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ConocoPhillips Alaska '24 report; future exploration west of Willow?
Kay Cashman Petroleum News
In connection with ConocoPhillips' fourth-quarter 2024 earnings conference call on Feb. 6, ConocoPhillips Alaska reported that it invested $3.2 billion in Alaska in both new and legacy fields in 2024.
And ConocoPhillips Alaska incurred an estimated $1.5 billion in taxes and royalties in 2024, which included $1.1 billion to the state of Alaska and $400 million to the federal government.
"The company had an exceptional year in 2024," said Erec Isaacson, president of ConocoPhillips Alaska.
"We successfully achieved first oil at Nuna, remaining under budget and ahead of schedule. Additionally, we exercised our preferential rights and acquired additional working interests in the Kuparuk River and Prudhoe Bay units in the fourth quarter. We have also accomplished significant milestones on the Willow project, including delivery of the Operations Center modules to Alaska, along with infrastructure developments such as gravel roads, pads, bridges and pipelines. This project is progressing well, bolstering Alaska's economy and creating thousands of jobs. We remain on track for first oil in 2029," Isaacson said.
ConocoPhillips Alaska reported net income of $1.3 billion in 2024.
Questions and Answers In ConocoPhillips Q&A portion of its Feb. 6 earnings conference call, Alaska, and especially Willow, were addressed several times.
The first question that touched on Alaska asked if executives "could dig in a little bit on some of the long-cycle CapEx ... and the outlook. Just wondering if you could kind of hit on some of the moving parts around Alaska. ... And are we right in assuming that your equity outlays on major projects are peaking in 2025?"
Andy O'Brien, ConocoPhillips senior vice president, strategy, commercial, sustainability and technology, responded to the question.
"As we said, 2025 is expected to be the peak spend as we undertake the biggest winter construction season in Willow," O'Brien said.
"So if you look past 2025, we are going to see the major project spend step down each year. At the same time, we'll start to see the projects coming online delivering on our expected cash flow and free cash flow improvements. And ...we'll have Willow in 2029. ... But I think the key point I want you to take away is that absolutely, we see this year as the peak spend in these projects," O'Brien said.
Exploration west of Willow The next question involving Alaska noted that the state has "gotten a lot of attention from the Trump administration so far and even had its own executive order. ... Could you remind us how you're thinking about the western North Slope opportunity set and whether or not the policy environment creates more of an opportunity to move forward ...over the next few years?"
Kirk Johnson, ConocoPhillips senior vice president, global operations responded.
"Yeah, there's certainly been quite a bit of press out there around NPR-A. ... were pleased to see that President Trump and that administration issued an executive order to, in essence, reverse what came about here late last year. ... Yes, we're looking forward to partnering with the Department of Interior and especially with the state of Alaska. Fundamentally, we believe that continued exploration west of Willow, it's the right thing to do for energy. It's the right thing to do for the state of Alaska and its stakeholders. And clearly, we're in a really good position. We're putting ourselves in a position to continue exploring west of Willow, as that's enabled for us. So again, some good news out there for us in Alaska.
Unpacking Willow ConocoPhillips executives were also asked to describe progress at Willow to date.
"There's a few things certainly in there to unpack. I'll start with Willow as you did and certainly happy to report that the progress we made here last year, certainly inclusive of fourth quarter, and even just this last month here in 2025, allows me to say we're really on trend with the progress that we've been making, ... that project team there in Alaska just continues to hit all the key milestones that we've laid out certainly since taking FID back in late '23," Johnson said.
"When I think about it, certainly the work that was underway in fourth quarter and even just this last month in January, the initial mobilization of our winter construction season ... is our largest for the project, has really gone quite well. So we got a quick and early start. We got some cold weather. Ice road construction activities are ... modestly ahead of plan, which is really nice for us. It puts us in a position of taking full advantage of the full winter season knowing that we may certainly have a little bit of weather in front of us ... we're in a great position of building on all the activity that we accomplished last year," Johnson said.
"Again, this is a peak year of ice road construction. It's from those ice roads that we're building gravel roads, gravel pads. It allows us to, from those ice roads, build our pipeline networks. And then we've got a few unique activities as well planned this winter season. Think bridge construction as well as some horizontal directional drills for pipeline crossing," Johnson said.
"So again, lots to do. And then you even go into the operation modules that you heard me speak about last year. We floated those -- barged those up to Alaska, landed those and onshored those during the ice-free season. ... Just this last month those are moving across into the Willow development area," Johnson continued.
"So we're using crawlers to get those into that new pad. So again, some really good progress. We landed our contracts; engineering is on track. That puts us in a great position for full fabrication across the entirety of this year," Johnson said.
"So all that culminates ... into this peak year of spend, which is why we're guiding to an expectation of project capital being roughly $500 million more than we spent in 2024," Johnson said.
"We're thinking about all of that spend and manifesting and probably close to one third of our total annual spend expectation here in 2025, showing up in the first three to four months of this year. And then so naturally, then we expect the capital this year to stairstep down in the second, third and fourth quarters. ... And ... that will continue to stairstep down with very little, if any, spend in 2029, which is when we're expecting first oil. So again, great progress."
Nuna, Coyote etc. In another question an analyst noted that company executives had highlighted the start of the Nuna project on Alaska's North Slope. "I wonder if you could ... put the startup of that project in the context of your overall, call it 180,000 barrels, of oil a day. I know you guys said it was 29 wells, but can you tell us, is that going to be of a magnitude that we're going to be able to observe the effect of that in your 1Q and 2Q volumes in '25?"
Again, Kirk Johnson, ConocoPhillips senior vice president, global operations, responded.
"I appreciate the question on the Alaska base business because certainly, that business continues to chart a course of really sustaining production here with some really modest growth in the next couple of years. And I think it really highlights the amount of investment opportunities that still exist for us in that business with Nuna being a prime example of that," Johnson said.
"Nuna ...is a project in which we have built out a new pad, the first one in roughly a decade, and it shows the great work that the teams are doing in exploring and appraising new targets and taking advantage of the infrastructure that we have there. First oil was in December, that came on after drilling and completing and bringing on a couple of wells," Johnson said.
"We do have plans for eight more wells there this year in 2025. And all of that ...has actually come on the heels, if you will, of having drilled over 10 wells from existing gravel. So again, it shows the pragmatism that the team has really deployed of ensuring that we understand what these targets are. We de-risk those before we actually put new gravel out there," Johnson said.
"We are, in fact, expecting that production to enable us to more than offset decline as we look at Alaska's production profile for the next year. And then we have a number of other targets that exist out there for us. And you've heard me speak to some of these before in Kuparuk. In addition to Nuna, we have Coyote. Coyote is a really interesting parallel to Willow. And then in WNS and our Alpine asset, we've got Narwhal and Minke," Johnson said.
"And so these Brookian topsets put us in a really nice position of using these wells to advance technology, to advance certainly our capital efficiency, knowing that some of these are great analog or a parallel to Willow, which gives us, again, that much more of an opportunity as we stand up a couple of rigs for Willow in 2027. So really pleased with how that's taking shape for us on our base business in Alaska," Johnson said.
--KAY CASHMAN
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