During an especially upbeat quarterly earnings call this spring, a top ConocoPhillips executive gave a special shout-out to Alaska.
“This was our largest exploration program in Alaska since 2002, and a successful one,” Al Hirshberg, Conoco’s vice president for production, drilling and projects, said.
Hirshberg noted that after drilling a half-dozen exploration wells in the National Petroleum Reserve-Alaska area this past winter, Conoco made three new oil discoveries. And, Hirshberg said, the company confirmed the discovery it announced last year, called Willow, holds quite a lot of oil — 300 million barrels.
Then Hirshberg teased investors with this:
“I think we can see from the appraisal work in Willow that it’s looking more and more like it’ll be able to justify a standalone facility,” Hirshberg said.
Translation? Conoco thinks it’s sitting on so much oil that the company is considering building a major new project in the Reserve, a processing facility. The company’s already big plans for this remote, federally-managed Arctic wilderness are getting even bigger. And environmental groups are watching closely.
A new processing facility would be a major investment for Conoco and a major addition to the landscape. A processing facility is like the nucleus of an oil development: fed by a handful of drill sites, it would be the first stop for oil before it gets sent to the trans-Alaska pipeline. On the North Slope, processing facilities are also like self-contained towns, serving as a home base for a few hundred workers.
Scott Jepsen, Conoco’s vice president for external affairs in Alaska, said if the company built a new processing facility in NPR-A, it would be about the same size as the nearby Alpine facility, located just outside NPR-A. Alpine puts out about 100,000 barrels of oil per day.
But Jepsen said Conoco hasn’t made a final decision on whether to build the project. He said that will come after the federal environmental review process.
“We still have more evaluation work to do. We still have a permitting process to go through,” Jepsen said. “But all the signs that we have seen so far point to the fact that it’s large enough, the rates are going to be high enough, that we can most likely justify a standalone facility out there.”
Conoco has firmly established itself as the dominant oil company in NPR-A. It may be called a “Petroleum Reserve,” but it wasn’t until 2015 that this massive, federally-managed portion of the North Slope first started producing oil. That project was ConocoPhillips’ CD-5 drill site. Since then, Conoco has steadily advanced a series of projects in NPR-A. Its next drill site there, Greater Mooses Tooth 1, is set to start up later this year. The federal permitting process for a third drill site, Greater Mooses Tooth 2, took a major step forward in March.
And in May, Conoco sent a letter to the Bureau of Land Management, the agency that oversees NPR-A, asking to start the environmental review process for what it’s calling the Willow Central Facility.
The Trump administration is eager to help Conoco achieve its goals. During a speech at a recent oil industry conference in Anchorage, top Interior official and former Alaska Department of Natural Resources commissioner Joe Balash said his agency is about to turn its attention to Willow “in a big way.”
Then Balash reiterated one of the Trump administration’s promises to industry: it aims speed up and simplify the environmental review process for projects like Willow.
“As you all know, the process to date has been taking too long, it costs too much money, and it is too complicated,” Balash said.
But environmental groups that keep close tabs on NPR-A see it differently. David Krause with the Wilderness Society in Anchorage said the faster Conoco’s footprint in NPR-A grows, the more difficult it is for them to understand how environmental impacts are adding up in what was, until recently, mostly untouched wilderness.
“We certainly have significant concerns about the rate of development,” Krause said.
Conoco’s processing facility wouldn’t be far from the Teshekpuk Lake Special Area, a biologically rich part of NPR-A the Obama administration put off-limits to oil development. It’s important habitat for migratory bird species and caribou.
But geologists also think there’s significant oil potential there, so the Trump administration is taking a second look at whether the area should be off limits — a move Conoco supports. Krause said that makes his organization nervous about what a big development at Willow could mean in the future.
“The fact that this development is knocking on the door of the Teshekpuk Lake Special Area is very concerning,” Krause said.
But Krause said the Wilderness Society isn’t coming out against the project; Conoco hasn’t released many details at this point.
Those details will become clearer when the Trump administration kicks off the environmental review process, which Conoco anticipates happening later this year.