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January 16, 2009 --- Vol. 15, No. 7January 2009

Conoco cuts spending companywide, including Alaska

ConocoPhillips is budgeting a 20 percent reduction in capital spending in Alaska this coming year, but doesn’t expect to cancel any major programs or exploration drilling.

The Houston-based oil company unveiled a $12.5 billion capital-spending plan today, which represents an 18 percent reduction from the $15.3 billion budgeted in 2008.

Although the company did not release a dollar amount for Alaska, spokesman Natalie Knox Lowman said, “We expect about 20 percent less than our 2008 capital budget.”

ConocoPhillips budgeted around $1 billion for Alaska for 2008.

The reduction in spending will likely hit regular drilling work, as opposed to the exploration program planned for this winter or continued work in the Chukchi Sea.

Drilling will be reduced. That’s going to be kind of the general decline,” Lowman said.

The spending plan released by ConocoPhillips specifically mentions “continued development” of the Prudhoe Bay and Kuparuk units, and the Alpine field and satellites, but leaves out the West Sak heavy oil deposit, included in the budget in recent years.

“We have slowed work at West Sak,” Lowman said, adding that the sharp decline in oil prices over the past few months forced the company to focus on “high-margin light oil.”

ConocoPhillips still plans on drilling two exploration wells in the National Petroleum Reserve-Alaska this winter, and recently applied for its first permit for the program.

See full story in the Jan. 25 issue of Petroleum News, which will be online at noon Friday, Jan. 23, at www.petroleumnews.com.

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