As oil demand begins to recover, Alyeska Pipeline to ease up on North Slope production cut

The operator of the trans-Alaska pipeline said it will accept more North Slope oil as global demand begins to recover from the COVID-19 pandemic, but a major producer hasn’t changed its plans for a large cut to its oil production in June.

Alyeska Pipeline Service Co. in April had announced a 50,000-barrel reduction to daily production, cutting North Slope output by 10%, as it foresaw a period of high inventory at its Valdez tank farm in late May.

But the oil glut has slowly begun to ease.

[Analysis: Oil prices bounce back from pandemic-fueled lows, but troubles remain]

The company on Friday moved to a curtailment of just 25,000 barrels of oil daily, or a 5% drop of North Slope production, said Brigham McCown, president of the pipeline operator, in a tweet on Thursday. For a short period before that, Alyeska had increased the cut to 75,000 barrels daily.

The reduction is known as pro-rationing.

“With inventory and supply chain distribution improving @AlyeskaPipeline will be removing 2/3rds of previous proration beginning at noon ADT Friday which means #TAPS will be able to take up to 95% of crude oil shipments from Alaska’s #NorthSlope,” McCown said.

As the pipeline operator accepted less oil in April, North Slope oil production dropped from more than 500,000 barrels daily to around 420,000 about a week ago. It has risen since then.

ConocoPhillips does not plan to alter its decision to cut about half its Alaska production.

“The decision to curtail production by 100,000 barrels a day in June has been made, and that won’t change,” said Natalie Lowman, a ConocoPhillips spokeswoman.

North Slope oil production dipped below 400,000 barrels daily for many days last summer, a season when equipment maintenance often slows production.

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