Bowles: Can’t lose sight of prices

Although ConocoPhillips does not release its annual budget until mid-December, ConocoPhillips Alaska President Jim Bowles reiterated plans for the company to drill two exploration wells in the National Petroleum Reserve-Alaska this winter.

The Grandview and Pioneer wells would further delineate the Greater Mooses Tooth unit, formed earlier this year. Like the BP Liberty project, current exploration and any future production in the NPR-A isn’t covered by the state production tax code.

ConocoPhillips is still working to permit development of the CD-5 pad, also known as Alpine West. The satellite of the Alpine field would allow the company to bridge some of the gap between Greater Mooses Tooth and the existing North Slope processing facilities.

Like BP, Bowles also said oil at $50 a barrel in 2008 didn’t compare to similar prices in 2005 because “the fundamental cost of our business has changed over the past couple of years.” He said producing a barrel of oil in the Arctic costs between $25 and $50 today.

“We cannot lose sight of where we are in oil prices today, and that will dictate… what our level of spending will be in the future,” Bowles said.

Bowles added that most major projects on the slope operate on long-term cycles.

“What we need to do is to stay focused on the near term and make sure we don’t let our fundamentals get behind us as far as what’s happening on the slope,” Bowles said.

He again blamed recent tax changes for a decision to cancel a $300 million project that would have allowed a diesel plant at Kuparuk to produce Ultra Low Sulfur Diesel, which will be a legally required fuel in coming years. Instead, ConocoPhillips will truck 30 million gallons of Ultra Low Sulfur Diesel to the North Slope on the Dalton Highway.

The state disputes the connection between the tax and the decision to cancel the project.

—Eric Lidji