Ray Metcalfe’s Nov. 5 opinion piece comparing ConocoPhillips’ Alaska profits with the rest of the world was seriously misleading. Metcalfe asserted that ConocoPhillips is making higher per-barrel profits in Alaska than anywhere else. What Metcalfe is comparing is the oil profits in Alaska with the combined oil and natural gas profits everywhere else.
ConocoPhillips is an oil and natural gas company. Oil and gas are frequently found together; they are produced together and their combined financial results are reported together, on a barrel of oil/cubic foot of natural gas, BTU-equivalent basis.
In Alaska, the company’s operations are nearly all oil, and elsewhere they are about a 50/50 split between oil and natural gas. But natural gas only has about 25% of the value of oil on a BTU-equivalent basis.Metcalfe is not reporting per-barrel oil profits. He is reporting the combined oil and natural gas profits. He essentially compares the oil operations in Alaska with the combined oil and natural gas operations everywhere else.
Page 171 of ConocoPhillips’ 2018 Annual Report shows that Alaska has nearly the highest per-barrel production costs in the world, and the highest per-barrel taxes.
— Roger Marks
Anchorage
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