ConocoPhillips reports profits in Alaska, but losses elsewhere

ConocoPhillips is the largest oil producer in Alaska.  (LM Otero / AP)
ConocoPhillips is the largest oil producer in Alaska. (LM Otero / AP)
JUNEAU — ConocoPhillips reported losing $179 million in the quarter that ended June 30, compared to profits of $2.1 billion in the same quarter last year.

But its Alaska operations, reported separately Thursday, remained profitable even while oil prices plunged over the last year.

The company is closely watched as the largest producer of oil in Alaska, as well as being the major oil company that reports the most detail about its Alaska operations.

Thursday it also commented on its natural gas operations in the state, including its just-announced plans to sell most of its Cook Inlet natural gas production and to later develop a large pipeline from the North Slope to export liquefied natural gas.

Losses in Lower 48

In Alaska during the quarter, Conoco reported earning $195 million, compared to a loss of $293 million in its Lower 48 operations.

For the same quarter a year ago, ConocoPhillips made $627 million in Alaska, with the difference evidenced by the price it reported getting for Alaska oil during the two quarters. Last quarter it got $61.51 per barrel, compared with $108.93 last year. Production declined by 19,000 barrels of oil equivalent per day, to 174,000 barrels, which the company attributed to normal field decline and downtime for maintenance.

Despite losing money, Conoco executives said the company’s top priority was continuing to pay dividends to stockholders, which it recently increased. One of the ways it is paying for that, it said, is “high-grading” its portfolio of assets, and selling off the less desirable ones.

This week the company announced it was offering for sale its north Cook Inlet and Beluga River gas production operations.

Progress with partners

CEO Ryan Lance told industry analysts the company continually looks at rationalizing its assets and “eliminating the bottom end of the portfolio.” In response to a question he emphasized it was keeping its LNG plant in Nikiski.

Another analyst questioned how Conoco, which has announced cuts to its capital spending worldwide, though not in Alaska, would fund the big investment that AKLNG, the big natural gas pipeline project, would take.

But Lance said they were still making progress with their partners, which include the state and the large natural gas leaseholders, on the project.

“There’s still a lot of work to go do to get an aligned view around the fiscals and state’s participation, and what that’s going to look like,” he said.

Gov. Bill Walker has discussed a possible special session of the Alaska Legislature in the fall to consider legislation to advance that project.

Lance told the analysts that such decisions might be made late this year or “into 2016.”

That depends on getting alignment with the state and its participation in the project, he said.

Related stories from around the North:

anada:  Greenpeace responds to report Canada is ill-prepared for Arctic oil, Radio Canada International

Finland: Finns still sharply divided over wind power, Yle News

Greenland: Arctic oil and gas must stay in ground to restrict warming to 2°C says study, Blog by Mia Bennett

Iceland:  From Arctic Circle 2013-2014, a big drop in the price of oil, Blog by Mia Bennett

Norway:  Norway surpasses Russia as top gas supplier, Barents Observer

Russia: Rosneft buys time in Arctic, Barents Observer

United States:  Clinton has ‘doubts’ about Obama’s Arctic drilling policies, Alaska Dispatch News

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