Despite technical and economic hurdles, Conoco’s newest development starts producing oil

The entrance to ConocoPhillips’ Kuparuk Field camp. (Photo by Rachel Waldholz/Alaska’s Energy Desk)

ConocoPhillips announced today that its newest development on the North Slope is producing oil, two months earlier than anticipated.

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The project, called 1H NEWS, had to overcome several challenges. One was the type of oil. Lisa Bruner, Conoco’s vice president of North Slope Operations and Development, explained it’s a harder-to-produce viscous oil, requiring new technology to get it out of the ground.

“The oil is heavier, so it flows more slowly, and as cold as it is here, it’s harder for the oil to flow than some of our other reservoirs,” Bruner said.

Another challenge was economics. Conoco first announced the project in 2014, but put it on hold in early 2016 after oil prices crashed.

“[We] went back to the drawing board and rolled up our sleeves and tried to figure out a way to reduce our costs to a point where it is economic,” Bruner said. “And it’s economic, but it’s not as competitive as some of the best things in our portfolio.”

According to Conoco, the project cost about $400 million, $60 million less than the initial estimate. But Bruner said it’s unlikely the company would green-light the same project today.

“If we were to look at it today and drill the exact same wells in the exact same way, and go for funding approval now within ConocoPhillips, it’s probably not something that would compete for funding,” Bruner said.

The development is in the Kuparuk Oil Field. Most of the company’s most promising new projects are further West, in and around the National Petroleum Reserve.

It’s expected to produce about 8,000 barrels of oil per day.

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Elizabeth Harball is a reporter with Alaska's Energy Desk, covering Alaska’s oil and gas industry and environmental policy. She is a contributor to the Energy Desk’s Midnight Oil podcast series. Before moving to Alaska in 2016, Harball worked at E&E News in Washington, D.C., where she covered federal and state climate change policy. Originally from Kalispell, Montana, Harball is a graduate of Columbia University Graduate School of Journalism.

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