Legislature(2017 - 2018)BUTROVICH 205

01/26/2018 03:30 PM RESOURCES

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Audio Topic
03:30:15 PM Start
03:31:20 PM Overview: Oil and Gas Production Forecast
04:19:44 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Overview: Alaska's Oil Production Forecast TELECONFERENCED
- Department of Natural Resources
Division of Oil & Gas
-- Testimony <Invitation Only> --
                    ALASKA STATE LEGISLATURE                                                                                  
              SENATE RESOURCES STANDING COMMITTEE                                                                             
                        January 26, 2018                                                                                        
                           3:30 p.m.                                                                                            
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Cathy Giessel, Chair                                                                                                    
Senator John Coghill, Vice Chair                                                                                                
Senator Natasha Von Imhof                                                                                                       
Senator Bert Stedman                                                                                                            
Senator Kevin Meyer                                                                                                             
Senator Click Bishop                                                                                                            
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Bill Wielechowski                                                                                                       
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
OVERVIEW: OIL AND GAS PRODUCTION FORECAST                                                                                       
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
PAUL DECKER, Petroleum Geologist and Manager                                                                                    
Resource Evaluation Section                                                                                                     
Division of Oil and Gas                                                                                                         
Department of Natural Resources (DNR)                                                                                           
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Presented overview of the oil and gas                                                                     
production forecast.                                                                                                            
                                                                                                                                
ED KING, Special Assistant to the Commissioner                                                                                  
Department of Natural Resources (DNR)                                                                                           
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Presented overview of the oil and gas                                                                     
production forecast.                                                                                                            
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:30:15 PM                                                                                                                    
CHAIR  CATHY   GIESSEL  called  the  Senate   Resources  Standing                                                             
Committee meeting  to order at 3:30  p.m. Present at the  call to                                                               
order were  Senators Stedman, Bishop, Coghill,  Von Imhof, Meyer,                                                               
and Chair Giessel. Senator Wielechowski was excused.                                                                            
           ^Overview: Oil and Gas Production Forecast                                                                       
                                                                                                                                
3:31:20 PM                                                                                                                    
           Overview: Oil and Gas Production Forecast                                                                        
                                                                                                                                
CHAIR GIESSEL  announced today's only  order of business  was the                                                               
overview of oil and gas  production forecasting by the Department                                                               
of Natural Resources.                                                                                                           
                                                                                                                                
PAUL   DECKER,   Petroleum   Geologist  and   Manager,   Resource                                                               
Evaluation  Section,  Division  of  Oil and  Gas,  Department  of                                                               
Natural Resources (DNR), Anchorage, Alaska, introduced himself.                                                                 
                                                                                                                                
ED  KING, Special  Assistant to  the Commissioner,  Department of                                                               
Natural Resources  (DNR), Juneau, Alaska, introduced  himself and                                                               
said he would be available for questions.                                                                                       
                                                                                                                                
3:32:12 PM                                                                                                                    
MR. DECKER outlined his presentation:  The purpose is to describe                                                               
the DNR  Fall 2017 production  forecast for this fiscal  year. He                                                               
would provide  an overview and highlight  production by comparing                                                               
the Fall  2017 forecast to  actual production and talk  about the                                                               
reasons  for some  of the  production growth  since 2015,  a good                                                               
news message.  He would also make  a comparison back to  the Fall                                                               
2016  forecast   and  explore  the   reasons  for  some   of  the                                                               
differences.  He would  go into  this year's  forecast objectives                                                               
and  review  the  methodology  in  following  three  tranches  of                                                               
production:  currently producing  (CP),  under development  (UD),                                                               
and under  evaluation (UE),  and review  some of  the adjustments                                                               
made to  the methodology over  the last  year to better  meet the                                                               
needs of the Legislature and  the Department of Revenue (DOR). He                                                               
would review some of the results,  both near term and longer term                                                               
and review their forecast relative to recent production.                                                                        
                                                                                                                                
3:33:17 PM                                                                                                                    
MR. DECKER said  everything in the forecast  is probabilistic and                                                               
is presented  in a  range. Happily, production  is square  in the                                                               
mid-range, and overall  the average for FY18 is  expected to come                                                               
in at  550,100 barrels  per day. The  current departure  from the                                                               
actual forecast is less than 1 percent.                                                                                         
                                                                                                                                
