New CP Alaska president excited about return
New ConocoPhillips Alaska President Erec Isaacson should have a pretty good idea of what it will take to remain competitive on the North Slope in the rapidly evolving oil industry. That’s because he just was the competition.
Isaacson took to the helm of the Alaska business unit in January following the retirement of Joe Marushack, who had held the spot since 2015. He and his family came north from the Lower 48 where Isaacson led development and operations of the company’s Eagle Ford and offshore Gulf Coast assets, which produced an average of 241,000 barrels of liquids per day last year.
The South Texas Eagle Ford basin is one of ConocoPhillips’ — and the country’s — top focus areas for unconventional oil production and Isaacson said in a May 14 interview with the Journal that he believes Lower 48 unconventional, or shale, oil will largely continue to set the base of oil markets that other regions around the globe must match.
That’s in part due to the relative fast pace of the work that is regularly measured in weeks or months, compared often to years on the North Slope. And it’s more than just the ability to quickly match activity and production levels to market conditions; it’s the ability to innovate at the same pace.
“You’re finishing off wells every couple weeks. You drill and then move on to the stimulation phase and that ability to learn rapidly and continue to optimize really quickly,” Isaacson said of work in the shale fields of the Lower 48.
“You can try different things and learn really quickly whether or not it works and then you can optimize your program and continue to work in it from that standpoint; whereas up here, you’re not turning things over as quick. You have to take the opportunity to learn a little bit differently, through maybe just statistics. You just have to be more purposeful about the way that you learn, the way that you optimize (in Alaska).”
ConocoPhillips doubled down on its unconventional oil bet last year when the company announced a deal to purchase fellow shale producer Concho Resources for $8 billion, a further indication that the Lower 48 will remain Alaska’s biggest competition for oil capital within ConocoPhillips as well as broader markets for years to come, according to Isaacson.
He is well versed in the fundamentals of the North Slope industry despite being only a few months into the Alaska president position because it is not his first time here.
He first reported to work in Alaska in 2006 as the company’s exploration manager when ConocoPhillips was starting to explore the National Petroleum Reserve-Alaska in earnest. Before heading overseas in 2010 for roles leading operations in Qatar and Indonesia, he also did a stint as Alaska vice president of commercial assets at a time when ConocoPhillips still operated Cook Inlet gas fields and the Kenai LNG plant when cargoes were regularly being sent to Japan.
He was also a representative for the company on the Trans-Alaska Pipeline System Owners Committee.
“It was a real opportunity to see the full value chain of the oil and gas industry,” Isaacson said.
During his first tour north, ConocoPhillips was looking in the NPR-A to repeat the massively successful Alpine field, which began producing in 2001, and had picked up federal leases in the Chukchi Sea. At the time, many in the industry envisioned a big move offshore as sea ice gradually retreated and oil prices remained high.
That early NPR-A exploration is now starting to turn into oil production with the development of the two Greater Mooses Tooth drill sites — first oil from GMT-2 is expected late this year — but the company never struck Alpine 2.0. The shale-induced oil market reset of 2014-15 has all but evaporated former visions of massive Arctic offshore oil fields even if the resources are there.
Arctic offshore oil just can’t compete with the price standard set by Lower 48 unconventional production. However, Isaacson noted that Alaska’s innovations have come in the form of new onshore discoveries and major advancements in the sustainability of North Slope developments.
While ConocoPhillips did not replicate Alpine in its initial NPR-A exploration seasons, the company has turned the shallow, conventional Nanushuk oil formation find first popularized by Armstrong Energy and Repsol in the Pikka Unit into the $6 billion Willow project in the NPR-A and other satellite prospects as well.
“That Brookian topset play that is Willow and in the Pikka area — that was stuff that we weren’t really chasing back then,” Isaacson said of his first stint in Alaska.
The opportunity to lead development of a large, modern oil project on the scale of Willow, which could produce up to 160,000 barrels per day at its peak, is something he said he finds truly exciting; so is being in a place where there is still plenty of largely unexplored territory.
“In some ways it’s part of the hunt. Part of the excitement you had in the original oil and gas industry is going out there and conducting that exploration activity,” Isaacson, a trained geophysicist, described.
The Colorado native also mentioned several times, unprovoked, that he enjoys winter among the other aspects of the Alaska lifestyle that made him want to eventually return after leaving roughly a decade ago.
“I like the mountains, the skiing. I like the winter and the outdoor pursuits, so as a family, we really enjoyed it here,” Isaacson said.
He hopes his family can spend this summer reacquainting themselves with the once-familiar parts of Alaska and finding new favorites.
“For us it’s just kind of being active up here again,” he added.
On the business side, the rest of the year will be much about restarting after the forced reset of 2020.
Isaacson said he wants to get back to the Slope more frequently as COVID-19 travel and camp space limitations are relaxed to meet more of the people doing the field work and see some of the infrastructure that didn’t exist the last time he worked in Alaska, such as the highly successful CD-5 drill site and the Greater Mooses Tooth projects.
He also wants to “reinforce the safety culture that has made ConocoPhillips so successful in working on the North Slope,” Isaacson said. “That’s one of my key responsibilities when going up to the Slope: engaging with our employees, reinforcing our safety culture, reinforcing the way we work and the way we develop things here in Alaska.”
ConocoPhillips is drilling again at CD-5, development wells are planned at GMT-2, and it is conducting workover operations in the large Kuparuk River field this year.
According to Isaacson, ConocoPhillips and the other working interest owners of Prudhoe Bay have also agreed to restart drilling there later this year.
ConocoPhillips is also continuing engineering and design work on the facilities for Willow while on-the-ground development is paused in the midst of two lawsuits challenging the federal government’s environmental review of the company’s plan for the project. Isaacson reiterated that no major decisions would be made regarding the future of Willow until the lawsuits filed by conservation and Alaska Native organizations are resolved.
The parties have asked federal Alaska District Court Judge Sharon Gleason to expedite the suits so a decision can be reached prior to next winter’s North Slope construction season.
“Barring those legal risks, it’s competitive within our portfolio and we’re doing a lot of work right now, spending a lot of money heading towards getting that engineering done so we can be in a position to make (a final investment decision),” he said of Willow.
Looking out further, he said the State of Alaska must maintain a stable oil and gas fiscal regime to garner investment dollars, particularly as pressure on Arctic developments continue to intensify and even though the state still faces significant annual budget deficits.
“Alaska has a risk premium, so if you think about being attractive for investment you have to consider that sort of risk premium that you’re operating in the Arctic — from a regulatory standpoint — that really underpins the need for an attractive, stable fiscal regime in order to attract that capital investment in the long-term,” Isaacson said.
Elwood Brehmer can be reached at [email protected].