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Alaska Watchdog Orders Oil Well Shut-Downs

Alaska

The Alaska Oil and Gas Conservation Commission has ordered oilfield operators in the North Slope to shut down wells with a design similar to one operated by BP that spilled oil and gas in April this year as a result of permafrost thawing.

The watchdog also asked the companies to provide it with lists of these wells by the end of the year.

BP’s well in the Prudhoe Bay field spilled about 63 gallons of crude oil and 100,000 pounds of natural gas when the thawing of permafrost caused the ground to sink and increased the pressure on the well. The AOGCC is now worried that further thawing in the area could cause similar accidents in other fields. The good news is that the number of wells anchored to the permafrost instead of the rock underneath it is small.

The watchdog noted that BP was supposed to share the findings from its investigation into the April incident with other North Slope field operators, but it failed to do so, which prompted the AOGCC to issue the well shutdown orders.

Meanwhile, the Alaskan Department of Natural Resources forecast that oil production in the North Slope will rise this year for the third year in a row. The increase, of 1.7 percent, will bring crude oil production for fiscal 2018 to 524,000 bpd, from 514,900 bpd in the current fiscal year. Last year, oil production in the North Slope rose 3 percent.

Related: Iraqi Pipeline Disruption Takes 250,000 Bpd Off The Market

The President of the Alaska Oil and Gas Association, Kara Moriarty, said the increase in production was notable because it came amid lower oil prices, signaling oilfield operators in one of the United States longest-producing oil regions were now able to do more with less.

Alaska produces around 600,000 bpd of crude oil, a far cry from the peak of 2 million bpd that it hit in 1988. Prudhoe Bay is among the largest oil fields in the United States, producing a total 12.5 billion barrels over the four decades of its operation so far.

By Irina Slav for Oilprice.com

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