3:35:05 PM                                                                                                                    
MR.  KING said  that  550,000-barrel number  is total  production                                                               
including the North Slope and  Cook Inlet. The North Slope number                                                               
is more like 533,000 barrels.                                                                                                   
                                                                                                                                
3:35:23 PM                                                                                                                    
MR. DECKER  said some  of the  reasons for  the recent  growth in                                                               
production is  from new  projects coming  on and  efficiencies in                                                               
some  older large  fields. The  Kuparuk Unit  drill site  (DS)-2S                                                               
(Sharks Tooth)  has made  a significant  contribution as  did the                                                               
Colville  River   CD-5.  The  Prudhoe  Bay   Unit  has  increased                                                               
efficiency  overall  which  has resulted  in  holding  production                                                               
flat, for  example: non-drilling rig workovers  and bringing back                                                               
wells on the  inactive list. The reservoir models  continue to be                                                               
refined, which  helps identify  targets for  additional workovers                                                               
or sidetracks  and things  like that in  the subsurface,  and the                                                               
facilities  modeling  has  come  a   long  way  in  planning  and                                                               
maintenance and the turn-around events.                                                                                         
                                                                                                                                
3:37:34 PM                                                                                                                    
Future projects coming  in: the 1H-News Project  at the northeast                                                               
West Sak  in the  Kuparuk River  Unit is  already online  and the                                                               
GMT-1 Lookout  Discovery in NPR-A  is going  to come on  later in                                                               
2018. Hilcorp will  be drilling a substantial number  of wells in                                                               
the Kuparuk  and Shrader  Bluff formations  from their  new Milne                                                               
Point Moose Pad.  Further out, the Pikka  Horseshoe trend started                                                               
development in the north part and  is expected to come on line in                                                               
2023, and  the GMT-2  (further out in  NPR-A from  GMT-1) another                                                               
Jurassic  sands Spark  Rendezvous  accumulation,  and the  Willow                                                               
accumulation from the Nanushuk formation are unfolding.                                                                         
                                                                                                                                
3:38:45 PM                                                                                                                    
MR. DECKER  said some  old discoveries  are moving  forward, like                                                               
Liberty that has been on the books for a couple decades.                                                                        
                                                                                                                                
Why  the  difference in  the  outlook  for this  year's  forecast                                                               
versus  last  year's?   Mr.  Decker  said  this   year  they  are                                                               
considerably  more optimistic.  What is  up  in 2016  that is  no                                                               
longer  true?  Not just  the  forecasters,  but the  industry  in                                                               
general, was  pretty gloomy about  trends on the North  Slope, he                                                               
said.  Everyone  was  struggling  with  the  price  falling.  So,                                                               
companies  decreased their  commitments of  capital expenditures,                                                               
which resulted  in 80 percent  of the forecasted pools  in Alaska                                                               
had  no  plans  for  new  drilling  in  2017.  All  those  things                                                               
contributed  to an  increasing decline  story as  opposed to  the                                                               
leveling off that they see now.                                                                                                 
                                                                                                                                
MR. DECKER said  some of the adjustments in  this year's forecast                                                               
have  been made  because of  the shortcomings  in their  forecast                                                               
last year and  explained that in the past they  were very focused                                                               
on  correcting an  over-optimistic bias  in the  long term.  This                                                               
year,  realizing just  how  important  the short-term,  month-to-                                                               
month  seasonal fluctuation  numbers are  to the  legislature and                                                               
the Department  of Revenue (DOR) introduced  seasonal adjustments                                                               
and monthly predictions into their forecast.                                                                                    
                                                                                                                                
3:40:40 PM                                                                                                                    
CHAIR  GIESSEL  said some  of  the  data  that  was used  in  the                                                               
previous methodology used some  confidential information from the                                                               
companies and asked if they are still doing that.                                                                               
                                                                                                                                
MR. DECKER  answered yes.  They continue to  have those  kinds of                                                               
meetings and will likely continue them into the future.                                                                         
                                                                                                                                
SENATOR STEDMAN  said he  understood that a  couple times  a year                                                               
industry gives  them an idea of  what they expect capex  and opex                                                               
to  be,  so   that  data  can  be  updated.  He   asked  if  this                                                               
confidential data  is included  in those  discussions or  is this                                                               
another data  source outside  of what  they have  normally talked                                                               
about before.                                                                                                                   
                                                                                                                                
MR.  DECKER replied  that  this  data has  been  included in  the                                                               
forecasting process  for some time,  not directly,  but informing                                                               
the overall forecast.                                                                                                           
                                                                                                                                
