in 2017 over 2016. Production in the larger Kuparuk River field, also ConocoPhillips-operated, was up by 5.9 percent year-over-year. Data was compiled by the state Dept. of Revenue at our request.

Higher production levels continued into January, according to the state data.

The Kuparuk River field increased production from an average of 102,194 barrels per day in 2016 to 108,192 barrels per day in 2017. Alpine increased from 58,701 barrels per day in 2016 to 62,943 barrels per day in 2017. In the large Prudhoe Bay field, which produces about half of the total North Slope production, field operator BP essentially attended the field decline for the third year in row. Prudhoe showed a 0.2 percent decline in 2017 over 2016, according to the state data, or 280,909 barrels per day on average compared with 280,313 barrels per day in 2017. Altogether, total North Slope production was 1.4 percent higher in 2017 than 2016. Alyeska Pipeline Service Co. said it moved an average of 527,323 barrels daily in 2017 compared with 517,868 barrels per day on average in 2016.

ConocoPhillips spokeswoman Natalie Lowman told us the highly-successful CD-5 production pad in the Alpine field was a big factor in that field’s improved performance. “CD-5 has had better-than-expected production. It is currently at 37,000 barrels per day compared with the original estimate of 16,000 barrels per day,” she said. The company added more wells to CD-5 last year after the initial production was better than expected.

Kuparuk River output was aided by a new field project on line, North East West Sak, or NEWS, that was completed two months early and has since enjoyed better-than expected production. Results in both fields are also aided by completion of new-technology “pentra-lateral” wells, where five underground producing legs are drilled with rotary rigs off one vertical well to the surface, and results from coiled-tubing drilling improved by better use of geoscience and reservoir targeting, she said. Producers were generally able to achieve higher operating efficiencies with data analytics and suggestions from company employees.