ConocoPhillips will develop the Nuna field, a project that will add up to 20,000 barrels of oil to Alaska’s daily production, the company announced this month as the state debates higher oil industry taxes.
The oil giant acquired the relatively small field in 2019 from Caelus, a company from Dallas that still owns the potentially giant but remote offshore oil prospect in Smith Bay, off Alaska’s North Slope.
ConocoPhillips’ announcement comes as state lawmakers discuss the possibility of higher taxes on the industry as a way to help fill the Alaska’s structural deficit. Senate Bill 114, introduced this year to raise taxes on producers, could advance during the legislative session next year. Alaska’s oil and gas trade association launched an ad campaign against the five-page bill.
ConocoPhillips is the state’s top oil producer, producing about 175,000 barrels of crude oil daily. Oil companies produce close to 500,000 barrels of oil daily in Alaska.
At Nuna, ConocoPhillips will rely on its existing infrastructure at the Kuparuk River Unit for production, the Houston-based oil company said. Caelus had already built the gravel road and drilling pad for the project.
Drilling at Nuna is set to begin late next year, followed soon after by oil production, the company said. Nearly 30 development wells are planned.
Construction will start this year and continue next year with pipeline installation and other work on the pad, the company said.
“The additional drilling opportunities we’ve identified at Nuna are a positive development that should increase oil production at Kuparuk,” said Erec Isaacson, president of ConocoPhillips Alaska.
Isaacson said the company approved the project because of stability in the state’s tax system.
Compared to other broad geographic areas where it operates, ConocoPhillips earns more in Alaska for every barrel of oil equivalent, a common unit of energy that companies use when reporting oil and natural gas production, according to Legislative Research Services, which provides nonpartisan research for Alaska lawmakers.
The company has previously said those adjusted net earnings are higher in Alaska primarily because its production in the state is almost entirely oil. In other areas, the company produces a higher proportion of lower-price natural gas or natural gas liquids.
ConocoPhillips reported earning $2.4 billion in Alaska last year. It reported spending $1.1 billion on capital projects in Alaska last year, a level of investment the company plans to continue, its statement said.
A ConocoPhillips spokeswoman said in a statement Tuesday that the company supports nearly 1,000 direct jobs and 8,900 contractor jobs in Alaska. The company paid $3 billion in taxes and royalties last year, including $2.3 billion to the state and $711 million to the federal government, the statement said.
State Sen. Bill Wielechowski, the sponsor of Senate Bill 114 who sought the report from Legislative Research Services, said the oil industry in Alaska has not lived up to its promised investments when Senate Bill 21 was passed and implemented about a decade ago.
Jobs have been cut in half, and investment and state revenue have plummeted.
“Alaska is an extremely profitable place to do business,” said Wielechowski, an Anchorage Democrat.
ConocoPhillips also owns the giant Willow oil field in northern Alaska, approved by the Biden administration this year. Conservation groups have sued to stop the project, asserting that the federal government violated multiple laws when it approved the project and did not fully account for its environmental impacts.
ConocoPhillips has said construction there could start next year, depending on the outcome of the case. Oil production could begin there in 2029, eventually reaching up to 180,000 barrels daily.