MR. KING  added that capex  and opex information is  collected by                                                               
the DOR  to forecast  their tax revenues,  but DNR  generates its                                                               
revenues off royalties, which is  gross figure, so they don't pay                                                               
as much  attention to  capex and  opex. Data is  given to  DOR as                                                               
taxpayer confidential information and  that information is shared                                                               
with DNR  after DNR has  signed confidentiality  agreements. That                                                               
information is included as under-evaluation (UE) or under-                                                                      
development (UD) layers of the forecast.                                                                                        
                                                                                                                                
3:43:04 PM                                                                                                                    
The other half of the forecast,  what is normally called the base                                                               
forecast (currently  producing tranche)  is all done  with Alaska                                                               
Oil and  Gas Conservation Commission  (AOGCC) data. In  the past,                                                               
that was done  with confidential DOR data  and held confidential,                                                               
which limited DNR's ability to  disaggregate those numbers. Using                                                               
publicly-available  data  for the  base  forecast,  they can  now                                                               
speak  much  more confidently  and  deeply  about some  of  those                                                               
fields and their production levels.                                                                                             
                                                                                                                                
SENATOR STEDMAN remarked that the  process is similar to what has                                                               
been used historically.                                                                                                         
                                                                                                                                
MR. KING  agreed and added that  DNR is using the  same data-set,                                                               
but the difference  is in how the modeling is  done. In the past,                                                               
"discrete models"  were used and  now they are  using "stochastic                                                               
models."                                                                                                                        
                                                                                                                                
3:44:18 PM                                                                                                                    
MR. DECKER launched into more of  the nuts and bolts and outcomes                                                               
of  the 2017  forecast. The  objective was  to provide  a 10-year                                                               
official  production  forecast  for   the  Revenue  Sources  Book                                                               
instead of five years, a significant change.                                                                                    
                                                                                                                                
They also tried to increase  focus on near-term accuracy by using                                                               
monthly  calculations   of  production  that  show   very  strong                                                               
seasonality, whereas  previously they  were looking  at straight-                                                               
line annual  trends. More  emphasis is  now placed  on evaluating                                                               
currently producing fields as the  better predictor of the future                                                               
rather than the long-term over-all trend of things.                                                                             
                                                                                                                                
MR.  DECKER  said  slide  8  shows  how  the  three  tranches  of                                                               
production  fall into  the forecast.  They have  different timing                                                               
criteria as  well as  different levels of  confidence in  how the                                                               
prediction is going to work as expected.                                                                                        
        -Currently producing (CP): decline analysis from                                                                        
     public data                                                                                                                
     -Under development(UD): incremental oil from years 2-5                                                                     
     of the forecast - a high chance of success projects                                                                        
     -Under evaluation (UE): likely to occur in years 2-10                                                                      
     of the forecast                                                                                                            
                                                                                                                                
He explained  that the UE  projects don't necessarily have  to be                                                               
scheduled and part  of an annual budget; they are  all subject to                                                               
the same kind of probabilistic stochastic treatments.                                                                           
                                                                                                                                
3:47:54 PM                                                                                                                    
He said  slide 9  compared from  the Fall  2016 versus  Fall 2017                                                               
forecast. He  explained that  the Fall  2016 forecast  was called                                                               
"the pot of gold," in keeping with  the idea that it was a little                                                               
bit vague and hard to pin  down but what they hoped would happen.                                                               
This year  they subjected all the  projects to the same  level of                                                               
analysis:  monthly rates  with seasonal  fluctuations versus  the                                                               
annualized rates and an emphasis on  the near term but not taking                                                               
their eyes  off the  ball for a  realistic long-range  outlook as                                                               
well. Three elements of risk  were used in evaluating UE projects                                                               
this year:                                                                                                                      
     -chance  of  occurrence  of   the  project  within  the                                                                    
     forecast window                                                                                                            
     -first  oil  start-up   date:  when  actual  production                                                                    
     starts                                                                                                                     
     -probabilistic  range in  the expected  profile of  the                                                                    
     development if it does come on line                                                                                        
                                                                                                                                
