ConocoPhillips to add wells at CD-5, will reach 16K b/d goal this year
Despite low oil prices, ConocoPhillips keeps drilling.
The company announced Thursday morning that it has approved a plan to spend about $190 million to add another 18 wells and associated infrastructure to fully build out its new CD-5 oil development.
ConocoPhillips has completed 10 of the 15 wells laid out in CD-5’s initial development plan. Production from the site began in October of last year.
The more than $1 billion overall project was designed to accommodate 33 wells, meaning the latest approved drilling program will add another 18 wells.
CD-5 is the company’s latest project in the Alpine field — on the western fringe of the established North Slope. ConocoPhillips expects CD-5 will hit its production target of averaging 16,000 barrels per day this year.
“The additional drilling opportunities we’ve identified at CD-5 are a positive development that should increase oil production at Alpine,” ConocoPhillips Alaska President Joe Marushack said in a release. “The competitiveness of this next phase of CD-5 drilling was improved due to the investment climate resulting from the passage of (Senate Bill 21 in 2013). We want to continue to invest in production-adding projects like this.”
The company expects first oil from the next phase of drilling to begin flowing in the fall of 2017.
Oil and gas industry representatives in the state have emphasized during discussions in the Legislature about trimming the state’s oil and gas tax credit program that the cost of producing North Slope crude and getting it to market — approximately $46 per barrel — means companies are losing money at today’s prices. Alaska North Slope crude was selling for about $43 per barrel at the time of ConocoPhillips’ announcement.
Earlier this year BP announced it is idling three drill rigs working in the Prudhoe Bay field and several smaller independent companies have slowed or delayed development projects, citing cash flow issues and the current price environment.
Development work is also continuing on ConocoPhillips’ $900 million Greater Mooses Tooth No. 1 project, expected to bring another 30,000 barrels online at peak production, with first oil scheduled for late 2018. The company sanctioned GMT-1 late last year.
Farther west than CD-5, GMT-1 would be the first production on federal land within the National Petroleum Reserve-Alaska. While within the NPR-A boundary, CD-5 is on an “island” of land owned by Kuukpik Corp. an Alaska Native village corporation.
ConocoPhillips has a 2016 Alaska capital budget of $1.3 billion, down 5 percent from 2015 spending. That’s the smallest reduction of any area the company operates after it lost $4.4 billion in 2015, and is greater than its cap-ex spending in Alaska in 2012.
Elwood Brehmer can be reached at [email protected].