ConocoPhillips is proposing a $900 million capital budget for Alaska this year.
The Houston-based major spent $775 million in Alaska in 2011, according to annual filings released by the U.S. Securities and Exchange Commission on Feb. 21.
The annual report comes as the Alaska Legislature is pondering whether to change the production tax code to spur oil industry investment in the state. Because the Alaska figures show ConocoPhillips increased profits and tax payments in 2011 and is slightly increasing spending in 2012, it should provide ammunition for policymakers on all sides of the state production tax debate.
When it comes to the majors, budgets and annual spending rarely align. For instance, ConocoPhillips spent $775 million in Alaska in 2011, but budgeted $900 million, just like this year. For 2008, ConocoPhillips budgeted $1 billion, but spent $1.4 billion. However, the $775 million ConocoPhillips spent in Alaska in 2011 is a slight increase from the $730 million spent in the state in 2010. ConocoPhillips spent $810 million in Alaska in 2009, $1.4 billion in 2008, $666 million in 2007 and $820 million in 2006.
The high 2008 spending included a record-breaking lease sale in the Chukchi Sea. In the Lower 48, ConocoPhillips is budgeting $4.8 billion for capital projects this year after spending $3.8 billion in 2010, $1.8 billion in 2009 and $2.6 billion in 2008.
Internationally, ConocoPhillips is budgeting $7.6 billion for upstream capital projects after spending $7.3 billion 2010, $5.9 billion in 2009 and $5.4 billion in 2008.
ConocoPhillips said spending in Alaska “is expected to be directed toward the Prudhoe Bay and Kuparuk fields, as well as the Alpine Field and satellites on the Western North Slope.” The company is also planning major investments in liquids-rich shale plays across the Lower 48 and oil sands in Canada, with “increased levels of investment in liquids plays and lower levels in North American conventional natural gas.”
Although the company drilled only one North Slope exploration well this winter, and none the past two winters, it did drill 41 development wells in 2011 and 47 development wells in 2010. ConocoPhillips’ spokeswoman Natalie Lowman said the budget included contingency funding in case the state changed its fiscal terms.
Higher profits, higher taxes
The spending increase follows profit increases.
ConocoPhillips earned $1.9 billion in Alaska in 2011, up from $1.7 billion in 2010 and $1.5 billion in 2009. The company produced 215,000 barrels of liquids per day in Alaska in 2011, down from 230,000 bpd in 2010 and 252,000 in 2009, while oil prices jumped.
ConocoPhillips paid $3.8 billion in income and production taxes in Alaska in 2011, up from $2.5 billion in 2010 and $1.8 billion in 2009. By comparison, it paid $1.2 billion in taxes in the Lower 48 in 2011, up from $1 billion in 2010 and $343 million in 2009.
Seen another way, ConocoPhillips paid $33.11 per barrel in non-income taxes in Alaska in 2011, up from $17.65 per barrel in 2010 and $11.62 per barrel in 2009. In the Lower 48 it paid $3.33 per barrel in 2011, $3.08 per barrel in 2010 and $2.37 per barrel in 2009.
—Eric Lidji
