(Recasts, adds more details about small companies; adds
By Yereth Rosen
ANCHORAGE Feb 11 Oil giant ConocoPhillips
(COP.N) said on Wednesday it will cut its capital spending in
Alaska by 20 percent in 2009 to $800 million due to a slump in
crude prices and the economic downturn.
The announcement was the biggest among a slew of investment
pullbacks in the state in recent months that could hit Alaska's
tax revenues and future energy production.
"We're trying to position ourselves in the current business
environment to live within our means," said ConocoPhillips
spokeswoman Amy Burnett.
One casualty of the Alaska spending cut will be the
company's investment in a heavy oil project that seeks to
commercialize the thick and vast West Sak formation.
"We have slowed work at West Sak because it's technically
challenging and higher cost, and are focusing on higher-margin
light-oil projects," Burnett said.
ConocoPhillips still plans new wells and development at the
huge Kuparuk field and at the Alpine field and associated
satellites on the western North Slope, she said.
Conoco has been trying to reduce global capital spending
this year by 38 percent while cutting its workforce by about
SMALL COMPANIES IDLE
Some small independents plan little or no activity in
Alaska this year.
Dallas-based Petro-Hunt LLC., in December relinquished oil
and gas leases on over 820,000 acres of federal North Slope
territory just three months after bidding $13.7 million for the
Independent operator Brooks Range Petroleum Corp. plans no
drilling or winter construction, despite holding permits for an
ice road and numerous North Slope wells, according to the
Alaska Division of Oil and Gas.
Officials with Talisman Energy TLM.T unit FEX and Pioneer
Natural Resources (PXD.N) told a conference last month that
their companies had postponed some drilling as well.
"We're locked and loaded on development. We're just waiting
for prices to improve and cash flow to improve," said Pioneer
Executive Vice President Jay Still.
The slowdown is reflected in Alaska's budget.
The state Department of Revenue has lopped $200 million off
the total it expects will be provided during the current fiscal
year in oil industry investment tax credits.
And the overall fiscal 2009 budget, which depends on oil
revenues for nearly $9 of every $10 it takes in, anticipates a
$1.65 billion deficit after several years of fat surpluses.
But economic woes and lower oil prices have not altered all
BP (BP.L) unit BP Exploration (Alaska) Inc., operator of
the giant Prudhoe Bay field, remains intent on carrying out the
2009 work plan it announced in December.
That plan calls for $1.2 billion in spending, up from the
$900 million spent in 2008, and includes investment in new
projects such as the offshore Liberty field, heavy-oil research
and planning for a massive natural gas pipeline.
"The economic climate is the world that we live in. But we
have not made any changes in our planned work program for the
coming year," BP spokesman Steve Rinehart
ExxonMobil (XOM.N), meanwhile, has pledged to construct a
50-mile ice road and drill two wells at the Point Thomson field
on the eastern North Slope, part of a deal with the state that
temporarily resolves a dispute over two leases. Those would be
the first wells drilled at Point Thomson in nearly three
decades, according to state officials.
Shell RDS.A is cutting its Alaska spending, but for legal
rather than economic reasons.
The 9th Circuit Court of Appeals in November voided the
company's exploration plan for the Beaufort Sea, making it
impossible to drill wells there this season.
"Our investment in Alaska is decreasing not because of the
state of the world economy, but rather our inability to work,"
company spokesman Curtis Smith said in an email.
(Reporting by Yereth Rosen, writing by Richard Valdmanis;
Editing by David Gregorio)