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ConocoPhillips produces strong Alaska profits

Company, legislator debate cost of doing business in Alaska

Posted: July 25, 2012 - 11:07pm

ConocoPhillips Co. made a billion dollars in after-tax Alaska profits so far this year, including $551 million in the last quarter, the company announced Wednesday.

The company used the earnings announcement as example of why Alaska should lower its taxes, while an Alaska legislator said that proved there was no need for the reduction the company sought.

Conoco spokesperson Natalie Lowman acknowledged the company was doing well in Alaska.

“We’ve never said we don’t make money here, that’s what we’re here for,” she said.

What the company has been arguing, she said, is that if Alaska had “better fiscal terms,” or lower taxes, her company would invest more in Alaska and increase production and jobs.

The company also reported $202 million in capital investment in Alaska, while investing $1.288 billion in the Lower 48 and Latin America during the quarter.

“It would seem to me that people would be more concerned about getting more investment in Alaska, similar to that the Lower 48 is doing because of their more attractive fiscal regime,” she said.

State Sen. Bill Wielechowski, D-Anchorage, said Wednesday that what he saw in the Conoco numbers was “blockbuster” profits that showed the company was doing extremely well despite the tax rates under the Alaska’s Clear and Equitable Share tax system.

“Every year since ACES was passed Alaska has outperformed the Lower 48 by significant margins,” he said.

Wielechowski called Alaska “one of the most profitable places in the world for the oil and gas industry.”

He cited data in the Conoco earnings report showing that the company’s net income per barrel of oil equivalent was $28.16 in Alaska, and $2.97 down south.

Lowman called that an unfair comparison, because the term “barrel of oil equivalent” includes both natural gas and oil.

“Natural gas is hugely depressed compared to crude oil right now,” she said.

Wielechowski acknowledged that it was “always difficult to get an apples-to-apples comparison,” but said that for the last 10 years, before and after ACES and in different market conditions, Alaska has had above average profit margins for the industry.

ConocoPhillips reported producing 190 thousand barrels of oil per day in the last quarter, down from the 200,000 it averaged all last year and the 208,000 from the year’s first quarter.

That number will decline next quarter for planned maintenance downtime, company officials said.

They told industry analysts that will likely reduce production by 40,000 to 50,000 barrels per day during the quarter.

• Contact reporter Pat Forgey at 523-2250 or at patrick.forgey@juneauempire.com.

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