ConocoPhillips has bold plans to begin building the Willow oil field project this winter in the wake of a favorable court decision this week. The company expects to spend $900 million and employ 1,800 people this construction season alone.
Economists say the $8 billion project will be a boon for a struggling statewide economy that has been marked by a decade of outmigration, with more people leaving the state than moving here.
Conservation groups said they plan to appeal Thursday’s decision by U.S. District Court Judge Sharon Gleason. Gleason rejected their claims that the Biden administration had not properly approved the project.
Willow opponents have called the project a “carbon bomb” that will lead to the release of about 275 million metric tons of greenhouse gas emissions. They say the project is a stepping stone for future development in the 23 million acre National Petroleum Reserve-Alaska, a western frontier for the state’s oil patch.
Located more than 600 miles north of Anchorage, Willow should begin to produce oil in 2029.
If developed, it will be the largest oil field completed in Alaska in decades. It should produce nearly 600 million barrels over 30 years, valued at more than $50 billion at today’s oil prices.
Neal Fried, a retired state economist, said the project will help underpin economic growth in the state.
He said the financial benefit to the state will be blunted because Willow is located on federal land, and many Alaskans might not notice the project’s impacts. But he said it will provide important jobs and billions of dollars in federal, state and local government revenues.
Fried said the activity will directly support an array of industries: Truckers will haul materials, construction workers will build facilities and roads for the North Slope project, and catering companies will provide meals.
The work will help reinvigorate an industry that employs less than half the workers it did a decade ago, providing high-paying jobs that support other sectors across Alaska, such as restaurants and retail stores, he said.
“It’s big in a number of ways,” Fried said. “We haven’t seen a project for a very, very long time with this kind of macro impact on our economy.”
ConocoPhillips has already taken steps to get a jump-start on construction at Willow, ahead of the judge’s decision.
As of July, it had spent more than $100 million on early efforts to build the future Willow operations center, with the construction of modules in Texas, according to Connor Dunn, vice president of the Willow project, in court testimony in August.
The modules, such as for drinking water and wastewater treatment, will be transported to Alaska next year and later become part of the Willow operations center.
The company has been planning the ice roads that must be built over the frozen tundra this winter to support this season’s work, said Rebecca Boys, a spokeswoman with ConocoPhillips. Construction materials for the upcoming season are arriving at Willow, she said.
Dunn said this winter’s plans include:
• ConocoPhillips extending a gravel road 7 miles to access Willow, plus building other roads including to the airstrip site, Dunn said in his testimony.
• Installing a bridge near Willow that was fabricated in Tacoma, Washington, over the summer.
• Building the gravel foundation for the operations center.
Work to install many miles of pipeline will also take place this season to eventually carry products like produced oil and diesel fuel, Dunn testified.
The company also hopes to conduct a seismic survey around the Willow area this winter, according to a recent application with the Bureau of Land Management.
Companies such as Nanuq and ASRC Energy Services Houston Contracting, owned by Alaska Native corporations, have been hired to provide construction work, Dunn said.
“With 600 contractor company personnel directly supporting Willow with engineering, planning and other office work, combined with 1,200 direct construction jobs this winter, the total number of Willow jobs will be approximately 1,800 when Willow construction re-commences this winter,” Dunn testified.
The company planned to spend $903 million from August 2023 until the end of the winter construction season, usually in late April. That will double the total amount ConocoPhillips has already spent on Willow, he said.
A similar amount of work will take place next year, including building the gravel foundation that will support the first drill site, Dunn said.
Willow could boost other drilling
ConocoPhillips said the project over its life will produce more than $11 billion in revenues to the federal and state governments and the North Slope Borough, according to its brief in the case.
Of that, it said the state of Alaska will receive $2.3 billion in production, property and income taxes.
In its first five years, Willow will cost the state close to $400 million, according to a decade-long outlook by the Alaska Department of Revenue in March. But the state would then begin receiving revenue from the project, taking in about $1.3 billion in the five following years. The initial deficit for the state comes largely because ConocoPhillips can deduct Willow construction expenses from production taxes.
Erik Grafe, an attorney with Earthjustice, said in a statement that the group plans to appeal the case. Earthjustice represented environmental groups in one of the cases seeking to stop Willow.
Oil produced from Willow will release carbon dioxide emissions equivalent to driving 2 million extra cars for the next 30 years, Earthjustice said in the statement.
The group fears that Willow, with its oil processing facility and other infrastructure, will set the stage for more development in the petroleum reserve.
Gleason said in her decision that the reserve was created “to help meet the nation’s need for oil and gas.” She said leaving large quantities of economically recoverable oil in the ground “is quite simply inconsistent with the congressional policy of resource extraction.”
Roger Marks, a retired state of Alaska petroleum economist, said the Willow oil project will likely open the door for additional development in the reserve. ConocoPhillips’ huge investment in infrastructure could incentivize smaller explorers by reducing upfront costs, he said.
“The way development happens is, you have a big field and you step out and have more satellite fields,” Marks said. “You understand the geology better, and new companies come in and can make a go of it with satellites that feed the main field.”
ConocoPhillips has told investors that Willow could be the “next great Alaska hub” for oil production, while its infrastructure could support additional large “prospects and leads” hosting potentially 3 billion barrels of oil equivalent, referring to a unit of energy that could be oil or natural gas.
Outside Willow, close to 200 active leases exist elsewhere in the reserve. But there’s not enough information to indicate whether they can be developed, the Bureau of Land Management said in an environmental analysis of Willow in January.
“However, the existence of the Willow Project makes exploration of these areas more attractive, since the Willow Project infrastructure would enable access to the area and lower the costs of a development should a discovery be made,” the agency said.
The report said two exploration wells drilled about a dozen miles west of the Willow project, called West Willow, are the only “reasonably foreseeable future actions” in the Willow area with potential for future activity. It added that there’s no certainty that will happen.
Still, estimates of the wells’ resource potential is significant. They could yield approximately 75 million barrels of oil, the report said.
ConocoPhillips said a West Willow project isn’t planned. But the company acknowledged it’s a potential future development, according to its court testimony.