A ConocoPhillips executive says there won't be significant changes to its North Slope oil production in the short term, but the company will analyze a long list of capital projects to see if they will be profitable enough to pursue in the years ahead.
"I certainly expect to see us want to increase our investment in Alaska based on this change," Matthew Fox, the executive vice president for exploration and production, said in a conference call today about first quarter earnings of the company.
In response to a question from a stock analyst about whether actions taken this year would lead to new activity in the winter of 2014 or 2015, the executive said that would be too soon to expect major new projects.
"In some areas, we can ramp up that quickly. That's pretty fast for somewhere like the North Slope. Of course, if it's major projects and adding new phases of West Sak development or adding new drill sites in Kuparuk or in the NPRA, these things take quite a bit longer than that to get moving," said Fox.
Under the new tax bill approved by the Legislature, ConocoPhillips will see its taxes decline by hundreds of millions of dollars a year in Alaska.
The company announced last week that it would be sending a new drilling rig to the Kuparuk oil field, as its first additional investment in response to lower taxes. The rig will not be drilling new wells.
"That rig is going to focus on working over existing wells and adding production that way," Fox said.
Fox said the company will be able to talk in more detail later this year about what projects that are now profitable enough to pursue. He said the company is "looking at how this change in the fiscal regime influences the competitiveness of the incremental projects that we can see there."
Asked if the new rig would have an impact on the decline rate on the North Slope, Fox said: "You won't really see any significant change in the short term. But the issue is given the new fiscal regime, are incremental capital investments now competitive? And we think they will be, but we're taking that through our overall planning process this year. And we'll be more equipped to talk about that later in the year."
Jeffrey Wayne Sheets, the chief financial officer, said this about the tax cut: "We are currently analyzing the possible impact to our business, including where we could or would increase investment in Alaska, and we expect to provide more details of -- on our future plans over time."
In February, before the tax cut was approved, Fox told investors that increased incremental investments on the North Slope would trim the decline rate to about 2 percent a year in five years.