ConocoPhillips makes comparatively small Alaska budget cut
In ConocoPhillips' second round of spending cuts announced this morning, Alaska once again lucked out with only $200 million of the company-wide $1.6 billion capex reduction coming from the state. Alaska spending for 2020 spending was reduced March 18 from approximately $3.4 billion to $3.2 billion; the most recent announcement brings it down to about $3 billion.
Some of the reductions will come from drilling - cutting short the exploration season, such as drilling only one well at Harpoon (Harpoon 2) instead of three this winter and not starting up Doyon 26, the big extended reach drilling rig that just arrived at the CD2 pad for assembly and testing.
ConocoPhillips said it was voluntarily reducing oil production in May in the Lower 48 and Canada by about 225,000 barrels a day gross but was not curtailing output in Alaska. But that could change in future months, per company executives CEO Ryan Lance, COO Matt Fox and CFOs Don Wallette Jr., who participated in the April 16 webcast.
They said production curtailment decisions would be made on a month by month basis, subject to operating agreements and contractual obligations,
The reason the Alaska North Slope didn't see any production reductions in May was because trading for ANS crude begins a little earlier than it does for Lower 48 and Canadian crude, and the ANS price at the time was acceptable.
- KAY CASHMAN
AIDEA backs HEX on KLU deal
Anchorage-based HEX LLC has entered into a binding term sheet with the debtors and key creditors in the Chapter 11 bankruptcy of Furie Operating Alaska LLC, moving closer to its goal to acquire Furie's Cook Inlet assets.
HEX President and CEO John Hendrix confirmed the deal in an appearance at an April 15 board meeting of the Alaska Industrial Development and Export Authority in Anchorage.
At the meeting, the AIDEA board unanimously approved a resolution allowing modifications to a previously approved AIDEA development-project finance loan to HEX not to exceed $7.5 million for the acquisition of the limited liability companies that own the natural gas leases and the natural gas production infrastructure of the Kitchen Lights unit.
The April 15 resolution allows a debtor in possession loan subordinated to the AIDEA loan, as agreed to in the debtor's term sheet. The first source of repayment for the DIP loan is State of Alaska tax credits already earned but unpaid to date, subordinated to an ING tax credit debt in the tax credit waterfall, AIDEA said.
HEX aims to close the transaction by June 30, but that will be subject to resolving issues with working interest owners.
- STEVE SUTHERLIN
Point Thomson condensate production rising
According to a Petroleum News source close to ExxonMobil "two trains are now operating" at the company's eastern North Slope Point Thomson unit.
The field he said, will soon see an increase in daily production of Point Thomson condensate from around 5,000 barrels per day to 10,000, as each train is supposed to be capable of 5,000-6,000 bpd.
Since the term train is usually associated with future LNG production from Point Thomson, it likely means the company is keeping two compressors working - over the years ExxonMobil has told the state that production has been impacted by gas injection compressor availability and reliability.
Each compressor allows the field to produce 5,000-6,000 barrels a day. In its most recent plan of development for Point Thomson, ExxonMobil told the state that it is addressing issues in its gas injection equipment, has begun installing upgraded components and expects to receive and install the remaining equipment during the 2020-21 period.
The source also said much of that equipment "has been installed and is running really well."
- KAY CASHMAN
Mustang loan discussed at AIDEA board meeting
A three and a half hour executive session at the April 15 board meeting of the Alaska Industrial Development and Export Authority that included the Mustang development loan did not produce a resolution the board could vote on in the public session that followed.
"We're not taking action on the matters discussed in the executive session," AIDEA Board Chairman Dana Pruhs said after the confidential conference.
Mustang, the first oil field on Alaska's North Slope to have been developed and brought online by a small independent oil company, began production in early November under operator Brooks Range Petroleum Corp., or BRPC.
The field was offline for December, January and February per the Alaska Oil and Gas Conservation Commission's most recent North Slope oil production numbers.
Stay tuned …
- KAY CASHMAN
See full stories April 19 issue, available online Friday, April 17 at https://www.PetroleumNews.com
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