State sees rise in slope spending

The state is projecting a $760 million increase in North Slope capital investments by industry next year based on projects now in development. Capital spending is expected to increase from $1.81 billion for the current state scal year, FY 2018, which ends next June 30, to $2.57 billion in FY 2919, the scal year beginning next July 1.

Most of this spending is associated with new development projects like ConocoPhillips’ Greater Mooses Tooth No. 1 and Greater Mooses Tooth No. 2 as well as Hilcorp Energy’s Moose Pad project, DNR officials told us. GMT-1 and GMT-2 are within the National Petroleum Reserve-Alaska west of the currently producing elds on the slope, which are on state-owned lands. Moose Pad is a new project within the Milne Point eld operated by Hilcorp Energy.

The spending projections are provided by North Slope operating companies as a requirement of the state production tax, and were included in the state’s fall revenue forecast, which is typically published in December.

The state is also estimating a $247 million increase in oil royalty and tax revenue for its FY 2019 budget year, thanks to rising crude oil prices, compared with an earlier estimate made in October. An average price of $57/bbl for Alaska North Slope, or ANS, crude oil is forecast for FY 2019 compared with $56/bbl for FY 2018, the current budget year.

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Brooks Range Petroleum tested a production well at its undeveloped small Mustang project and it successfully owed 1,292 barrels per day of oil. The well has been certified as capable of commercial production, which puts Brooks Range on track to complete financing to develop Mustang. An initial phase is planned with limited facilities but construction of an on-site process plant will enable to eld to produce up to 12,000 barrels per day.

Once Mustang is under development, Arctic Slope Regional Corp. is likely to move forward with development of its nearby Placer discovery, also small.

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Armstrong drops plan for winter test

Armstrong Oil and Gas has dropped plans for a winter exploration well near its Pikka discovery. ConocoPhillips is moving ahead with its Putu
2 well planned this winter as part of the deal in which Kuukpik Corp., the surface landowner, received a 1 percent royalty override.

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Eni long-reach well is underway

Eni US Operating has drilling underway for its “North Nikaitchuq” exploration program, with a 6.5-miles lateral “extended reach” well. The drill- ing is being done from an arti cial gravel island in state-owned Beaufort Sea waters to a location in federal Outer Continental Shelf leases to the north. Eni and Shell own the leases 50-50.

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Laid-off slope workers rehired

Just days after an Arctic Slope Energy Corp. oil service company laid off 92 workers after losing a support contract for Hilcorp Energy the company that replaced ASRC, Anchorage-based Northern Energy Services, hired them back.

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As expected, Cook Inlet Region Inc. of Anchorage has signed on as a partner with Fair- banks-based Doyon Ltd. in the planned new Nenana Basin exploration well, to be drilled next summer. Site work is underway.