North Slope oil is running below the state's forecast so far, and the price is running above it

Two of the numbers that drive Alaska's budget are moving in opposite directions. North Slope oil is flowing well below what the state assumed when it forecast this year's revenue. The price of that oil is running well above it.

The Department of Revenue's March forecast assumed 518,500 barrels a day and $75 a barrel for the year that began in July. Through Sept. 9, production averaged about 460,900 barrels a day, roughly 57,600 short. The price has gone the other way, averaging about $84 so far.

The production shortfall is partly seasonal. Summer is maintenance season on the Slope, so the fiscal year always opens in its weakest months and climbs from there. In each of the last four years the full-year average finished above the summer opening, by 4 to 10 percent. Even applying that lift, this year's opening pace points to a full year still short of the forecast by roughly 24,000 barrels a day.

The bigger issue is that 518,500 would be a jump from anything recent. Production has run between about 452,000 and 480,000 barrels a day over the past four years, so the forecast asks for about 38,000 more than the best of them. The state is counting on new oil to make up the difference, chiefly the Pikka field, the largest new development on the Slope in decades, with Willow to follow in 2029.

Pikka is ramping up, but not there yet. Santos, which operates the field, told investors Sept. 2 it was producing about 40,000 barrels a day, roughly half the 80,000 it's built to sustain. The company still expects to hit that rate by the end of September. The field has doubled its output since midsummer, and statewide production has risen with it, reaching nearly 500,000 barrels a day in early September, the strongest stretch this year.

Price has been climbing too. Alaska North Slope crude closed above $100 on Sept. 9 for the first time since June. It opened the fiscal year near $70 and has risen since, the reverse of what the department expected: its forecast assumed prices would start above $80 and decline through the year. They started below $80 and went up.

What that means for the budget cuts both ways, and the two effects roughly offset in scale. The department's own math puts the price gain at about $400 million above forecast at current levels. But the production shortfall pulls the other direction, and the state's sensitivity table doesn't net the two against each other.

Nothing here is settled. The fiscal year is ten weeks old, the forecast is a full-year figure, and the department issues a revised one each December. By then Pikka will have hit its target or missed it, and the winter production months will be under way.