20 ALASKA RESOURCE REVIEW SUMMER 2024 Global giant heads toward $20 billion in investment in the state BY TIM BRADNER EDITOR’S NOTE: THE FOLLOWING IS A RECAP OF REMARKS GIVEN BY CONOCOPHILLIPS’ KIRK JOHNSON AT THE 2024 RDC ANNUAL MEETING AND LUNCHEON. CONOCOPHILLIPS ALASKA HAS INVESTED $10 BILLION IN THE STATE DURING THE PAST DECADE. EXCLUDING WILLOW PROJECT INVESTMENT, IT WILL INVEST AN ADDITIONAL $10 BILLION IN ALASKA IN THE COMING YEARS. THIS MAKES THEIR TOTAL INVESTMENT MORE THAN $20 BILLION SPANNING TWO DECADES. That’s the upbeat message Kirk Johnson, ConocoPhillips’ Senior Vice President for Global Operations, delivered to the Resource Development Council members at the annual member’s luncheon in Anchorage on June 12. Willow itself is requiring $7 billion to $7.5 billion by 2029, when the field is expected to begin production, Johnson said. The company has other projects underway, too, like “Nuna,” in the Greater Kuparuk Area. “We are continuing to find new opportunities in Alaska,” even near existing fields, he said. Johnson cited Coyote, a new project in the Greater Kuparuk Area, as an example, along with Nuna. ConocoPhillips Alaska and its predecessor, ARCO Alaska, have been in Alaska for more than 50 years and have played key roles in the discovery and development of the major producing fields of the North Slope as well as in Cook Inlet. Johnson started his own career in Alaska, too, working here for 11 years, longer than in any other place he’s worked for ConocoPhillips. “Coming back here is like coming home,” he said. ConocoPhillips has grown over the years and now has operations in 13 countries, with approximately 10,000 employees. The company now focuses on “upstream” oil and gas production and no longer in “downstream” refining and marketing. It is a top U.S. crude oil producer with diverse sources including the Bakken, Permian, and Eagle Ford shale fields. Alaska, however, continues to be a core part of the company’s strategy. Alaska has its challenges, of course. In recent years those have revolved around government fiscal and regulatory policies. “The new rule in the NPR-A (the federal government’s new land regulations there) will raise significant questions on our ability to continue to develop areas in the NPR-A west of Willow,” Johnson told RDC members. In the worldwide perspective, “we’re all aware of the energy transition that is underway,” he said. Wind, solar and other renewable energy sources are growing but growth continues in the world’s appetite for energy, and fossil fuels like crude oil will continue to play a major role. Fossil fuels supply 80 percent of world energy demand today, roughly the same percentage as over the last 60 to 70 years, Johnson said. China is a leading developer of renewable energy and increased its coal capacity last year, he said. Most scenarios for the future also see natural gas growing faster than oil, too. Crude oil demand will continue to be strong, and the U.S. will play a role with an estimated 200 billion barrels of resources. “Based on current Cost of Supply estimates, assuming a competitive rate of return, these resources will continue to be produced,” Johnson said. However, most estimates are that U.S. oil production will see continued growth through the mid-2030’s when we start to see decline. Dependence on foreign oil sources will begin to grow again. All of this puts Alaska in a strong position because of its resource base, reputation as a steady supplier and proximity to U.S. west coast refineries. However, even Alaska’s supply of oil to the U.S. west coast is expected to peak from existing fields by 2030, which makes projects like Willow particularly important. Willow is expected to produce 180,000 barrels a day at peak of new North Slope oil supply starting in 2029. Because of projects like Willow and a stable tax structure, Alaska will continue to be a core part of ConocoPhillips’ plans. “Alaska has a large resource base, and while there are high costs because of its remote operations Alaska’s crude oil is of high quality and sells at a premium, which balances off the high costs,” Johnson said. “In a comparison of worldwide crude oil supply sources, Alaska comes down right in the middle, a good place to be,” he told RDC. CONOCOPHILLIPS ADDS TO ITS ALASKAN GOALS “Alaska has a large resource base, and while there are high costs because of its remote operations Alaska’s crude oil is of high quality and sells at a premium.” — Kirk Johnson, ConocoPhillips’ Senior Vice President for Global Operations
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