3:49:58 PM                                                                                                                    
Slide 10  depicted what  uncertainty looks  like in  each tranche                                                               
and how it is handled: Overview: Oil and Gas Production Forecast                                                                
     -CP  projects: a  relatively  small uncertainty  range,                                                                    
     especially  becomes  of  the older  fields  have  well-                                                                    
     established  behavior. They  do decline  curve analysis                                                                    
     projects  and  using  special software  that  has  been                                                                    
     developed at their request by  Schlumberger to help get                                                                    
     a  quantitative  estimate  of the  probabilistic  range                                                                    
     from P90-mean-P10 cases                                                                                                    
     -UD   projects:   they   acknowledge  there   is   more                                                                    
     uncertainty  than CP  but it's  a high  likelihood that                                                                    
     they will happen.  They assign a 95  percent chance for                                                                    
     each.  The  magnitude  of production:  samples  from  a                                                                    
     range of  possible production profiles  and do  a Monte                                                                    
     Carlo stochastic  roll-up comes  out with the  mean and                                                                    
     the ranges.                                                                                                                
     -UE   projects:   least    certain,   financial   risk,                                                                    
     occurrence risk, the price forecast is unsure                                                                              
                                                                                                                                
3:51:56 PM                                                                                                                    
Near term focus in 2017                                                                                                       
By  weighting  the  decline  curve  analysis  towards  2-5  years                                                               
results in a probabilistic range  from P90-P10 of what production                                                               
in each  of those pools should  look like in the  future. Another                                                               
change is giving  full credit to all the planned  projects in the                                                               
UD category. Previously,  the thought was that  the decline curve                                                               
analysis of the historical production  inherently factors in some                                                               
level of base drilling or  work-over activity, which is true, but                                                               
they   discovered  they   were  underestimating   last  year   UD                                                               
production by  discounting as  much as they  did. They  find that                                                               
this makes for a more  accurate near-term production empirically.                                                               
Leaving  the UD  projects in  there helps  make up  for the  rate                                                               
increases  that are  also inherent  in the  historical data  that                                                               
come from  non-drilling rate-adding jobs (the  non-rig workovers,                                                               
the facilities  streamlining, and other  operational efficiencies                                                               
that are being squeezed out of the fields).                                                                                     
                                                                                                                                
3:53:35 PM                                                                                                                    
SENATOR STEDMAN  asked him to  talk a  little bit about  how they                                                               
plan on  dealing with 1002 potential  and the impact it  may have                                                               
on Point Thomson.                                                                                                               
                                                                                                                                
MR.  DECKER replied  they  do not  include  ANWR for  forecasting                                                               
purposes,  even  in UE  projects  that  haven't resulted  in  any                                                               
discovery of  oil. They also  exclude it based on  expectation of                                                               
production  within  10 years,  all  primarily  because it  hasn't                                                               
yielded any discovery to evaluate.                                                                                              
                                                                                                                                
SENATOR  STEDMAN said  there are  expectations  of seismic  work,                                                               
leases, and litigation, and asked  if there is any information on                                                               
that type of time horizon.                                                                                                      
                                                                                                                                
3:55:40 PM                                                                                                                    
MR. DECKER said  he understood the desire to know  more about how                                                               
ANWR will play out, but he didn't  have a good way to address all                                                               
those things.                                                                                                                   
                                                                                                                                
MR. KING said it is difficult  to make predictions far out in the                                                               
future that have  any value. That is why their  forecasts are re-                                                               
evaluated  every  year.  Historically,  the DOR  did  attempt  at                                                               
include fields  that were  yet to be  found, and  those forecasts                                                               
compared to  what actually happened were  overly optimistic. They                                                               
tried  to not  completely  throw out  the  production from  those                                                               
fields that  aren't well delineated  or lack information,  but to                                                               
honor the  amount of  information they don't  have by  applying a                                                               
"chance factor,"  a range of  uncertainty around  production rate                                                               
and when  it might occur.  Instead of saying  a unit or  field is                                                               
going to come  on at 100,000 barrels/day 10 years  from now, they                                                               
now say: include  5,000 barrels based on what they  know now. The                                                               
model gets  reassessed and updated  as they continue to  move. If                                                               
the  project continues  to stay  on schedule,  more contributions                                                               
are accounted in the forecast.                                                                                                  
                                                                                                                                
MR.  DECKER added  the DOR's  commercial division  has undertaken                                                               
modeling of potential production and  revenues from the ANWR 1002                                                               
Area and that  should be available on their website.  It is quite                                                               
separate from the forecasting.                                                                                                  
                                                                                                                                
3:58:17 PM                                                                                                                    
The 2017  forecast results  from the mid-1980s  were on  slide 12                                                               
depicting production  peaking at  over 2 million  barrels/day off                                                               
the  North  Slope  largely  and declining  ever  since  with  the                                                               
exception  of the  early 2000s,  because  of the  Alpine/Colville                                                               
River discovery coming on line.                                                                                                 
                                                                                                                                
