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Vol. 26, No.8 Week of February 21, 2021
Providing coverage of Alaska and northern Canada's oil and gas industry

Retrenching to survive

ConocoPhillips cuts 8-9% of Alaska staff of 1,100 to ensure future success

Kay Cashman

Petroleum News

ConocoPhillips Alaska said Feb. 15 that 8-9% of its staff of 1,100 will either be laid off or accept voluntary severances - this is a separate action from the Feb. 13 layoffs connected to the appellate court decision on the Willow project (see story on this page).

Instead, the employee layoffs are related to ConocoPhillips acquisition of Texas-based Concho Resources last fall, after which employee cuts were expected company-wide.

“An EIO (expression of interest) for voluntary severance was issued to employees in early December” as part of that process, ConocoPhillips Alaska spokeswoman Natalie Lowman told Petroleum News Feb. 16.

The Alaska layoff notifications began Feb. 15 and ended Feb. 16, she said: “Some departures were immediate, and some employees will stay on a bit longer during a transition period,” Lowman said.

“This past year has emphasized the need to stay focused on cost and become more efficient in what we do. With the acquisition of Concho, we have revisited our overall structure and that has resulted in job losses company-wide. We must be set up to succeed long term and be able to provide jobs long term - across industry cycles and during energy transitions.”

Lowman said “affected employees will receive severance, outplacement services, and other benefits offered under existing HR policies. … Our people are important to the company, and they make us who we are. We do not take lightly the reality that some team members have lost their jobs.”

Putu before Willow now?

In ConocoPhillips 2020 annual report released Feb. 16, the company said the following about another Alaska development project, but this one on state and Native land:

“In late 2018, we commenced appraisal of the Putu discovery with a long-reach well from existing Alpine CD4 infrastructure. In 2019 and 2020 the long reach CD4 appraisal and supporting injector well finished drilling and testing. Production and injectivity tests confirmed development and waterflood feasibility of the reservoir. The project transitioned from appraisal to development in early 2020. Development planning is ongoing.”

Furthermore, the annual report said: “A 3D seismic survey was completed in 2020 over a 234-mile area on state and federal lands. We are currently evaluating this seismic data for future exploration opportunities.”

The Putu prospect near the village of Nuiqsut is in what ConocoPhillips terms the Narwhal trend, to the east of the Colville River. This is the same trend as the Pikka/Horseshoe trend, where Oil Search is planning the Pikka development in the massive Nanushuk formation. (Narwhal is an informal, not geologic term.)

ConocoPhillips has always planned to move forward with its Willow project in the National Petroleum Reserve-Alaska, followed by Putu. The question is, will the order of these two developments soon change because of the difficulties in working on federal land with the new administration?

What about North Slope gas?

ConocoPhillips’ position on North Slope gas development has not changed, per its 2020 report: “We remain willing to sell our Alaska North Slope Gas to interested parties on a competitive basis if a market materializes in the future,” the company concluded after a segment on North Slope gas.

“In 2016, we, along with affiliates of Exxon Mobil Corporation, BP p.l.c. and Alaska Gasline Development Corporation (AGDC), a state-owned corporation, completed preliminary FEED technical work for a potential LNG project which would liquefy and export natural gas from Alaska’s North Slope and deliver it to market.”

“In 2016, we, along with the affiliates of ExxonMobil and BP indicated our intention not to progress into the next phase of the project due to changes in the economic environment, however, AGDC decided to continue on its own, focusing primarily on permitting efforts.”

“Currently, AGDC is in the process of seeking new sponsors for the project. Given current market conditions, we no longer believe the project will advance and since there is no current market, we recorded a before-tax impairment of $841 million for the entire associated carrying value of capitalized undeveloped leasehold costs and an equity method investment related to our Alaska North Slope Gas asset.”

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