Cook Inlet oil production and royalties on the rise
(Anchorage, AK) – The State of Alaska is receiving higher royalty rates—and payments—from several Cook Inlet oil fields due to recent increases in oil production.
“Increased capital investment in the Cook Inlet fields has yielded higher employment, longer-term natural gas security, and increased oil royalty revenue to the Alaska Permanent Fund,” said Department of Natural Resources Commissioner Joe Balash.
The uptick in oil production, and royalty payments, is due to new investment at several of the inlet’s legacy assets. For example, oil production from Hilcorp Alaska’s Trading Bay Unit Monopod Platform, is approaching 2,900 barrels per day (bpd), up from 820 bpd for the first quarter of 2013, and production from Cook Inlet Energy’s Osprey Platform has increased from 226 bpd to 1,221 bpd in the same time frame.
In recent years, many Cook Inlet legacy fields have paid reduced royalties to the state due to their low oil production. With their increasing production over the past two years, the Monopod and Osprey platforms are paying the full royalty rate of 12.5 percent for the first time since 2007 and 2002, respectively. At Hilcorp’s Granite Point, state royalty rates have increased from 10 to 12.5 percent due to an increase in production from 1,173 bpd in the first quarter of 2014 to 1,375 bpd in the second quarter of 2014.
While royalty rates are just one factor in the size of royalty payments, total State of Alaska royalties for Cook Inlet oil have increased from $14 million in the first half of 2013 to $24.9 million in the first half of 2014 – an increase of nearly 78 percent. Oil production in the inlet has increased from 13,087 barrels per day to 16,288 barrels per day – an increase of nearly 25 percent – in the same time period. “Increases in production from mature fields such as these are not possible without significant investment by the operators,” said Division of Oil and Gas Director Bill Barron.
During 2013 and in 2014 to date, a total of 29 new Cook Inlet wells were completed – 12 targeting gas and 17 targeting oil.
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Posted: August 14, 2014