Noting that the company has "a rich history" in technological research and development in the recovery of conventional resources, ConocoPhillips is dedicating $150 million in 2008 to the development of nonconventional oil and gas resources and the development of new energy sources, such as renewables, said CEO Jim Mulva.
Speaking at the company's annual analyst meeting in New York last week Mulva said he believes "that further research is the key to unlocking the value of our nonconventional resources and advancing the development of alternative energy sources."
ConocoPhillips expects to spend approximately $400 million on technology in 2008, primarily to progress such technologies as reservoir imaging, steam-assisted gravity drainage, coal gasification, carbon capture and sequestration, cellulosic ethanol conversion and refining processes. The company added that bolstering its skilled workforce also remains a top priority, which has become difficult to do in recent years as the current industry workforce ages and the line of qualified replacements is short or nonexistent. Raymond James energy analysts late last month noted that more energy professionals are retiring, and fewer are entering the field (see related story), (see NGI, March 3; Feb. 18).
"Further, we are investing strongly in our people by enhancing our efforts to recruit, retain and develop a highly capable, demographically balanced and diverse work force," Mulva said. "We are making good progress, and our plans to develop both a technology center and a corporate learning center will help ensure our employees attain their maximum potential."
In outlining the company's path forward, Mulva told analysts that ConocoPhillips' strategic objectives and operating plans will enable the company to utilize its portfolio of "high-quality assets" in delivering growth and enhancing value for shareholders, while overcoming a variety of challenges inherent to the current business environment.
"We have a strong portfolio of opportunities, and development plans are under way so that we can fully capitalize on their potential," Mulva said. "We are benefiting from our talented work force and ongoing focus on capital discipline and project execution, financial optimization, operating excellence, and safety and environmental stewardship. As a result, we believe ConocoPhillips is well positioned to operate successfully in the business environment we foresee for 2008 and beyond -- one that seems likely to be characterized by strong energy demand. Although we face intense competition for access to new resources and the prospect of legislation on climate change, we have taken steps to enable ConocoPhillips to operate effectively and deliver value as we manage the challenges ahead."
He reaffirmed ConocoPhillips' intent to fund a capital program of $15.3 billion in 2008, to select asset sales that facilitate ongoing renewal of its portfolio, and to continue pursuing efficiency in executing its development projects, drilling programs and base operations.
In its exploration and production segment, the company outlined its plans to advance an asset portfolio that is resource-rich, with more than 50 billion boe of existing resources, including 10.6 billion boe of proved reserves at year-end 2007. Mulva said ConocoPhillips has "leading positions" in both natural gas production and heavy-oil acreage in North America, a legacy asset position in the North Sea, and strong growth prospects in the Asia Pacific, Russia and Caspian, and Middle East regions. He said the company expects to sustain a long-term, average production growth rate of 2% and a five-year reserve replacement average of 100% or more. ConocoPhillips also anticipates new opportunities to emerge from its business development efforts and from a replenished exploration program that is increasing the company's exposure to high-potential prospects.
Mulva also noted that energy supply security and the challenge of climate change caused by carbon emissions are "interrelated and must be solved together." To that end, he said ConocoPhillips supports enactment of a comprehensive U.S. energy policy and a mandatory national framework to reduce carbon emissions. He added that the company is working to conserve and recycle more of the water used in its operations, and funding research into new techniques that could utilize the water produced in association with oil and natural gas for agricultural and industrial applications.
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