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Doyon and ConocoPhillips announce joint drilling rig venture

By Rhonda McBride 12:39 PM July 28, 2014

Doyon Limited and ConocoPhillips announced a joint venture Monday.

Doyon Limited is the regional Native corporation for Interior Alaska. As part of the agreement, Doyon’s subsidiary — Doyon Drilling — will build a new $100 million rotary drilling rig for ConocoPhillips. Doyon also has a five-year contract with options to renew in the future.

The announcement came at Doyon headquarters in Fairbanks with board members present.

“It’s certainly an exciting day for Doyon,” said Aaron Schutt, president and CEO of Doyon. “We don’t get the opportunity to build large North Slope rigs every year, sometimes even every decade.”

Mike Wheatall, ConocoPhillips’ manager for drilling wells in Alaska, called the drill rig, to be named Doyon 142, unique in the world.

“It will be able to operate between Kuparuk and Alpine. There is no rig on the North Slope right now that can cross the Colville River in the wintertime and still fit on all of our wells at Alpine,” Wheatall said.

Engineering for the rig is mostly complete, with construction already underway. It should be brought on line by April of 2016.

There was no attempt to hide the fact that the timing of the announcement comes just before a vote in the August primary to repeal oil tax reform passed by the Legislature last year.

“ConocoPhillips believes in Alaska,” Wheatall said. “So this is good news for us, Doyon, and for Alaskans. Doyon 142 will be the third rig we’ve added to North Slope operations since passage of the tax reform.”

Sen. Bill Wielechowski, one of the proponents of Ballot Measure 1’s “Vote Yes” campaign to repeal oil tax reform created by Senate Bill 21, said he’s not surprised to hear announcements like the one from Doyon and ConocoPhillips.

“We knew we were going to see press releases and brass bands every time something positive happens,” Wielechowski said.

While Wielechowski acknowledges that oil industry investments are up in Alaska, he said this was anticipated under the old ACES tax regime, due to increased activity at Pt. Thomson.

ACES, Alaska’s Clear and Equitable Share, was a tax reform measure passed during former Gov. Sarah Palin’s administration.

Wheatall said if voters overturn SB21 in August, it would not have an impact on the Doyon rig because the two companies have a five-year contract. But Wheatall said ConnocoPhillips might be forced to scale down other projects.

Doyon said the new drilling project will put about 100 people to work and support hundreds of other indirect jobs.

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