ConocoPhillips credits oil tax regime for new North Slope production
ConocoPhillips has now produced the first oil on federal land in National Petroleum Reserve-Alaska, at its Greater Mooses Tooth 1 site. The company says that's thanks, in part, to the state's current oil tax regime.
In 2013, Alaska lawmakers revamped the state's oil tax system — from ACES (Alaska's Clear and Equitable Share) to a measure known as SB 21. If you were in Alaska at the time, you're probably pretty familiar with the term. The law faced a referendum the following year, but voters decided to keep it.
According to ConocoPhillips, it's a good thing they did. It was in 2013 that ConocoPhillips started pursuing its Greater Mooses Tooth 1 project. Now, five years later, its reached a milestone in the state. The site is slated to produce 25,000 to 30,000 barrels of oil per day at peak production, expected sometime next year.
ConocoPhillips was able to successfully achieve production at Greater Mooses Tooth 1, despite a dramatic plunge in the price of oil in 2016, which has yet to make a full rebound.
"As a company, and, really as an industry as a whole, we started focusing more on how we can reduce our costs and survive in a low cost environment," Scott Jepsen, vice president of external affairs at ConocoPhillips, said in a morning interview with KTVA.
When the company announced production last week, Sen. Cathy Giessel (R-Anchorage), who chairs the Senate Resources Committee, called the Greater Mooses Tooth production "a representation of the fact that the tax policy we put in place several years ago is working."
"Alaska's a high-cost place to do business and our tax rate, under the old ACES regime was 90 percent on a marginal tax basis," Jepsen said. "The current framework we have now kind of puts us in the average of where we need to be, and is helping to keep Alaska competitive."
When asked whether Greater Mooses Tooth 1 bodes well for development in the Arctic National Wildlife Refuge (ANWR), Jepsen said ConocoPhillips is focused on the west side of the North Slope. "If something comes available, we'll look at it."
Several hours after Jepsen addressed the company's find, more positive news came from Joe Marushack, president of ConocoPhillips' Alaska operations. He told a crowd at the Anchorage Chamber's Make it Monday luncheon the strong 2017-2018 North Slope drilling season will be even stronger this year.
"The 2018 program, the one we finished up this last winter, was the biggest one we did in about 16 years and the one we're planning on doing in the 2801-2019 in the winter season will be an even bigger program," he said after his speech.
He described North Slope activity as a renaissance, citing current field exploration in the Slope's western region, including the Willow field Marushack calls one of the company's largest prospects globally.
He said Willow could produce upwards of 100,000 barrels per day with first oil as early as 2024.
"The reason I think it's important is because I think it's a great story in terms of how important oil is to the state whether it's severance taxes or royalties or any other taxes," Marushack said. "I think folks need to know there is a real good opportunity out there. We think here are a lot of developments -- not just our developments --being done and we think we are in a good place to be doing those things."
Copyright 2018 KTVA. All rights reserved.