39
AOGA Kenai Peninsula Community Luncheon August 19, 2013
AOGA
Kenai Peninsula
Community Luncheon
August 19, 2013
Alaska Oil and Gas Association
Purpose
• Serve as single point of contact
for Alaskans on the state’s oil and
gas industry
• Provide a forum for discussion
and a point of decision on issues
that affect the industry
Mission
Long-term viability of the
Alaska’s Oil & Gas Industry for
the benefit of all Alaskans
Oil & Gas Has been Good to Alaska –
Jobs & Revenue
State of Alaska has collected $160+ billion from oil &
gas since 1959
• Oil & gas continue to dominate state’s unrestricted
revenue, accounting for 93% ($8.8 billion) in FY 2012
• State estimates 90% of its revenue will continue to
come from oil and gas – even with falling production
Industry creates jobs and provides income for many
• 44,800 jobs and $2.65 billion in annual payroll (does not
include State jobs, or jobs related to capital budgets)
• 1 = 9 - Nine oil industry-related jobs created in
Alaska for every primary company job
C
O
M
M
U
N
I
T
Y
Production Decline Is Real
Rich in Resources
State Land
Cook Inlet
• 599 mbo
• 19 tcf gas
Onshore North Slope
• Conventional
• 5 bbo
• 35 tcf gas
• Heavy/viscous
• 24-33 bbo
• Unconventional
• 2 bbo
• 12 tcf gas
Federal Land
Offshore Arctic
• 27 bbo
• 132 tcf gas
NPR-A
• 896 mbo
• 53 tcf gas
ANWR
• 10 bbo
• 35 tcf gas
mbo – millions of barrels of oil
bbo – billions of oil
tcf – trillion cubic feet
8 8 8 8 8
Integrity Urgency Ownership Alignment Innovation
Hilcorp A Company Built on Energy
Alaska Oil & Gas Association Luncheon
August 19, 2013
9 9 9 9 9
Hilcorp Overview
Who are we?
– One of the largest US based private E&P companies, based on production
Founded in 1988
– Fortune Magazine’s Top 100 “Best Places To Work” in America - #7
** 2013: Top Ranked Oil & Gas company AND Alaskan Employer **
Where are we going?
– Vision: to be the premier private energy company in the industry
– In the midst of a 5-year plan to double the size of the company
5-year plan termed “Dream 2015” well underway
– Metrics: (1) production, (2) reserves, and (3) equity value
10 10 10 10 10
Alaska Milestones
• Announce Chevron acquisition: July 2011
• Close on Chevron Acquisition: January 2012
• Announce Marathon Acquisition: April 2012
• 2012 Invest: $238 million
• Close on Marathon Acquisition: February 2013
• 2013 Invest: $330 million
11 11 11 11 11
Oil Production
Hilcorp Alaska Net Oil Production
12 12 12 12 12
Success Onshore: Swanson River Production
13 13 13 13 13
100
1000
10000
100000
daily p
rod
ucti
on
rate
Gas MCF/D Oil BOPD
Success Offshore: Monopod Platform Production
14 14 14 14 14
Spotlight: Happy Valley
Ave
rag
e M
on
thly
Pro
du
ctio
n R
ate
(M
cfd
)
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14
Happy Valley Field Production History
Max Field Rate
(14.774 Mcfd - April 2013)
Hilcorp began
operating field
15 15 15 15 15
More to Come…
Swanson River Field
Ninilchik
Susan Dionne Pad
16 16 16 16 16
More to Come…
Enhancing Offshore Operations
2 Built for purpose pulling units
MONCLA RIG 301
Granite Point Platform
Bruce Platform
HAK #1
Dolly Varden Platform
King Salmon Platform
Granite Point Platform
17 17 17 17 17
$814MM
$80MM
$96MM
$8MM Gov’t Payments
Royalty to Individuals
Payroll
Goods & Services
Total Impact
2012 2013 Hilcorp Alaska Financial Impact…
18 18 18 18 18
Support Industry is Critical…
As of August 13, 2013
637,678 Contract Man hours this year
19 19 19 19 19
Wrap-up: Is the Cook Inlet barrel half full or half empty?
HALF FULL In the Cook Inlet region, the USGS estimates mean undiscovered
volumes of nearly 600 million barrels of oil, about 19 trillion
cubic feet of gas, and about 46 million barrels of natural gas
liquids.
