Yahoo Finance ConocoPhillips slashes Alaska production amid glut, pandemic
JUNEAU, Alaska (AP) — ConocoPhillips Alaska plans to reduce its North Slope production for the month of June by about 100,000 barrels a day, or nearly half its total output, though no layoffs were included with the announcement, the company said Thursday.
The company said the decision is in response to "unacceptably 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.”
This move comes on top of a request by trans-Alaska pipeline system operator Alyeska Pipeline Service Co. that companies deliver 90% of what they had been delivering in anticipation of high inventory in May.
Natalie Lowman, a spokeswoman for ConocoPhillips Alaska, said that should be lifted by late May, which is when she said the production ramp-down announced Thursday is expected to begin.
“There are two separate actions that should not overlap,” she said by email. She said Thursday's announcement did not include layoffs.
“We continue to monitor the market situation. But at this time, based on our current outlook, we chose to maintain organization capacity so we can resume programs in the future,” she said.
For the first quarter of the year, Houston-based ConocoPhillips said its Alaska operations produced the equivalent of 218,000 barrels a day.
During April, North Slope oil prices have been below $30 a barrel and more recently have hovered around $10 a barrel. Oil is a major economic driver for the state, and one of the sectors reeling from the impacts of the coronavirus.
Four oil field service companies have notified state officials of plans to lay off around 275 workers at their North Slope operations, Alaska’s Energy Desk reported Wednesday. The layoffs include heavy equipment operators, engineers, technicians and mechanics, the outlet reported.
Meanwhile, initial unemployment claims topped 10,000 for the most recent reporting week, according to the Alaska labor department. During the same period a year ago, such claims totaled 863.
State officials have begun taking steps to reopen parts of the economy that had been restricted or ordered to close in a bid to slow the spread of the coronavirus. Gov. Mike Dunleavy has said reopening decisions will be guided by science and data.
ConocoPhillips said it will decide on a month-to-month basis whether it needs to reduce production beyond June. It said its decision is not expected to affect the operation of the 800-mile pipeline.
”The curtailment will essentially leave the oil stored in the reservoirs, available for resumption of production at a later date,” the company’s statement said, explaining its actions “underscore the extraordinary challenges currently facing the oil and natural gas industry in Alaska and elsewhere.”
The operations involved are the company’s Kuparuk River unit and the Greater Mooses Tooth and Colville River units on the western North Slope.
Alyeska reported nearly 456,000 barrels of oil moved through the pipeline on Sunday, the most current daily total available. The average throughout March was about 503,000 barrels per day, according to the company.
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Associated Press reporter Mark Thiessen contributed from Anchorage, Alaska.
