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Continuing a proud tradition
Kevin Meyers President and CEO of Phillips Alaska Inc.
The year 2000 was certainly a year of change for the Alaska oil industry. The merger of BP and ARCO literally transformed the face of the industry and gave birth to the newest oil company in Alaska. As part of the merger, Phillips Petroleum Co. acquired ARCO Alaska Inc. creating a new company, Phillips Alaska. But this ‘new’ company in Alaska’s oil patch is also one of its oldest because the men and women of Phillips Alaska share the proud Alaska heritage of two great companies, Phillips Petroleum and ARCO Alaska. This month we’ll celebrate our 49th year in the 49th state.
Our shared legacy began with exploration on the Kenai in 1952 and spans nearly five decades. Along the way, we’ve been a part of every major discovery and development in Alaska, starting with the Swanson River field in 1956 and including the Prudhoe Bay, Kuparuk, Lisburne, Point McIntyre and Alpine fields. It’s a legacy that has set the standard for success and responsible development, a standard that Phillips Alaska is committed to continue.
A few weeks ago, the men and women of Phillips Alaska completed the most recent chapter in our legacy with the start up of production from the Alpine oil field. This 430-million-barrel oil field was constructed with minimal impact on the environment and has set new standards for Alaskan hire, buy, and build.
At Phillips Alaska we’re proud of our past and excited about our future. Yes, we have big shoes to fill, but what better way to make our forefathers proud, than to do it bigger and better. The new Phillips Alaska is the state’s largest producer of ANS crude, the largest producer of gas, the largest state and federal leaseholder and far and away the most aggressive explorer in Alaska.
We’re major owners of oil and gas resources in Cook Inlet and on the North Slope, with interest in the Prudhoe Bay, Kuparuk, Alpine, Greater Point McIntyre and many related satellite oil fields. Our operating facilities include Kuparuk, Alpine, the Kenai LNG Plant, the Beluga Gas Field and the North Cook Inlet Platform. And we play a major role in the safe transportation of oil in Prince William Sound via Polar Tankers. Where do we go from here? So, where do we go from here? During the next decade we plan to increase our oil production and to sell our ANS natural gas. Phillips Alaska will be a cornerstone of Phillips Petroleum Co. much as ARCO Alaska was to ARCO.
This year was a major turning point for Phillips Alaska, not just due to the merger. Our North Slope crude production had been steadily dropping since the late 80’s. However, this year we stopped that decline and our net production increased slightly over what we produced in 1999.
Next year we expect our net production in Alaska to increase by 10 percent to 395,000 BOEPD. Over the next five years we plan to maintain production between 375,000 - 400,000 BOED.
We’ll achieve these production goals by increasing recovery from existing fields, and through development of our recent discoveries such as the 50-million-barrel Meltwater field. We also continue to explore, building on the 1.2 billion barrels of oil we’ve found on the North Slope over the last six years. This winter we’ll have one of our most aggressive exploration programs in recent history and will participate in 12-15 exploration wells across the North Slope, including several wells in the National Petroleum Reserve-Alaska.
We have capital program that matches our aggressive growth program. This year in Alaska, Phillips spending will increase about $50 million to $775 million. This budget includes about $200 million for the construction of our four millennium-class tankers. ANS gas to market by 2007 I couldn’t complete the story of ARCO Alaska and Phillips Alaska without mentioning natural gas. ARCO was a pioneer in gas development and constructed and operated the largest miscible injectant project in the world at Prudhoe Bay.
Phillips was also a pioneer in gas development using its LNG technology to build the first LNG export plant at Kenai in 1969.
Today the Kenai LNG plant continues its export operations and our attention is focused on Alaska North Slope gas. North Slope gas is one of the largest undeveloped assets in Phillips’ worldwide portfolio. The gas resources owned by Phillips equal 8 trillion cubic feet or about 1.5 billion barrels equivalent. As a clean-burning fuel, demand for natural gas is growing worldwide. In the United States, natural gas supplies almost 25 percent of the energy consumed. Phillips’ goal is to get ANS gas to market by the end of 2007. It’s an aggressive goal but if we all work together, we believe that we can achieve it.
And finally Phillips plans to carry on one more tradition, our commitment to the environment and to the people of Alaska. We will continue “doing it right,” while exploring for Alaska’s future and Phillips will be a good steward of Alaska’s lands and preserve them for future generations. Polar Endeavour to begin service The Polar Endeavour, the first of four millennium-class tankers will enter service this spring. These tankers are setting the standard for safety at sea with double hulls, twin engine rooms, twin propellers, twin rudders and a sophisticated navigation and control system that allows the control of the ship from a single joystick. Phillips is investing about $200 million in each ship and dedicating the ships to haul Alaska North Slope crude to the West Coast.
We’re building these tankers because Phillips expects to be producing oil in Alaska for decades to come and because we have a continued commitment to safety.
Phillips Alaska Inc. and its heritage companies, Phillips Petroleum and ARCO Alaska, have been key players in Alaska’s history book and we plan to continue that tradition. I believe the men and women of Phillips will aspire to their proud heritage in Alaska and we’ll continue to make it happen in Alaska for years to come. u
Editor’s note: Kevin Meyers is the former president of ARCO Alaska Inc.
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