|
CPAI update
Willow start-up earlier than expected; NPR-A exploration surges Kay Cashman Petroleum News
Operator ConocoPhillips Alaska Inc. is expecting first oil at its North Slope Willow project to be sooner than forecast -- "early" 2029 versus later in that year, ConocoPhillips chief executive Ryan Lance said in ConocoPhillips Nov. 6 third quarter earnings report and conference call.
"The teams are executing well, and the project is really hitting all the milestones," he said.
Willow is scheduled to produce 180,000 barrels per day of oil at peak rates.
Lance also said Nov. 6 that in 2026 the company will have "a bigger exploration program than we've had in Alaska in a number of years," the specifics of which have since been revealed in a newly released draft environmental review of ConocoPhillips plans for a major oil exploration campaign in the National Petroleum Reserve-Alaska this coming year.
Another reveal of the Nov. 6 third quarter earnings report was a revised estimate for Willow project costs: They will be approximately $1 billion more than the company's late 2023 final investment decision estimate.
The projected cost range for Willow is now $8.5 billion to $9 billion, up from $7 billion to $7.5 billion.
Lance blamed the overruns on "higher-than-expected general inflation and localized North Slope cost escalation".
2X more activity than anticipated Kirk Johnson, ConocoPhillips Senior Vice President, Global Operations, clarified Lance's statement by saying it has "been driven by the fact that we've incurred more overlap of the peak construction seasons between our project and other projects ongoing in Alaska than we had originally expected."
Johnson said there has been "roughly a 2x increase in the regional activity we expected in the state -- think labor, logistics such as trucking, marine, and then even the availability of camps for our construction work there on the Slope."
What does Lance think about the cost increase for Willow?
"Certainly, the estimated increase does impact the cost of supply of this individual project going forward. It still fits well within our portfolio," Lance said during the Q&A session of the Nov. 6 conference call. "It's still very competitive within the portfolio. And again, we think longer term. We think about the future opportunities that are going to come from this infrastructure, which is our history on the North Slope ... the satellite discoveries that we get benefit from the infrastructure that we build. We fully expect that to be the case going forward with Willow. And then ... on the back end of this, the margins are still quite attractive, because Alaska's 100% oil, sells at a premium to Brent, typically on the West Coast of the United States. So that's why we still feel very comfortable with the margin. And it's competitive in our portfolio, and it's going to deliver a project for the company that will add to its future growth and development."
Trump administration During the Nov. 6 earnings call, Lance said ConocoPhillips is working with the Trump administration "to identify some ways to streamline permitting" in the state.
"I think you saw an early read of that with the new rules that are coming out for development in the NPR-A. That's just sort of the start," he said. "There's more things coming that will give us what we think is going to be a lot more clarity to faster permitting approvals coming in Alaska going forward."
Exploration plans Per the recently released draft environmental review, CPAI is planning to conduct a one-year exploration program, which will include seismic exploration, exploration drilling, and well plugging on land managed by the Interior Department's Bureau of Land Management, or BLM, within NPR-A.
CPAI's applications were as follows:
* One oil and gas geophysical exploration permit for seismic exploration work;
* Four applications for permit to drill for four new exploration wells;
* Two notice of intent sundries with final reclamation plans for two wells with proposed plugging and abandonment, or P&A, work;
* One right-of-way, or ROW, application for access to and between the drilling and plugging well locations.
Exploration East and West There are two areas of exploration within the NPR-A specified by CPAI: Exploration West and Exploration East.
The work for Exploration East will occur near the Willow gravel mine. It will involve drilling a single exploration well, Suqqaq 4, and plugging an existing exploration well, Flat Top 1, which was originally drilled in 2014.
The work for Exploration West will occur just west of the BT1 and BT3 production pads which are part of the Bear Tooth unit. It would involve drilling three exploration wells: Kavlaq 2, Tinnik 3 and Tinmiaq 19.
In addition to drilling the three exploration wells, CPAI will plug the existing exploration well Tinmiaq 20 which was originally drilled in 2020.
All well locations in Exploration East and Exploration West are on BLM lands managed by the Arctic District Office and leased by CPAI.
Seismic exploration CPAI's seismic program will be conducted south of the Bear Tooth unit and west of the Colville River.
The three-dimensional (3D) seismic data acquisition program is designed primarily in support of future exploration and will occur between November 2025 and September 2026.
Activities will be similar to previous seismic programs conducted in the NPR-A and will include equipment and operations typical of those prior programs.
The full seismic project area of 467 square miles includes a buffer around it to facilitate safe and efficient crew movements. The total extent of the survey will be approximately 300 square miles, or 192,000 acres.
| 