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ConocoPhillips expects to spend much more in Alaska this coming year.
The largest oil and gas company in the state is budgeting $1.7 billion for Alaska projects in 2014, up 54 percent from the $1.1 billion it budgeted for 2013 and more than double the $828 million it actually spent in 2012, according to figures provided by the company.
The budget includes construction of the CD-5 satellite, a share of efforts to market North Slope gas and the regular array of maintenance work, but ConocoPhillips is attributing the increase to a slate of North Slope projects announced since the state changed its fiscal terms in the More Alaska Production Act, also known as Senate Bill 21. Those include additional Kuparuk River unit drilling, early work on the Kuparuk Drill Site 2S pad and drilling in the National Petroleum Reserve-Alaska. The NPR-A work includes the GMT-1 development well and two exploration wells in the Greater Mooses Tooth unit.
The budget proves the revised fiscal system is working, according to Gov. Sean Parnell, who released a statement saying, “Billions of dollars in new investment have been announced since I signed the MAP Act into law, and it’s helping to keep Alaska’s businesses and workers busy as they go after new oil production. Alaska is on track for more oil in the pipeline and more opportunities for future generations.”
Whether voters agree with his conclusions will be determined during the primaries next year. That is when the people will vote on a ballot referendum aimed at repealing the law.
Heavy Lower 48 spending
The spending comes as part of a $16.7 billion capital budget for 2014. The budget provides only a general breakdown of spending. A more-detailed breakdown often accompanies the annual report, which ConocoPhillips usually releases in February.
The budget dedicates some 39 percent, or $6.5 billion, for “high-margin development drilling,” of which two-thirds ($4.3 billion) will go to the Lower 48 and the remaining third, ($2.1 billion) will go to Alaska, Canada, Norway and western Australia.
The 2014 capital budget is aimed toward ConocoPhillips’ goal of producing some 1.6 million barrels of oil equivalent from its continuing operations in 2014, but those efforts are primarily focused on the Lower 48, Canada, Europe and the Asia-Pacific regions.
The budget allocates some 35 percent, or $5.8 billion, for “major projects,” starting with the APLNG project in Australia and including the Surmont Phase 2 project in Canada, the Eldfisk II project in the Norwegian North Sea, the Britannia Long-term Compression and Clair Ridge in the United Kingdom, as well as offshore developments in Malaysia.
The Lower 48 spending include work in the Eagle Ford, Permian and Bakken plays.
The budget also includes some 13 percent, or $2.1 billion, for “maintenance of the company’s high-quality legacy base portfolio, including 2014 planned turnarounds,” and another 13 percent on exploration and appraisal work in the Gulf of Mexico, the U.K. and Australia, as well as unconventional exploration in liquids-rich shale plays across the Lower 48 and Canada, and unconventional exploration in Colombia, Poland and China.
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