Slide 13  highlighted the last  three years of  actual production                                                               
(black  line) and  added a  mean  forecast (blue  line) going  10                                                               
years out. "Whiskers" represent  the range of uncertainty growing                                                               
longer  in  the  out  years   of  the  forecast  reflecting  less                                                               
certainty. He noted  the "seamless" join between  the history and                                                               
forecast,  because last  year's  forecast didn't  have that.  The                                                               
decline was 1.5-2 percent overall.                                                                                              
                                                                                                                                
4:00:12 PM                                                                                                                    
Slide 14  mapped the  medium to long-range  UE projects.  He said                                                               
the future originates sort of in  the central part of the western                                                               
North Slope  and goes  west into  the middle  of NPR-A  and those                                                               
will probably  roll out as  a series of developments  rather than                                                               
all at one time. Smith Bay is  some ways out. It is challenged on                                                               
location,  infrastructure,  and  technical  knowledge.  It's  too                                                               
early to know how it will perform, but it is in the forecast.                                                                   
                                                                                                                                
SENATOR VON IMHOF  said an issue that is  becoming more prevalent                                                               
is roads  connecting these wells  in all seasons.  When producers                                                               
can't access their  wells for even an additional month,  it has a                                                               
ripple  effect over  time in  their ability  to produce  oil. She                                                               
asked  his department's  opinion  on  promoting year-round  road-                                                               
building  and asked  what  has  to be  done  to  get permits  and                                                               
permission to do that.                                                                                                          
                                                                                                                                
MR.  DECKER said  he was  here to  speak about  the forecast  and                                                               
couldn't  speak  for  the  commissioner,  but  the  DNR  actively                                                               
supports  the   Arctic  Strategic  Transportation   and  Resource                                                               
Project (ASTAR) project connecting communities.                                                                                 
                                                                                                                                
MR. KING  said they are  working on  the ASTAR, which  was funded                                                               
last year to  connect communities throughout the  North Slope. As                                                               
a by-product,  they expect those roads  to also open some  of the                                                               
access to resources.                                                                                                            
                                                                                                                                
SENATOR VON  IMHOF said she  would like  to learn more  about the                                                               
step-by-step   process  in   getting   ASTAR   from  concept   to                                                               
completion:  what the  roadblocks are  and potential  growth from                                                               
there.                                                                                                                          
                                                                                                                                
MR. KING  said they  would take that  into consideration  as they                                                               
prepare materials for the committee.                                                                                            
                                                                                                                                
4:05:08 PM                                                                                                                    
SENATOR BISHOP commented  that 425 miles of road had  to be built                                                               
to get to Prudhoe Bay. So, we could do this.                                                                                    
                                                                                                                                
MR. KING  said as  projects come  on line  and start  to decline,                                                               
others come  on line and replace  them. That is what  creates the                                                               
appearance of a  smooth-lined forecast, which is  the most likely                                                               
scenario.                                                                                                                       
                                                                                                                                
CHAIR GIESSEL asked where Smith Bay falls in prospectivity.                                                                     
                                                                                                                                
MR. KING answered  that Smith Bay would normally  not be included                                                               
because it's start  of production was beyond five  years, but now                                                               
that they are  looking beyond into the 10-year  window, Smith Bay                                                               
is in  that window  if it  stays on  track. So,  the contribution                                                               
from Smith Bay  is small today, but as they  move forward and get                                                               
more information, that should increase.                                                                                         
                                                                                                                                
4:07:55 PM                                                                                                                    
MR. DECKER offered  slide 15, a portfolio roll-up  of UE projects                                                               
plus the 1-H  News project, which is now  producing. He cautioned                                                               
that this  is their  best estimate of  how the  overall portfolio                                                               
should perform from 10 years out  into the future; no one profile                                                               
is  the  most likely  outcome  for  any particular  project.  The                                                               
profile is  the product  of the  risking principles  they started                                                               
using.                                                                                                                          
                                                                                                                                
4:11:53 PM                                                                                                                    
CHAIR GIESSEL  asked if the  potential capital  expenditures that                                                               
would  happen  with  the  UE   projects  were  included  as  they                                                               
calculated revenues in the Revenue Sources Book.                                                                                
                                                                                                                                
