ConocoPhillips’ Expanded Play in the Permian Could Come at the Expense of Alaska

October 20, 2020

When news broke of ConocoPhillips’ purchase of Permian independent Concho, one of the first things that went through Alaska State Director Rick Whitbeck’s head was, “How will this affect their long-term strategy in Alaska?”

With hundreds of oilfield jobs already lost this year from geopolitical events, including COVID-19, any reduction of ConocoPhillips’ 1,000 Alaska employees would be continued bad news for the energy community in our great state.

With Concho a major player in Permian Basin production – holding 550,000 net acres split between the Delaware and Midland sub-basins – the $9.7 billion deal is a clear indication that ConocoPhillips is all-in on the Permian.

Forbes noted that analysts were positive on the acquisition, with Tudor, Pickering, Holt & Co. noting the purchase aids ConocoPhillips by providing “…significant scale in the Permian and reducing concentration to various regulatory uncertainties in Alaska.”

Oh yes, “regulatory uncertainty”.  In one respect, it is also known as the ongoing fight against oil tax “reform”.  Four times, energy worker opponents have tried to change oil tax policy in the past 15 years.  The one time they succeeded, jobs were lost, exploration budgets were gutted, and even at per-barrel prices double (and nearly triple) what they are today didn’t jump-start exploration. 

The second “regulatory uncertainty” is what could happen under a Biden presidency, if his promised ban on fracking, along with no new leasing of federal lands and waters for development are implemented on day 1, as he has assured his supporters.  With much of the North Slope developed through fracking, and with some of the largest areas of potential growth federally-owned, the effects of a Biden presidency could absolutely eviscerate the job market.

While Power The Future is excited about the Permian-area jobs that should grow with the ConocoPhillips/Concho deal, we can’t help but wonder if Alaska will experience job loss in either the short or long term.  For a state where energy is a cornerstone economic driver, that would be significantly bad news.  We’ll be sure to stay on top of this situation, and will remind our amazing friends in Alaska and throughout the US that elections have consequences.