GMT-2 is a go
ConocoPhillips sanctions development; reports increased Alaska income
Following a federal record of decision, allowing ConocoPhillips to proceed with its proposed Greater Mooses Tooth 2 development in the northeastern National Petroleum Reserve-Alaska, the ConocoPhillips board has sanctioned the project. On Oct. 25 the company announced that a final investment decision had been made, enabling the GMT-2 project to proceed.
SUBHED: Increased earnings
The announcement coincided with the company’s publication of its results for the third quarter of this year, results which reflect a positive situation for the company in Alaska. The company reported that its third quarter adjusted earnings in Alaska had increased from $103 million in 2017 to $427 million in 2018. Earnings for the first nine months of the year increased from $291 million to $1.3 billion. Those results came in the context of a similar uptick of ConocoPhillips’ worldwide earnings: Overall the company’s quarterly adjusted earnings increased from $198 million to $1.6 billion, with earnings for the first nine months of the year increasing from $199 million to $4.0 billion.
ConocoPhillips primarily attributes its increasing profitability to the rising price of oil.
High oil price not assumedDuring an Oct. 25 earnings call Ryan Lance, ConocoPhillips chairman and CEO, emphasized that the company is still basing its planning on a West Texas Intermediate oil price of less than $40 per barrel for sustaining production and that the company was not ramping up activity to chase higher oil prices. Lance also commented that ConocoPhillips anticipates maintaining its capital expenditure in 2019 at around its 2018 level, exclusive of acquisitions such as the recent purchase of Anadarko’s Alaska interests. The company anticipates announcing its 2019 plans in December.
The GMT-2 developmentThe GMT-2 development, to which ConocoPhillips has now committed, is the latest of a series of step-out developments from the Colville River delta west into the NPR-A. Previous developments in this series consist of the CD-5 pad and Greater Mooses Tooth-1.
GMT-2, at a total cost of around $1.3 billion, will involve the construction of a new 14-acre pad and up to 48 wells, an 8.2-mile road and an 8.6-mile pipeline connecting GMT-2 with GMT-1. Production is expected to peak at 35,000 to 40,000 barrels per day.
ConocoPhillips spokeswoman Natalie Lowman has told Petroleum News that detailed design for the project is underway and that the company plans to lay gravel for the project in early 2019. There will be three construction seasons, beginning in the winter of 2019-20, with construction employment possibly peaking at around 700 jobs. ConocoPhillips anticipates first oil in the fourth quarter of 2021, Lowman told Petroleum News.
WillowLooking further into the future, the Bureau of Land Management is preparing an environmental impact statement for ConocoPhillips’ proposed Willow development, a potential major NPR-A oil field in the Bear Tooth unit, to the west of Mooses Tooth. Depending on the timing of the EIS and the development schedule, first oil could flow from Willow around 2024-25, with a peak production rate as high as 100,000 barrels per day.