Resource Development Council
 
 

ConocoPhillips increasingly optimistic

about Alaska’s future oil and gas prospects

With a much improved business climate thanks to oil production tax reform, ConocoPhillips CEO Ryan Lance said his company is increasingly optimistic about Alaska’s prospects for both increased oil production and a large LNG export project.

Lance, speaking before over 1,000 people at RDC’s annual meeting luncheon in Anchorage June 24, cited passage of SB 21, oil production tax reform, as encouraging new investment in oil production and setting the stage for a North Slope LNG project.

Lance noted the petroleum industry is booming in the Lower 48, mainly because of the revolution in extracting oil and gas from shale. Alaska passed a tough new tax policy in 2007, just as shale development exploded in the Lower 48.

“The ACES tax created an adverse investment climate while conditions were favorable in the Lower 48,” Lance said. As a result, investments aimed at new production went there, not Alaska, which slipped from second to fourth – behind California in annual production.

SB 21 made investment in oil producing projects more attractive than it had been under ACES, allowing the industry to turn its focus back to Alaska, Lance said. With the improvement in the fiscal climate, activity is picking up across the North Slope, Lance noted.

ConocoPhillips’ Alaska budget has increased 50 percent from 2013 and is now twice the average of 2008-2012. The company expects to add 40,000 barrels per day of new North Slope production by 2017.

As for LNG, Lance said “Alaska has advantages (for LNG export) because of its location relative to Asia markets and the desire by buyers to diversify supply.” He said the state’s participation in the Alaska LNG project has enhanced the alignment among the parties, which include the North Slope producing companies and TransCanada.

While the LNG project clearly represents a big opportunity for the state, Lance said that for an Alaska project to compete, “it’s going to take reasonable supply cost and reasonable fiscal terms” because of competition from 40 LNG terminals proposed to date in North America and more around the world.

With oil production tax reform, Lance said the stage is now set for a new wave of investment and development, explaining that a robust oil industry also makes Alaska’s North Slope LNG project more competitive with projects elsewhere.

Lance said Alaska is moving in the right direction. He noted SB 21 is doing what it was intended to do – to be more competitive with other investment opportunities elsewhere, encourage new investment in Alaska, and start producing off the North Slope.

Lance is no stranger to Alaska. He was based here for half of his 30-year career. While with ARCO, he led the development of the Alpine field on the North Slope. He also served on the RDC Executive Committee during part of his time in Alaska.

Return to newsletter headlines