Morning Headlamp — Govt. Share of Oil Revenues Always Bigger Than Industry’s

Alaska first. Worldwide, ConocoPhillips lost $318 million in the final quarter of 2016, according to adjusted earnings provided to federal securities regulators. But Alaska was the second-best region for the company, bringing in $116 million this quarter in adjusted earnings. The final quarter was the most profitable one in 2016 for ConocoPhillips in Alaska.

In a conference call with financial analysts, company executives touted recent developments in Alaska to increase oil production, including the large and recently unveiled Willow discovery in the National Petroleum Reserve-Alaska. Potential production there could significantly boost oil flowing through the 800-mile trans-Alaska pipeline, by up to 100,000 barrels daily.

Headlamp would note, that ConocoPhillips saw their oil production go up 3% in 2016 compared to 2015, due primarily to investments made since SB21 passed.

Members of the House Resources Committee heard testimony from the big three North Slope oil producers, ConocoPhillips, ExxonMobil, and BP, on how the state’s current oil tax structure is working. “The need for Alaska to maintain a competitive fiscal regime that encourages critical, ongoing and long term investment is by far one of the most important issues you face,” ExxonMobil Tax Counsel Dan Seckers said. “How can we remain competitive when the state has constantly changing tax policies?” Kara Moriarty, President of the Alaska Oil and Gas Association asked.

As was pointed out in testimony by industry, based on Fall 2016 Revenue Sources Book assumptions, at all oil prices the State always maintains the largest share of oil revenues and a positive share when industry is losing money.

Coal kids on the block. Coal is known as a source of methane, the main component of natural gas, but getting oil is something new. Liquid hydrocarbons were extracted from four Alaska coal samples in tests, Alaska Division of Geological & Geophysical Survey (DGGS) Director Steve Masterman told the House Resources Committee in a recent overview hearing. Each sample “generated quite a lot” of oil, Masterman said. Oil from coal is likely to be more complicated, however. “Certain coals in Alaska, in the Holitna, Nenana, North Aleutian/Bristol Bay, Susitna, Cook Inlet and Gulf of Alaska basins, if buried deeply enough to reach the right level of thermal maturity, might have potential to generate significant quantities of liquid hydrocarbons,” DGGS said in a briefing paper on the tests.

According to Petroleum News, 2017 is shaping up to be a turnaround year for Pebble, the enormous  copper, gold and molybdenum project in Southwest Alaska. “The stars that were previously askew, they seem to be lining up,” Northern Dynasty CEO Ron Thiessen told Mining News. This star realignment is reflected in a $37.4 million financing package the Pebble project owner closed on Jan. 26. Underwritten by a trio of renowned financiers, this financing involved the issuance of 20.24 million shares at US$1.85 per share, not bad for a company whose stock was selling for a mere US27 cents per share this time last year.  


First Reads

ConocoPhillips earned $233M in Alaska in 2016, a global highlight for the company
Alaska Dispatch News, Alex DeMarban, February 2, 2017

North Slope oil companies ask lawmakers for stable tax laws
Alaska Public Radio News, Rashah McChesney, February 2, 2017

USGS, working with coal samples provided by DGGS, extracts liquid hydrocarbons
Petroleum News, Tim Bradner, February 2, 2017

Legislature eyes limit on state government spending
KTOO, Andrew Kitchenman, February 2, 2017

Pebble stars align
Petroleum News, Shane Lasley, February 2, 2017

Global oil output down by 1.4 mln bpd in Jan, Russia says
Reuters, February 2, 2017

Chair of the Arctic Economic Council: – We have made lightyears of progress
High North News, Hege Eilertsen, February 2, 2017