Contractor base getting stronger
Encouraging results
HALF EMPTY
Constrained natural gas market
Risk of regulation creep
Development
Point
Thomson
Project
August 2013
Development
About Point Thomson – Overview
21
We’re excited that Point Thomson will contribute to:
• Opening new portions of the North Slope
• Establishing infrastructure for potential future development
• Investing in Alaska’s human resources
• Taking a strategic next step towards North Slope gas development
Development
About Point Thomson – Overview
22
• Discovered in 1977
• Located 60 miles east of Prudhoe Bay and Pump Station 1 of TAPS
• Reservoir contains
- About 25% of known North Slope gas resource
- 200 million barrels of condensate
Development
About Point Thomson - Initial Production Facility
Scope
• Produce 10,000 barrels per day of condensate into TransAlaska Pipeline System
• Support pipeline extension, with a capacity of 70,000 BPD
• Establish critical infrastructure (roads, pier, camp, airstrip, gas processing plant,)
23
Process
• One production well, and two
injection wells
• Cycle 200 million cubic feet of
natural gas per day
• Directional drilling minimizes
environmental footprint
Development
Infrastructure Investment
24
July 2008 September 2008
August 2013 February 2013
August 2010
Development
Infrastructure Investment
Winter / Summer 2013
• Pipeline infrastructure in place with 2,200
vertical support members (VSM) installed
• Diesel tanks installed
• Permanent service pier in place
• Camp completed in August
• Airstrip to be commissioned in October
Ice Road Construction
25
Permanent Camp
VSM Installation
Diesel Tanks in Transit
Development
Infrastructure Investment
Winter 2014 – Summer 2015
• Install gathering and export
pipelines
• Mobilize drilling rig to west pad
26
Piping Installation
Drilling
Facilities Hookup & Commissioning
Winter 2015 – Summer 2016
• Point Thomson facilities and
pipeline operational
• First production into TAPS!
Development
Investing in Human Resources
27
By the Numbers
• 600+ people working on site this summer
• Over 1,000 Alaskans employed in total during the summer work season
Commitment to Local Hiring
• Over 85% local hiring
• 65 Alaskan companies
• All contractors are expected to comply with
ExxonMobil’s local hiring standards
Development
Human Capital: Project Contractors
Peak Oilfield Services
ASRC
Valmont
SSD Tyco
Dryden & Lerue Kumin RSA Morris Engineering Group
Universal Welding Flowline Alaska
ATS
CB&I
Jesse Engineering Seven Sisters
Builders Choice Inc. NANA Construction
ICE Services Alaska Power
Lone Star
Landstar
Asiana Chipolbrok
Rickmers
BBC
ATS APL
Lynden Maersk
Lynden Bowhead / Crowley
Northstar Terminal & Stevedore Co.
AK Railroad Co.
Umiaq Big Horn Trucking
Totem Ocean Express
Horizon Lines
Lynden Transport / LAC
NAC
Sourdough Express
Samson Tug & Barge
AK Airlines
Carlile
Port of Anchorage
Crowley Marine
Bowhead Transportation
NMS
Everts Air Cargo
CIRI / Cruz Marine AK
CH2MHill
Ukpeagvik (UIC)
Tikigaq
Naniq Logistics
Nanuq
Ryan Air
SLR ABR
ERM
LGL
Kuukpik
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Development
Human Capital: AK Contractors
Peak Oilfield Services
ASRC
Valmont
SSD
Tyco
Dryden & Lerue Kumin RSA Morris Engineering Group
Universal Welding
Flowline Alaska
ATS
CB&I
Jesse Engineering
Seven Sisters
Builders Choice Inc. NANA Construction
ICE Services Alaska Power
Lone Star
Landstar
Asiana Chipolbrok
Rickmers
BBC
ATS APL
Lynden Maersk
Lynden
Bowhead / Crowley
Northstar Terminal & Stevedore Co.
AK Railroad Co.
Umiaq Big Horn Trucking
Totem Ocean Express
Horizon Lines
Lynden Transport / LAC
NAC
Sourdough Express
Samson Tug & Barge
AK Airlines
Carlile
Port of Anchorage
Crowley Marine
Bowhead Transportation
NMS
Everts Air Cargo
CIRI / Cruz Marine AK
CH2MHill
Ukpeagvik (UIC)
Tikigaq
Naniq Logistics
Nanuq
Ryan Air
SLR ABR ERM LGL
JAGO Kuukpik
ERA Alaska
NMS Security Alaska Clean Seas
Hyundai Heavy Industries Co. LTD
URS
Baker
PND Engineers, Inc
NANA WorleyParsons
PRL
Logistics, Inc.
