ConocoPhillips has laid out its global plans for the next year, with its base capital spending levels in Alaska falling -- but its overall investment in-state remaining static due to a series of projects.
In its 2016 operating plan unveiled Thursday, the firm -- one of the "Big Three" oil companies operating in Alaska, and a partner with the state in a planned natural gas pipeline -- said it expected to have a $15.4 billion worldwide budget for the year, split evenly at $7.7 billion apiece in capital and operating costs.
Ryan Lance, the company's chairman and CEO, said the reduced capital budget, about 25 percent smaller than 2015's, was the product of a global operating environment he called "challenging."
"We are significantly reducing capital and operating costs, while maintaining our commitment to safety and asset integrity," Lance said in a statement on the operating plan. "We also retain the flexibility to adjust capital spending in response to market factors. Our plan highlights the actions we accelerated over the past year to position our company for low and volatile prices."
Alaska, with relatively minor reductions, was the bright spot in ConocoPhillips' capital budget. Cuts across the company's operations in the Lower 48, Canada, Europe and the Asia-Pacific/Middle East ranged from 15 to 30 percent.
"Approximately $1.3 billion, or 17 percent, is allocated to Alaska," ConocoPhillips officials wrote. "This reduction of about 5 percent compared with 2015 expected spending is predominantly the result of reduced major project spending in the region following the startup of CD5 and Drill Site 2S in 2015. Capital in 2016 will mostly target development drilling, base maintenance and the progression of several major projects."
The Alaska cuts come after ConocoPhillips vowed to cut 10 percent of its global workforce in September, a blow to Alaska employees that state labor economist Neal Fried subsequently said could have been "higher than that." Earlier this year, the company projected flat oil production in Alaska for at least the next three years.
Correction: This story has been edited to remove an incorrect assertion that base capital spending by ConocoPhillips in Alaska was cut by about two-thirds from 2015.