RDC’s 22nd Annual Conference Presentations
Rick Mott, Vice President Exploration and Land, Phillips Alaska, Inc.
Phillips Vision for Alaska oil in the future is shaped by our recent past.
2001 was big year for Phillips Alaska. As a company we had some historic milestones
We celebrated working 49 years in the 49th state. And we announced the first discoveries in the National Petroleum Reserve-Alaska since the area was reopened to the industry for exploration in '99.
Phillips Alaska and our partner Anadarko Petroleum have drilled six wells in NPR-A during the last two winter seasons. Five wells and a sidetrack encountered oil and gas or gas and condensate and we believe these wells encountered at least three separate hydrocarbon accumulations.
It's too soon to speculate on reserve estimates or development plans. We're hopeful that further testing and exploration will prove that we have economically viable oil development in NPR-A.
In addition to the NPR-A discoveries, Phillips announced two additional oil discoveries in 2001. The first was the 35-million-barrel discovery is called Palm, which extended the Kuparuk field to the west.
The third announced discovery was Nanuq field which is a satellite to the Alpine field, and holds approximately 40 million barrels of recoverable oil.
By the end of this year, Phillips will have drilled or participated in 15 exploration wells in Alaska. This is one of our most aggressive exploration programs in recent history. Compared to 9 wells in 2000, and 6 wells the year before.
Phillips continues to earn the title of Alaska's #1 explorer and has demonstrated it is a successful finder of new oil in Alaska.
In addition to exploration success, there are other indicators of our perspective on the future of oil in Alaska. Phillips is the largest state and federal leaseholder in Alaska, holding more than 1.2 million acres and we recently participated in the North Slope and Beaufort Sea state lease sale.
This year our 3-D seismic program was the largest Alaska acquisition program in Phillips history, acquiring more than 1,000 square miles of proprietary data.
Nothing will attract future oil development investment like production success and certainly Alpine field fits that requirement. The field continues to out-perform our expectations, hitting a one-day high of 109,000 barrels of oil and averaging more than 90,000 BOPD monthly. This
brings Phillips Alaska net production for this year to an average of about 392,000 BOEPD
Many of you here today were part of the Alpine project, an Alaska success, and thank you.
Taken in total, Alaska oil is an important worldwide asset and opportunity for Phillips and it be long after the ConocoPhllips merger is successfully completed.
What's ahead?
I'd like to focus on exploration for a few minutes.
· In the 2002, our exploration plans are to:
· Appraise our NPR-A discoveries and in the same area collect baseline wildlife and environmental information to expedite possible developments
· Evaluate and Obtain prospective Leases in 2002 NPR-A Sale
· Acquire 400 square miles exploration 3-D Seismic data
· Continue Our Successful Satellite Exploration Drilling Program
· Continue Drilling New Wildcat Prospects
Phillips Alaska should in total drill or participate in approximately 10 exploration wells this winter. Precisely how many wells are drilled will depend on oil prices, the weather, the restrictions on drilling operations by regulators, contractor costs, exploration results, and final funding approvals from co-venturers and within Phillips.
However, our future oil exploration program is not without its challenges.
As we move greater distances from current production areas, logistics for drilling and seismic acquisition are becoming more difficult given our short winter operating season. More than 140 miles of ice roads will be needed to support drilling our 2002 exploration program half in NPR-A.
In general, as we move west, costs increase.
At Phillips, we know that the challenges ahead are great In order to make areas like NPR-A economic, we need the cooperation of all the stakeholders-- surface use owners, state and local governments, regulatory agencies, and contractors.
Alaska oil exploration and development projects must compete worldwide with all Phillips' E&P opportunities for capital dollars. Decisions by Phillips to invest in Alaska projects are made based on economics and measured against all Phillips prospective projects worldwide.
At Phillips Alaska we recognize this and we'll work very hard to maintain our cost structure and find competitive exploration and development investment opportunities. However, we need the help of regulators and contractors to keep our operating costs down, and maintain a stable fiscal and permitting environment in the Alaska.
Phillips is about to celebrate 50 years of doing business in Alaska. I'm proud of what has been accomplished with the support of organizations like the Resource Development Council.
There are many companies that support the environmentally and socially responsible development of Alaska's resources. Like Phillips, these companies are investing in Alaska's future.
With a continued stable fiscal environment, the State of Alaska can give companies the confidence to make $1 billion investments like the Alpine and Northstar fields.
As we look ahead, it's important that organizations like RDC continue to urge the State of Alaska to preserve the pro-investment climate that they have created in recent years.
It's also important the industry, stakeholders and the State continue to work cooperatively to build a strong future for Alaska.
Thank you
