The Alaska World Affairs Council and Northrim Bank hosted another luncheon as part of the Oil & Gas Series. Today’s speaker was Trond-Erik Johansen, President of ConocoPhillips Alaska and he addressed Getting Alaska Back on the Global Energy Map. He began his presentation with a brief outline of the ConocoPhillips global stake in the oil and gas industry. ConocoPhillips is the largest, independent Exploration and Production company in the world and has reach in more than 30 countries. They have a very large, global asset base and Johansen affirmed the importance of Alaska in ConocoPhillips’ portfolio. He continued with a few items regarding ConocoPhillips’ assets and business strategy.
Much of the rest of the presentation focused on the ways that ConocoPhillips is increasing production and exploration in Alaska, due to the change in the tax structure with the passage of SB21. Johansen said that the new tax structure allowed for a better investing environment. Alaska faces a number of challenges in the oil and gas industry because it is far from the market, there is an extreme, harsh climate, very stringent environmental regulations, as well as mature fields that are costly to maintain. Johansen acknowledged that opponents to SB21 believe that the new tax structure is a give-away to the oil companies. He noted that even though it is lower than the previous structure, it is still a very high tax. Even though the tax is much more competitive than it was under the ACES structure, it is higher than both North Dakota and Texas by about 10 percent.
Since May 2013, when the new tax structure was signed into law, ConocoPhillips has begun work on an additional rig at Kuparuk, which is already producing approximately 1,300 barrels of oil per day (BOPD) and has created 700 indirect jobs. There are also plans for a new drill at Kuparuk which is estimated to produce 8,000 BOPD and create 200-300 direct jobs. The first oil from this site would be produced in 2015. Finally, ConocoPhillips is planning a new NPR-A development, which is in the permitting process. This project would create 400 jobs during the construction phase alone and has the potential for over 30,000 BOPD, with first oil being produced in 2017. SB21 has made Alaska more competitive within the industry and we are already seeing the benefit of the new tax structure.
ConocoPhillips is also working to progress the Southcentral LNG project with BP, ExxonMobil and TransCanada. This project is slated at $45-55 billion and there are already over 300 people working to develop the project concept. Field work was initiated this summer and the project will continue to be a focal point for many throughout Alaska. There are significant benefits to the project including a long-term gas supply, jobs and State revenue.
Johansen wrapped up his presentation with a summary of how Alaska is poised to jump back onto the global energy map. He stated that Alaska has the opportunity to set the stage for a bright economic future. New projects will reinvigorate the North Slope and provide new opportunities for Alaskans. ConocoPhillips is planning new developments and has already shown success with their additional rig at Kuparuk. Since May 2013, there has been more investment, more jobs and the future is looking up for Alaska.
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