MR. DECKER answered no, but DOR would take care of that.                                                                        
                                                                                                                                
SENATOR  MEYER thanked  them for  the presentation.  He asked  if                                                               
Pikka and Willow are about the same size.                                                                                       
                                                                                                                                
MR. DECKER  replied that  Pikka is  estimated at  500-1.2 billion                                                               
barrels of  oil recovery and  Willow may be 300  million barrels.                                                               
There may be other reasons the profiles are different, though.                                                                  
                                                                                                                                
MR. KING added that the clearest  distinction is in the number of                                                               
exploration wells in those areas:  Pikka has 16 exploration wells                                                               
and Willow  has one. So, a  lot more is known  about the resource                                                               
at Pikka versus  the other. Some of the  public announcements are                                                               
pegging them both at 100,000  barrels/day range, but that doesn't                                                               
include number  of wells,  production rate, how  the rate  can be                                                               
kept, and how  fast it will decline. Just looking  at a peak rate                                                               
isn't a  good indication of  how much oil  is really going  to be                                                               
produced.  There is  a  lot more  uncertainty  around timing,  as                                                               
well. Pikka is almost through  the Environmental Impact Statement                                                               
(EIS)  process; Willow  is a  lot  earlier in  that process.  But                                                               
ConocoPhillips  did announce  in the  Petroleum News  about their                                                               
exploration activities proving up Willow.  So, next year they may                                                               
know more.                                                                                                                      
                                                                                                                                
4:15:08 PM                                                                                                                    
SENATOR  MEYER  asked  how  many wells  are  being  drilled  this                                                               
winter.                                                                                                                         
                                                                                                                                
MR. DECKER  said there is  one at  Badami. He hadn't  heard about                                                               
Liberty having any drilling.                                                                                                    
                                                                                                                                
SENATOR MEYER  said Hilcorp hopes  to drill at Liberty,  which is                                                               
offshore.                                                                                                                       
                                                                                                                                
MR. DECKER said that Eni is  drilling a 35,000 foot well offshore                                                               
of  Nikiatchuq.  ConocoPhillips  has   announced  at  least  five                                                               
penetrations  at  Willow and  one  at  Stoney  Hill. It  is  also                                                               
drilling Putu  1 and 1A in  what is formerly known  as the Tofkat                                                               
Unit. Those are  all part of the  Nanushuk Pikka-Horseshoe trend.                                                               
The Willow trend  is separate, but similar, which  could turn out                                                               
larger  with   additional  exploration  wells  and   tests  being                                                               
conducted there.                                                                                                                
                                                                                                                                
4:16:54 PM                                                                                                                    
SENATOR MEYER asked,  with the announcement of  opening more land                                                               
in NPR-A, if he anticipated more lease sales happening soon.                                                                    
                                                                                                                                
MR. DECKER  answered yes; if  a lot  of lands that  are currently                                                               
off limits  to leasing become  available, he would expect  to see                                                               
future  lease  sales  there   and  significant  participation  in                                                               
extending  that acreage  position into  lands that  are currently                                                               
unleasable. ConocoPhillips,  and to a lesser  degree some others,                                                               
have  picked up  a large  swath of  acreage over  to the  eastern                                                               
boundary of unleasable acreage and  he didn't know why they would                                                               
stop there.                                                                                                                     
                                                                                                                                
SENATOR MEYER  said Caelus had  mentioned needing $70  oil before                                                               
they could actually produce it.                                                                                                 
                                                                                                                                
MR. DECKER responded  that is very likely Nuna. He  said the Nuna                                                               
project had  received royalty  modification investments  from DNR                                                               
in the past and that may be required in the future.                                                                             
                                                                                                                                
SENATOR BISHOP  commented that he  was under the  impression this                                                               
was  the busiest  exploration season  on the  North Slope  in the                                                               
last 20 years,  and the 2004 Revenue Sources  Book estimated that                                                               
production in 2014 was supposed to be 942,000 barrels/day.                                                                      
                                                                                                                                
4:19:44 PM                                                                                                                    
CHAIR GIESSEL, finding no further comments, adjourned the Senate                                                                
Resources Committee meeting at 4:19 p.m.                                                                                        

Document Name Date/Time Subjects
Senate Resources - Hearing Agenda - 1 - 26 - 2018.pdf SRES 1/26/2018 3:30:00 PM
Oil
Sen Resources - Oil Production Forecast - 1 - 26 - 2018.pdf SRES 1/26/2018 3:30:00 PM
Oil