ConocoPhillips backs away from $1 billion budget

Company officials say figure planned before oil tax hike

Posted: Sunday, December 16, 2007

ANCHORAGE - ConocoPhillips is backing away from figures announced recently that included $1 billion in capital spending in Alaska next year.

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On Thursday, company executives said the budget was prepared in the fall, before the Legislature raised oil tax rates. Conoco authorized $1 billion for drilling and other Alaska oil field work, but the company now must re-evaluate all its projects in light of the tax increase, said Jim Bowles, Conoco's Alaska president.

"I would anticipate we'll spend less than that allocation," he said.

Houston-based Conoco is Alaska's top oil and gas producer and the top exploration spender.

Earlier this month the company announced a global capital spending plan of $15.3 billion, including $1 billion for Alaska - 28 percent more than the company budgeted last year.

According to the budget announcement, the money would go for further development of small satellite fields near Conoco's large Alpine field on the North Slope. The company also said it planned to pursue development of the West Sak heavy oil deposit and continue work in the Prudhoe Bay and Kuparuk oil fields.

In a special session that ended Nov. 16, state lawmakers raised the tax rate on oil profits from 22.5 percent to 25 percent.

Many legislators and Gov. Sarah Palin said they wanted to capture a larger share of the wealth being generated from oil pumped from state land. In recent months oil has commanded record prices close to $100 a barrel.

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