Washington — Alaska's oil producers face the prospect of sharply lower output and investment as they confront the two-pronged crisis of the Saudi/Russian price war and plunging demand from the coronavirus, US Senator Lisa Murkowski said in an interview with S&P Global Platts.

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"For our state, this is an economic hit that is going to be very, very directly and immediately felt," she said in a Capitol Crude interview.

On top of the effects of the price plunge, Alaska's North Slope producers will also have to scale back operations after a worker tested positive this week for the coronavirus. Oil companies have been taking measures for weeks to keep the virus out of Prudhoe Bay.

"There's going to be some decisions that will be made in response to that confirmed case, where activity is going to be greatly reduced," Murkowski said.

So far Murkowski is not worried that lower North Slope output will put the Trans Alaska Pipeline in any danger of shutting. The system carries North Slope production to Valdez and has a minimum flow rate needed to keep the oil warm enough to move.

TAPS was carrying about 509,000 b/d Tuesday, owner Alyeska Pipeline said.

North Slope producers need prices above $20/b to generate operating cash flow, above other US basins, according to S&P Global Platts Analytics. However, the area could withstand low price pressure better than other areas because of the difficulty of restarting shut-in wells.

"North Slope production would be a little more resilient and try to outlast the price war, but like anywhere, if prices remain low enough for long enough, unhedged North Slope production could also be at risk," said analyst Parker Fawcett.

North Slope case

A worker at BP's Prudhoe Bay oilfield tested positive for coronavirus and is in quarantine on the North Slope, a state health official said Tuesday in a briefing.

The worker was an Alaska resident who had recently traveled out of state and had returned to his job at Prudhoe Bay before state officials ordered a 14-day quarantine on travelers returning from the Lower 48 states, state Health and Social Services Commissioner Adam Crum said.

Symptoms appeared within two days of the worker's arrival. Dr. Anne Zink, the state's chief medical officer, said BP has a coronavirus plan in place and was able to conduct the required tests. BP is the operator of the Prudhoe Bay field.

North Slope field workers live in Anchorage or in Lower 48 states and rotate to jobs on the slope typically on two-week schedules.

ConocoPhillips, which operates the Kuparuk River and Alpine fields on the slope, has suspended direct flights to those fields from Anchorage and asked field employees to work an extra shift as a precaution.

BP has continued flights from Anchorage but is screening workers for symptoms as they board flights for the slope.

'Economic warfare'

As Republican chairwoman of the Senate Energy and Natural Resources Committee, Murkowski has been urging the Trump administration to take a more aggressive stance against Saudi Arabia and Russia to stabilize the oil market. She said the two countries are waging "economic warfare" to put US shale out of business.

"It's not a time to be tanking the global oil markets," she said. "Our shale producers are feeling the hit on a lot of different levels. I think this was an effort to take advantage of this particular timing."

Asked if she expects US oil and gas exports to eventually recover, Murkowski said it's too hard to predict given the unprecedented market dynamics.

"We may be in a situation where global demand is down and stays down," she said. "I don't know how long or how low, but I do think this has caused everybody to look at the global oil market and to really think about where we may go next.

"We're in a new place. We've had low oil prices before. We've had prices that go up and go down. ... We have not had this global economic impact like we're seeing from this global pandemic now. So how this shakes up the oil and gas markets, how it shakes up the supply and demand within the oil sector remains to be seen."