Oil companies curtail work on North Slope

Elizabeth Bluemink

Oil and gas companies on Wednesday gave a mixed forecast on their plans for work in Alaska next year.

Some announced plans to cut back on spending and drilling on the North Slope -- Conoco said it won't be drilling an exploration well for the first time in 45 years -- though they also said they will continue to pursue a handful of big, new projects.

BP said it will cut its Alaska spending by 15 percent next year, to $850 million. But it still plans to work on projects such as the proposed North Slope gas pipeline to supply North American markets and its new $1.5 billion Liberty oil field in the Beaufort Sea.

The updates were part of the two-day Resource Development Council annual conference, which began Wednesday and ends today. The pro-development trade group's Wednesday session included a speech by Gov. Sean Parnell decrying recent attempts by conservationists to list more Alaska species as federal endangered species due to climate change in the Arctic. He said he's seeking $800,000 in state funding for outside attorneys to fight the listing efforts and he wants to create a new attorney position within the state Department of Law just to handle endangered-species issues.

CONOCO GOES OFFSHORE

For the first time since 1965, ConocoPhillips will not drill a new exploration well in Alaska next year.

Instead, the company plans to focus its spending on developing its Chukchi Sea leases and making improvements at the two big oil fields it runs, Kuparuk and Alpine, said Helene Harding, vice president of North Slope operations and development.

"We're shifting our focus offshore," she said. Conoco spent more than $500 million last year to obtain its Chukchi leases in federal waters. It is now working on offshore development studies with Shell, which spent $2.1 billion to acquire leases during the same lease sale. Shell hopes to begin drilling on its leases next year.

Harding noted that the company has been the most aggressive explorer on the Slope in the recent past. It has drilled about 56 wells since 1999, though many of them didn't prove to be worth developing.

The company has said repeatedly that it believes the state's recent revisions to oil taxes will harm industry investment and cause job losses. She and other Conoco officials reiterated that on Wednesday.

Harding said the company is dedicated to developing a proposed North Slope gas pipeline, but is concerned about rising costs and other economic risks. She said the company will consider committing its gas to any pipeline proposal that is economic.

BP CUTS

John Minge, president of BP Exploration (Alaska) Inc., told RDC members his company has three big challenges in Alaska right now: oil production continues to decline, costs are rising and taxes have increased.

He said it is more appealing to an oil company like BP to invest money in the Gulf of Mexico than it is in Alaska right now, because the tax structure "is more inviting there."

He said the North Slope's vast amounts of heavy oil is not economic to develop right now given current oil prices and the state's tax structure.

EXXON BULLISH

Exxon Mobil said it is "100 percent" behind developing new wells at Point Thomson, a large oil and gas unit 60 miles east of Prudhoe Bay.

Ever since the state decided a couple of years ago to pull Exxon's leases at Point Thomson -- it cited decades without any drilling -- the company and the state have been battling for control of the potentially lucrative field. The state has returned a couple of leases, but the remainder are in court.

Exxon's Point Thomson project manager Lee Bruce said the company plans to finish two wells on the returned leases by the end of next year and start producing gas condensate, to be fed into the trans-Alaska pipeline, by the end of 2014.

The company spent $300 million on its work so far, and will hire about 600 workers for the construction work that remains, Bruce said.

Find Elizabeth Bluemink online at adn.com/contact/ebluemink or call 257-4317.


By ELIZABETH BLUEMINK
ebluemink@adn.com