ConocoPhillips Is ‘Getting Back to Work’ in 2021
ConocoPhillips is looking forward to getting back to work in 2021, said ConocoPhillips Alaska President Erec Isaacson at the Alliance’s annual Meet Alaska conference.
“2020 was a difficult year for the industry; it was a difficult year for our company,” Isaacson said, though he emphasized the year also had a few positive developments.
- ConocoPhillips Alaska closed out the year with an OSHA recordable rate of 0.08; for comparison, it was 0.3 in 2019. “That’s really a win—it’s a win/win for the company and all of the contractors that we worked with, all of our partners, in keeping people safe.”
- Alaskans voted against Ballot Measure 1 by a 16 point margin, an outcome that ConocoPhillips worked toward through outreach and education “about the importance of having a competitive oil and gas industry here in the state.”
- ConocoPhillips Alaska celebrated the 20th anniversary of its Alpine field, which first produced oil in 2000. “It’s been a fantastic asset for the company and all of its satellites, as well as for the state of Alaska with the amount of the revenue that it’s brought into the state,” Isaacson says.
- And it was in December 2020—with Ballot Measure 1 in the rear view, a robust testing program in place, and vaccinations on the horizon—that ConocoPhillips Alaska restarted its drilling program.
But overall, and it’s no surprise, 2020 was challenging. “We had to deal with COVID-19 in our operations and we had to learn how to put in place safety barriers to actually handle this in the way that we operated on the slope.
“We also had the demand disruption that we saw throughout the world, and as a result of that we ended up having to curtail production… and figure out how to take down a hundred thousand barrels of oil of production and then bring it back online safely,” Isaacson said.
He continued, “But as we exited 2020 the industry had changed through a result of that demand disruption. Our company has changed.” ConocoPhillips acquired Concho Resources in 2020, which included the acquisition of 8 billion barrels of unconventional resources in the Lower 48, which means ConocoPhillips now has 23 billion barrels of resource in its portfolio.
“Now, if you look at Alaska, Alaska is still competitive in ConocoPhillips’ portfolio, but we have to focus on getting our day-to-day costs down, we have to focus on being more efficient with our projects going forward in the future, because we have to compete with this larger, low-cost portfolio that the company now has.”
So what’s 2021 looking like for ConocoPhillips Alaska?
In 2020 ConocoPhillips Alaska’s emphasis on safety allowed the company to close out the year with an OSHA recordable rate of 0.08.
Drilling rig Doyon 25 restarted activity in Alpine in December at CD5. According to Isaacson, the company is moving Doyon 25 “in a month or so” into NPR-A to start Drilling at the Greater Moose’s Tooth 2 (GMT2) pad, its newest development in NPR-A.
This year, he said, is the third and final year of construction on GMT2, which will have 36 wells (at a cost of approximately $1.4 billion) and an estimated peak production of 35,000 to 40,000 barrels per day of oil.
Work to finish construction the drilling pad and lay pipeline to the pad will employ an estimated 700 people.
This year ConocoPhillips is starting up Doyon 26, also known as “the beast” since it’s the largest mobile land rig in North America. It has the capability to drill 37,000 feet, compared to the 20,000-foot reach of many of its current rigs. Its extended reach allows it to develop 150 square miles from a single pad. “It’s another tool that we have in our tool belt here in Alaska to continue to drive forward with the sustainable way of developing that we do here in Alaska.”
Doyon 26’s first project will be to spud a well at ConocoPhillips’ Alpine CD2 pad “in about two and a half months,” Isaacson said.
Because of the additional oil from GMT2 and CD2, ConocoPhillips needs to expand its Alpine facility. “Our Alpine facility will be expanded by 30 million cubic feet a day for our natural gas handling capability. We’ll be putting in a new turbine generator out there, and to help even out the flow into our Alpine facility, we’re going to be putting in a new slug catcher,” he explained.
The slug catcher, which he describes as a “massive piece of equipment” was transported to Alaska by sealift, which Isaacson said is the first sealift since Alpine was built more than twenty years ago.
“All three of these projects are planned to put in place in third quarter of this year. In the middle of this year, we will be having a nearly month long turnaround at Alpine in order to hook up a lot of this equipment. So for peak jobs for these projects, we’re looking about 250 people this year, with a total cost of a $190 million between last year and this year—again, helping to fire back up Alaska’s economy and bring online additional production at ConocoPhillips Alaska,” Isaacson said.
New oil from GMT2 and CD2 will require an expansion of ConocoPhillips Alaska’s Alpine facility, including a new slug catcher.
ConocoPhillips is also looking at Willow as a significant prospect to help boost Alaska’s economy. “The Willow development out in the NPRA represents a truly significant, large, low-cost of supply resource… This is a multi-billion dollar project run over the course of several years, peak production well over a hundred thousand barrels a day, and with the potential for thousands of construction jobs and hundreds of permanent jobs once this production facility comes online. And when you look at the impact that Willow will have on the state of Alaska, the BLM estimates that there will be more than $10 billion in benefits over the life of the project to the state, to the North Slope Borough, to the North Slope communities, and the federal government.”
In October 2020 the company received the record of decision from the Bureau of Land Management to move forward with the Willow development; however, two lawsuits were filed to challenge the record of decision and an injunction halted the company’s plans to lay gravel in the 2020/2021 winter season. Isaacson said a decision from the Alaska District Court about the lawsuits is expected before the end of the year, and in the meantime ConocoPhillips is moving forward with front-end engineering work.
ConocoPhillips Alaska President Erec Isaacson says the Willow development has the potential to produce more than 100,000 barrels of oil per day and provide hundreds of permanent jobs.
“So as we take a look at 2021, our focus is getting back to work for Alaska’s future,” Isaacson said.
“At ConocoPhillips Alaska, we know Alaska. We have a lot of opportunities here, we have a great track record of stewardship here in Alaska, and we’re committing to working with the stakeholders to create a mutually beneficial future for us together.
“We are planning a significant investment program this year, we have plans in place that will allow us to continue people to the slope and keep them safe during this COVID pandemic time, focusing on safety, focusing on execution, focusing on bringing people that haven’t been working back to work.”