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Update from Conoco on Alaska investments Trond-Erik Johansen, president of ConocoPhillips Alaska, reviews work under way since passage of bill reducing state taxes on oil Kristen Nelson Petroleum News
In April ConocoPhillips Alaska laid out work it planned in response to passage of Senate Bill 21, Gov. Sean Parnell’s oil tax revision.
In late September Trond-Erik Johansen, president of ConocoPhillips Alaska, gave the Alaska World Affairs Council an update on that work.
The addition of a rig at the ConocoPhillips Alaska-operated Kuparuk River field has resulted in 1,300 barrels of oil per day of new production online since May, Johansen said Sept. 27, and also supports 95 direct new jobs as well as some 700 indirect jobs.
In April the company also said it was working with Kuparuk co-owners to fund a new drill site on the southwest flank of the unit. Johansen said gravel will be laid this winter in preparation for construction of that new drill site, Kuparuk drill site 25.
The drill site will develop a discovery ARCO Alaska made with the KRU 21-10-08 well in the late 1980s. ConocoPhillips appraised the discovery with the Shark Tooth No. 1 well in the winter of 2012. The company began permitting work for the drill site and an access road in early 2013, with 300,000 cubic yards of gravel to be placed this winter and pipelines and power lines installed the following winter.
Johansen said first oil is expected from drill site 25 in 2015 with estimated peak production of 8,000 bpd; he pegged the development cost at $595 million.
NPR-A Johansen said the Greater Moose’s Tooth-1 development in the National Petroleum Reserve-Alaska, a major new development, would cost an estimated $890 million, with first oil in 2017 and estimated peak production of 30,000 bpd. He characterized the development as similar to CD-5 and said ConocoPhillips Alaska would seek approval for Greater Moose’s Tooth-1 in late 2014.
CD-5, sanctioned in late 2012, is a single-pad development, with a road and a bridge and pipelines over a channel of the Colville River, with crude oil sent to the Alpine facilities for processing. Construction on that project, also called Alpine West, is projected to begin in 2014 with partner approval. While first oil is estimated for late 2015 or 2016, the development is facing court challenges from environmental groups.
ConocoPhillips also plans two winter exploration wells in NPR-A, wells that Johansen said were questionable last year.
There are also projects at Prudhoe Bay, operated by BP Exploration (Alaska), and Johansen said BP has discussed those projects.
In late June Janet Weiss, president of BP Alaska, told the Resource Development Council that in addition to a $1 billion increase in Prudhoe Bay investment for the next five years, previously announced, and $3 billion in western region Prudhoe projects under evaluation, the Prudhoe owners are moving forward on development of the Sag River formation. BP is also reworking economics for Northwest Schrader at its wholly owned Milne Point field, she said.
The repeal issue Answering audience questions after his presentation, Johansen said that even though there is a referendum scheduled on Senate Bill 21, engineering for Kuparuk drill site 25 and for NPR-A is going ahead.
If the August 2014 vote turns the tax change upside down, some things may be stopped, he said.
But he noted that ConocoPhillips has hired 50 people since May and expects to have hired 120 by the end of the year. And, he said, they wouldn’t have done all these projects without SB 21.
Some would have been done, he said, but at a much slower pace.
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