ConocoPhillips: Willow likely big

ConocoPhillips appears to have all but decided on “stand-alone” oil processing facilities for its Willow oil discovery in the northeast National Petroleum Reserve-Alaska. This is significant in that it would require a multi-billion-dollar new investment by the company in years following 2020, which allows time for regulatory approvals, and that it would extend support infrastructure into the northeast NPR-A, which would help make other discoveries in the area economically viable. Willow’s discovery was first announced in early 2017 and the drilling of confirmation wells last winter seem to reaffirm the company’s early optimism that Willow is large, with about 300 million barrels of recoverable reserves.

ConocoPhillips recently led a “master plan” for Willow with the U.S. Bureau of Land Management indicating that facilities including a processing plant, camp, air eld along with road and pipeline connec- tions to the Alpine eld will likely be needed for Willow. The apparent size of the discovery means that processing the oil and gas in the existing Alpine eld plants would not be feasible.

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A lawsuit led by an Alaska citizen raising constitutional issues could throw a wrench into a state plan to sell bonds to retire about $900 million in accumulated oil tax credit liability. Eric Forrer, a Juneau commercial fishermen and former University of Alaska regent, claims the bonds are similar to state general obligation bonds which require a public vote. State attorneys argue the bond payments are subject to appropriation by the Legislature and not general obligations of the state, and are therefore constitutional.

However, the lawsuit will at least cause a delay in getting bonds sold and the tax credits paid. Revenue Commissioner Sheldon Fisher hopes to get at least $700 million paid later this year, which would allow explorers to get back to work on projects that were stalled in 2016 and 2017 because of the tax credit payment problem.