Beginning May 1, ConocoPhillips no longer will be among the ranks of the Big Oil integrated producers. Once Phillips 66, the refining and marketing arm, spins off, the Houston-based company will become the leading pure-play explorer in North America — a position it’s ready to handle, incoming CEO Ryan Lance said Monday.

Lance, who now leads international exploration and production (E&P) led a conference call with energy analysts to discuss the “new” company, which in North America will be sharply focused on liquids-rich opportunities both in the onshore and in the Gulf of Mexico (GOM), he said.

Production growth “will take us to over 1.8 million b/d by 2016,” he told analysts. Output from the E&P company this year is forecast to be 1.55-1.6 million boe/d. Most of the growth will be organic — and over the next 10 years the company expects to convert 8-10 billion boe of its global portfolio to proved reserves.

“Exploration will be driven by long-term growth,” said Lance. Like many of the bigger producers, ConocoPhillips has quietly and steadily built its unconventional portfolio. Last year alone it added 600,000 net acres in several plays, including the Niobrara and Wolfcamp formations.

Seven pilot programs are under way in unconventional plays across North America. The company also has ramped up an exploration effort in Australia’s Canning Basin, considering an emerging unconventional play as well as Poland, where it’s progressing a pilot program.

But it’s North America where the bulk of its focus will be to 2016. Twenty-six percent of North American output will come from liquids-rich U.S. unconventionals in the Eagle Ford and Bakken shales, as well as the Permian Basin by then, said Lance.

“We just really have scratched the surface right now,” he said. “We’ve got to work on that. You want to be certainly a first mover or a very, very fast follower, and that’s our intention.”

North America is especially “impactful,” said Lance, with 3-5% production compound average growth return projected from high-return programs. The company’s technical strengths, he said, are in unconventionals, the Arctic and in heavy oil.

By 2016 the Lower 48’s unconventional plays are expected to provide 210,000 boe/d, while Canada’s oilsands are slated to produce 80,000 boe/d. In total, the upstream company is forecast to produce more than 550,000 boe/d.

ConocoPhillips has 228,000 net acres in the Eagle Ford, with 77% weighted to liquids. In the Permian Basin the company has 1.1 million net acres that are 60% liquids. And in the Bakken Shale, ConocoPhillips holds 207,000 net acres.

Also on tap in North America is exploration in the GOM, where last year it was awarded 74 blocks in the deepwater Paleogene play, noted Lance.

North American exploration and appraisal activity is deep this year. In the U.S. onshore the focus is on the Eagle Ford, Bakken, Wolfcamp, Niobrara and Avalon. In Canada exploration is to be trained on the Canol, Duvernay and Montney shale programs. And in Alaska the producer will be spending most in the Chukchi Sea, said Lance.

In the GOM, ConocoPhillips plans to appraise the Tiber and Shenandoah prospects. It also is planning two deepwater wildcat wells, Coronado and Bioko.

The producer has no need to stock its portfolio for a while because it already has a solid warehouse of resources around the world — unconventional and conventional, onshore and in the offshore. Globally the company has an estimated 43 billion boe of resources to convert to captured reserves that would “provide a means to deliver growth well beyond 2016,” Lance said.

Still on the table are plans to sell $8-10 billion of the global holdings that just don’t fit into the revamped strategy. Among them are North American gas fields, whose promise has fallen as gas prices have tanked.

ConocoPhillips as a pure-play E&P would be unique among its competitors in that it would have the “best features of a large independent and the returns focus of a major,” said Lance. “But we will never be too big or too slow [to react]. We will have a deep inventory combined with sophisticated technology opportunities. These characteristics will carry on with us…with an exclusive upstream focus…” Without the burden of integrated operations, ConocoPhillips would have the “competency of a major but the focus of an independent.”

The biggest challenge facing ConocoPhillips and its peers in building unconventional oil and gas output in the United States “starts and ends with infrastructure,” Lance said. The producer now is working to not exceed infrastructure in its onshore plays, especially in the Permian Basin. Despite the play’s longevity, the abundance of new resources has made building new infrastructure critical, he said.

©Copyright 2012Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.