North Slope operators say oil tax change will now spur projects


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ConocoPhillips will increase its investments on Alaska’s North Slope following the state Legislature’s action to lower the state oil production tax, the president of the company’s Alaska subsidiary said Wednesday.

One immediate step is to bring an additional drill rig to the Kuparuk River field, which ConocoPhillips operates, said Trond-Erik Johansen, president of ConocoPhillips Alaska Inc.

The company will also work with its partners in the Kuparuk field, BP and ExxonMobil, to develop a new drillsite on the southwest flank of the field. An exploration well, “Sharktooth,” was drilled in this area last year.

Johansen also said ConocoPhillips would begin permitting and engineering on its Moose’s Tooth Unit in the National Petroleum Reserve.

Moose’s Tooth is in the northeast part of the NPR-A and west of the Alpine field on the Colville River Delta, which ConocoPhillips also operates.

The company has made a number of medium-sized oil and gas discoveries at Moose’s Tooth in recent years with its partner, Andadarko Petroleum Corp.

Passage of the change in the state’s petroleum tax by legislators April 14 was important in encouraging ConocoPhillips to proceed with the projects, Johansen said.

“We have always believed that Alaska’s North Slope is a resource-rich area. But developing oil from the legacy (producing) fields and new satellite fields has become increasingly challenging, costly and technology-intensive,” he said in a statement.

Alaska’s tax on oil production was among the highest among major oil-producing regions, Alaska Gov. Sean Parnell had said, and a reduction of the tax was needed to spur new industry investment. Production has been declining on the North Slope by about 6 percent a year mainly due to flat to declining investment in new oil projects, Parnell has said.

“The new oil tax law makes the North Slope a more attractive business environment and should lead to more investment in oil-producing projects than we have seen in recent years,” Johansen said.

BP did not identify specific projects the company would pursue, but was upbeat about the tax change.

"As a package, this is an important step forward and will help us compete for more investment. This puts Alaska back in the game," said Janet Weiss, BP’s Alaska region president.

"We will change our long-term plans accordingly, seeking appropriate sanctions for additional activity,” Weiss said.

ExxonMobil was also positive on the change.

“We believe Senate Bill 21 provides significant progress towards making Alaska’s investment environment more globally competitive and could lead to additional investment and production,” company spokesman Patrick McGinn said.

“ExxonMobil is committed to Alaska and will continue to actively pursue attractive investment opportunities,” he said.

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