ConocoPhillips Alaska will increase its investments in Alaska in response to approval of Senate Bill 21, the oil tax change, the company said in an April 17 press release.
Trond-Erik Johansen, president of ConocoPhillips Alaska, said the company has always believed — and communicated —“that Alaska’s North Slope is a resource-rich area.”
“But developing oil from the North Slope’s legacy fields and new satellite fields has become increasingly challenging, costly and technology-intensive,” Johansen said. “In addition, our ongoing efforts to renew aging facilities and pipeline infrastructure in order to ensure long-term safety and operational reliability will continue to require significant capital investment,” he said.
The company said that with the improvements to the state’s severance tax system, it is planning new work on the North Slope, including: bringing an additional rig into Kuparuk this spring; working with co-owners on funding a new drill site on the southwest flank of the Kuparuk River unit; and beginning regulatory/permitting activities and progressing engineering for the Greater Mooses Tooth unit in the National Petroleum Reserve-Alaska.
Johansen called those “some examples of the activities ConocoPhillips plans to kick off in the near future to help bring new investments and produce more oil from legacy and satellite fields.”
“ConocoPhillips is here for the long-term,” he said. “The new oil tax bill makes the North Slope a more attractive business environment and should lead to more investment in oil producing projects than we have seen in recent years.”
No dollar totals available
ConocoPhillips Alaska spokeswoman Natalie Lowman told Petroleum News that the total value of the additional investment wasn’t available.
She said in an April 17 email that the company is “still developing the workover schedule and work plan” for the additional rig at Kuparuk, and won’t be able to “accurately estimate the costs” until those plans are complete.
Further planning and engineering work needs to be completed for Greater Mooses Tooth and Kuparuk drill site DS-2S and those projects need to be sanctioned before the company can discuss estimates “for cost, hiring or production.”
“But we are now on a path to bring these forward for approval,” Lowman said.
ConocoPhillips reported its 2012 Alaska spending at $828 million, up from $775 million in 2011, with work on the Alpine West or CD-5 development in NPR-A accounting for much of the increase in 2012.
In legislative testimony on SB 21 additional drilling rigs were mentioned as one of the quickest changes companies could make to increase North Slope production.
Petroleum News reported in February that ConocoPhillips had applied for a U.S. Army Corps of Engineers permit to build a drill site and access road for the DS-2S project, which would develop a discovery ARCO made with the KRU 21-10-08 well in the late 1980s. ConocoPhillips appraised the discovery with the Shark Tooth No. 1 well in 2012.
Mooses Tooth is based on exploration work ConocoPhillips has done in NPR-A. The federal Mooses Tooth unit was formed in 2008, the Bears Tooth unit in 2009.
—Kristen Nelson
