Conoco gives up stake in North Slope project seen as precursor to gas line

Construction on Exxon Mobil’s Point Thomson field in December 2015. Image courtesy of Exxon Mobil/MSI Communications

ConocoPhillips has confirmed it’s giving up its small stake in the Point Thomson field on the North Slope.

The move has some observers wondering if it’s a bad sign for the state’s effort to build a massive natural gas line.

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Point Thomson is one of the state’s newest oil and gas projects. It’s about 60 miles east of Prudhoe Bay and started producing last year. Exxon operates the project and BP is the other major owner. Conoco only had about a 5 percent interest in the field.

Conoco spokeswoman Natalie Lowman said the company wants to focus more on its core projects, like the Kuparuk and Alpine oil developments west of Prudhoe Bay.

“I think everyone’s aware that the oil price is in a slump right now, and so in this current oil price environment, we are scrutinizing all our investments,” Lowman said. “And Point Thompson unit does not compete in our portfolio with other projects.”

Today, Point Thomson is producing a liquid called natural gas condensate. But the field’s real potential is its massive natural gas reserves. That can’t be sold until a gas pipeline is built to carry it approximately 800 miles from the North Slope to market.

The state of Alaska recently took over leadership of the gas line project from Conoco, BP and Exxon. It aims to start construction in 2019. But amidst low natural gas prices, the project faces big financial challenges.

Lowman said giving up a stake in Point Thomson doesn’t mean Conoco doesn’t support the gas line.

“This decision has no reflection on our support for a state-led project to monetize North Slope gas. We have been and are still willing to make our gas available for sale at the wellhead,” Lowman said.

But Kenai Peninsula Borough oil and gas advisor Larry Persily said Conoco’s decision to walk away from Point Thomson doesn’t bode well for the project.

“It confirms to me the gas line is not coming anytime soon or you would have held on to it, because then Point Thomson could be a moneymaker,” Persily said.

However, Alaska Gasline Development Corporation spokeswoman Rosetta Alcantra said as long as the companies are willing to sell gas, the state isn’t worried about Conoco’s decision on Point Thomson.

“We aren’t that concerned,” Alcantra said.

In a call with investors yesterday, Conoco reported it earned $99 million in Alaska in the first quarter of 2017. Lowman said during that period, the company paid about $250 million in taxes to the state.

Globally, Conoco reported a first-quarter loss of $19 million — an improvement from the first quarter of last year, when the company lost $1.2 billion amidst crashing oil prices.

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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.