FOSS KENTZ
Engineers & Constructors
BEACON Occupational Health and Safety Services
Fagioli
NANA Oilfield
Services, Inc.
Haskell
Corporation
Kuukpik
Arctic Services
Doyon Associated, LLC AFC
GCI
PANPROJECTS
Panalpina Group
BELL & Associates Construction
Alutiiq
Peak
Oilfield Services Co.
ERA Helicopters. LLC
Alaska Dreams Inc. Industrial Building Solutions
HDR
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Development
Human Capital: Permanent Operators
30
Class of 2013
• First class of 11 operators already in training
• Dedicated individuals from across Alaska, including Anchorage, Barrow,
Nikiski, and Homer
• Hiring process for next class begins Fall 2013
Donald Maxon
Homer, AK
Ashley Messer
Kenai, AK
Development
Looking Forward: Alaska Southcentral LNG
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Objective
• Tap full value of North Slope gas by establishing the infrastructure needed
to serve both domestic and global markets
Project Impact
• Estimated Total Cost: $45 – $65+ Billion
• Peak Construction Workforce: 9,000 – 15,000 jobs
• Operations Workforce: ~1000 jobs in Alaska
Development
Alaska Southcentral LNG: Project Concept Description
Gas Treating •Located at North Slope or Southcentral LNG site
•Remove CO2 and other gases and dispose / use
•Footprint: 150 - 250 acres
•Peak Workforce: 500 - 2,000 people
•Required Steel: 250,000 - 300,000 tons
•Among largest in world
Liquefaction Plant • Capacity: 15 – 18 million tonnes per annum (MTA)
3 trains (5-6 MTA / train)
• Potential areas: 22 sites assessed in Cook Inlet, Prince
William Sound and other Southcentral sites
• Footprint: 400 - 500 acres
• Peak Workforce: 3,500 - 5,000 people
• Required Steel: 100,000-150,000 tons
Storage / Loading • LNG Storage Tanks, Terminal
• Dock; 1 - 2 Jetties
• Design based on 15– 20 tankers
• Peak Workforce: 1,000-1,500 people
Pipeline
•Large diameter: 42”- 48” operating at >2,000 psi
•Capacity: 3 - 3.5 billion cubic feet per day
•Length: ~800 miles (similar to TAPS)
•Peak Workforce: 3,500 - 5,000 people
•Required Steel: 600,000 - 1,200,000 tons
•State off-take: ~5 points, 300-350 million cubic
feet per day, based on demand
Producing Fields •~35 TCF discovered North Slope resource
•Additional exploration potential
•Anchored by Prudhoe Bay and Pt. Thomson with
~20 years supply available
•Use of existing and new North Slope facilities
•Confirmed range of gas blends from PBU/PTU can
generate marketable LNG product
•Peak Workforce: 500 – 1,500 people
Development
In Conclusion
• Point Thomson is a pioneering endeavor. It
opens:
a new era for ExxonMobil Alaska;
a new region of the North Slope;
new resource, revenue, and employment
opportunities for Alaska.
• With our partners, this work is laying the
foundation for future gas development on the
North Slope.
• Alaska has the opportunity to become a global
gas leader. We’re exited to be contributing to
the next chapter in Alaska’s energy legacy.
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Production Decline Is Real
Business as Usual Fiscal Plan:
GF Spending Not Sustainable
GF Annual Growth Rate = 4.5
Governor Principles for Oil Tax Reform
Key Principles for Sound Policy
• Be fair to Alaskans
• Encourage new oil production
• Be simple and restore balance
• Be durable and long-term in nature
• Avoid changes that artifically creates “winners
& losers”
Senate Bill 21 is improvement over ACES &
is significant and crucial tax reform
Accomplishes all Governor’s Principles
• Eliminates high ACES progressivity
• Maintains key credit provisions
• Creates incentives for new production from
legacy & non-legacy fields
• Makes Alaska attractive to compete for
investment
Definition of Instability
Referendum to Repeal
SB 21 = Threat to All Alaskans
Work Together. Win Together.
