ConocoPhillips buys Chevron, Union Oil holdings on North Slope

ConocoPhillips has consolidated holdings on the North Slope in a purchase of remaining interests of Chevron USA and Union Oil Company in the Kuparuk River and Prudhoe Bay units. The purchase price was $300 million, ConocoPhillips announced Oct. 3.

Chevron and Union were both pioneers in the Alaska oil business, and the sale of their remaining assets is a final step out the door. Chevron, known early as Standard Oil of California, was an early explorer and producer in Cook Inlet and also operated Alaska’s first refinery on the Kenai Peninsula.

Union was also in Cook Inlet early and teamed up with Phillips Petroleum, now part of ConocoPhillips, to build the Kenai liquefied natural gas, or LNG, plant and begin the world’s first long-distance sales of LNG, to Japan.

The acquisition of the two companies North Slope holdings will increase ConocoPhillips share of the Kuparuk River field by about 5% to a range of 94% to 99%, depending on how interests in Kuparuk satellite deposits are counted, and an increase of 0.4% in Prudhoe Bay to about 36.5% of the Unit. ConocoPhillips’ share of Alaska oil production will meanwhile increase by about 5,000 barrels per day, the company said.

“This transaction once again demonstrates our investment in the state,” said Erec Isaacson, president of ConocoPhillips Alaska. “In the first half of 2024 our investments in Alaska projects have exceeded $1.4 billion, underscoring our sustained commitment to Alaska for more than 50 years.”

ConocoPhillips is one of the the “legacy” Alaska producers with its roots on the North Slope reaching back to ARCO Alaska, which ConocoPhillips acquired, and ARCO’s 1977 discovery of the Prudhoe Bay field.

Chevron and Union Oil also have long histories on the North Slope dating from the 1970s and 1980s mainly as explorers. The two companies have gradually reduced their Alaska holdings over the years.

In other North Slope developments, production on the slope increased Oct. 1 as summer maintenance was completed. This following a downturn in August when facilities were taken off-line. Overall production averaged 447,815 barrels per day in September but increased to 477,416 barrels per day on Oct. 1.

The September average was slightly up from 429,412 barrels per day on average in August and down year-over-year from a 453,588 barrels per day average in September 2923, according to Alaska Department of Revenue production data..

The production levels are typical for mid-year in northern Alaska because oil and gas production facilities are less efficient during the summer and become more efficient, processing more crude oil, as colder weather sets in.

By November and December output from fields in northern Alaska usually increases to the 480,000 barrels per day range.

Field-by-field on the North Slope, Alpine field output dipped to 40,592 barrels per day in September, down from 44,485 barrels per day in August, because facilities were off line because of maintenance.

However, year-over-year production also dropped at Alpine, with the field producing 55,785 barrels per day in September, 2023. By Oct.1 Alpine was back to 50,678 barrels per day, however. Alpine is owned and operated by ConocoPhillips.

The Kuparuk River field, also ConocoPhillips owned and operated, averaged 96,964 barrels per day in September, up slightly from a 92,817 barrels per day average in August but down year-over-year from 101,333 barrels per day in September 2023. Kuparuk increased to 108,306 barrels per day on Oct. 1, however.

Prudhoe Bay, the largest North Slope field, produced 292,516 b/d on average in September, up from 272,558 barrels per day in August and also up year-over-year from 277,466 barrels per day in September, 2023. Prudhoe production increased to 298,144 barrels per day on Oct. 1.

Prudhoe Bay the largest but also oldest field on the slope, is operated by Hilcorp Energy with ownership split roughly in thirds with ConocoPhillips and ExxonMobil.

Lisburne, the smallest field on the slope, produced 17,743 b/d on average in September, up slightly from a 17,582 b/d average in August but down from 19,805 barrels per day on average in September 2023.

Although North Slope production is holding generally steady the producing fields are aging and gradually declining. In September, 2018, for example, production averaged 499,394 barrels per day, about 50,000 barrels per day greater than in September 2023.

Production will be increasing in 2025 and 2026 as new projects are completed by companies. ConocoPhillips is expected to complete construction this year at Nuna, an undeveloped deposit in the Kuparuk River field, which is expected to add 20,000 b/d in new output beginning in 2025.

ConocoPhillips moved a production module for Nuna by barge to the North Slope in September bringing it ashore at the Oliktok dock near the Kuparuk field and moving it by road to the new the Kuparuk field Drill Site 3-T.

In 2026, Australia-based Santos, Ltd. will begin production at Pikka, a new project near the Colville River and Alpine field. Pikka will produce 80,000 b/d of new production in an initial phase beginning in 2026. A second phase of development will expand production, Santos has said.

Santos expects to complete all of the field pipeline work for Pikka this winter in anticipation of a project startup in mid-2026, the company has said.

ConocoPhillips will also continue construction at its Willow project this winter. Willow is expected to be complete and starting production in 2029, ConocoPhillips has said.