It’s been a good year for ConocoPhillips Alaska.
Last week, the company announced first oil from a drill site called Greater Mooses Tooth 1, ahead of schedule. Greater Mooses Tooth 1 is the first oil development on federal leases in the 22.8-million acre National Petroleum Reserve Alaska, or NPR-A, a west of Prudhoe Bay. Conoco estimates Greater Mooses Tooth 1 will produce up to 30,000 barrels of oil per day.
Today, Conoco received a key federal approval for another oil development in NPR-A, called Greater Mooses Tooth 2. Greater Mooses Tooth 2 is estimated to produce even more oil than Greater Mooses Tooth 1, up to 40,000 barrels per day.
And the company is laying plans for a much bigger oil development nearby, called the Willow project. Conoco estimates that project could produce up to 100,000 barrels per day, a fifth of the amount of oil currently flowing down the trans-Alaska pipeline. The federal government began the environmental review process for Willow this summer.
Conoco’s steady push to expand oil production westward into NPR-A is being closely watched by environmental groups, which are concerned about impacts to caribou, migratory birds and other species that live there. Earlier this year, a coalition including Earthjustice, the Natural Resources Defense Council and the Center for Biological Diversity filed a lawsuit challenging the Bureau of Land Management’s 2016 and 2017 oil lease sales in the reserve.
Still, last winter, Conoco had its most extensive oil exploration season in over a decade, drilling six wells in and near NPR-A. According to ConocoPhillips Alaska president Joe Marushack, Conoco’s exploration program this year is going to be even bigger: the company is planning to drill up to eight wells this winter.
In a presentation to an Anchorage business group on Monday, Marushack said Conoco’s projects are part of a new wave of oil production in Alaska, something he called a “North Slope Renaissance.”
Alaska’s Energy Desk caught up with Marushack after his speech and asked him what he thinks a “North Slope Renaissance” could mean for Alaska — and if that could include development in another chunk of federal land east of NPR-A: the Arctic National Wildlife Refuge.
This interview has been edited for length and clarity.
Marushack: When we look at what we’re doing, and then we look at what some of the other operators are doing with their opportunities out there, we believe there’s the opportunity for hundreds of thousands of barrels of incremental production to come on over the next, let’s say, five to 10 years. Now, it doesn’t come on all at the same time — it kind of gets feathered in — but we still believe there’s the opportunity for hundreds of thousands of barrels of incremental production over this time period.
Elizabeth Harball: A couple of years ago, there was real concern about the future of the trans-Alaska pipeline and low flow. Does this mean that that is not a concern anymore?
Marushack: Well, we have to maintain a stable fiscal environment, and we have to make sure that the regulations are in place that allow us to develop these and get permits in a timely fashion. But yeah, I think that if those two things are maintained — we’ve got to be able to weather these cycles, these up-and-down cycles in oil — we still have to worry about low flow at some point in time, but I think if we can get some of these projects moving forward, that that will go a long way to solving that problem, for a long time.
Harball: A lot of these developments are happening in a region where there’s lots of wildlife, there’s a community — Nuiqsut — that cares very deeply about subsistence. So as these developments move forward, can Conoco makes sure that the impacts don’t add up in a negative way?
Marushack: Obviously, there’s a lot of consultation that goes through. We try to operate in an environmentally very sensitive fashion. We do lots and lots of studies on fish and wildlife and we share that with folks. So yeah, we believe these developments can happen in an environmentally sensitive way, and it’s really important to us that we do that — it’s just good business for us to do that, too.
Harball: Oil prices are up around $80. What does that mean for everything Conoco has planned and does it mean you might be able to hire more Alaskans?
Marushack: So these developments that we are doing, especially the Willow project, will mean lots of opportunity for Alaskans. And it’s extremely important to me that ConocoPhillips does look carefully at what Alaskans can do and what they can participate in. We’ll be working, obviously, with the unions in order to develop these opportunities — we need a lot of labor on them.
Harball: On the oil price, though, I think I was hearing you say you don’t think $80-per-barrel oil is here to stay, necessarily. Why is that?
Marushack: We are not good at predicting oil prices. So what we’ve decided we need to do is we need to make sure we have our costs that are maintained at a low enough fashion that we can weather these cycles. And we believe there will be cycles. There’s $80 now, we didn’t necessarily see that coming. We certainly didn’t see $28 oil coming in 2015. But we’ve got ourselves in a position where we think we can be competitive as we go through these cycles over time.
Harball: I think I heard you mention [during your presentation] — and this is a good question to clarify — that you saw [the Arctic National Wildlife Refuge] as a potential opportunity. What did you mean by that — are we going to expect Conoco to show up at a lease sale, if the [federal government] holds one?
Marushack: Well, we’re looking at it. I can’t tell you for sure yet because we’re looking at it. But just like all opportunities, we look and see if it makes sense for us to be there or not. And we’ll look at this one, too.
Alaska has a lot going on right now.
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