Unless otherwise indicated, "the company,"
"we," "our,"
"us" and "ConocoPhillips" are used in this report
to refer
to the businesses of ConocoPhillips and its consolidated
subsidiaries.
Items 1 and 2-Business and Properties,
contain forward-looking statements
including, without limitation, statements
relating to our plans, strategies,
objectives, expectations and intentions
that are made pursuant to the
"safe harbor" provisions of the Private
Securities Litigation Reform
Act of 1995.
The words
"anticipate,"
"believe," "budget,"
"continue,"
"could,"
"effort,"
"estimate,"
"expect,"
"forecast,"
"goal,"
"guidance,"
"intend," "may,"
"objective,"
"outlook,"
"plan," "potential,"
"predict," "projection,"
"seek," "should,"
"target," "will,"
"would,"
and similar expressions identify forward
-looking
statements.
The company does not undertake
to update, revise or correct any
forward-looking information
unless
required to do so under the federal
securities laws.
Readers are cautioned that
such forward-looking statements
should be read in conjunction with the company's
disclosures under the headings "Risk Factors"
beginning on page
20 and "CAUTIONARY STATEMENT
FOR THE PURPOSES OF THE 'SAFE HARBOR' PROVISIONS
OF THE PRIVATE
SECURITIES LITIGATION
REFORM ACT OF 1995,"
beginning on pa
ge
Items 1 and 2.
Business and Properties
Corporate Structure
ConocoPhillips is an independent E&P company
headquartered in Houston, Texas
with operations and activities in
14 countries.
Our diverse, low cost of supply
portfolio includes resource-rich unconventional
plays in North
America; conventional assets in
North America, Europe, and Asia; LNG developments;
oil sands assets in Canada;
and an inventory of global conventional
and unconventional exploration
prospects.
On December 31, 2021, we
employed approximately 9,900
people worldwide and had total assets of
about $91 billion.
Total
company
production for the year was 1,567 MBOED.
ConocoPhillips was incorporated
in the state of Delaware on
November 16, 2001, in connection with, and in
anticipation of,
the merger between Conoco Inc. and Phillips
Petroleum Company.
The merger between Conoco
and Phillips was consummated on
August 30, 2002.
In April 2012, ConocoPhillips completed the separation
of the
downstream business into an independent,
publicly traded energy company,
Phillips 66.
On January 15, 2021, we completed the acquisition
of Concho Resources Inc. (Concho), an independent
oil and gas
exploration and production
company with operations in New Mexico
and West Texas
focused on the Permian
Basin.
For additional information related
to this transaction,
see
Note 3
.
On December 1, 2021, we completed our acquisition
of Shell Enterprises LLC's (Shell) assets
in the Delaware Basin.
Assets acquired include approximately
225,000 net acres of producing properties
located entirely in Texas.
For
additional information related to
this transaction,
see
Note 3
.
Segment and Geographic Information
We manage our operations
through six operating segments,
defined by geographic region: Alaska;
Lower 48;
Canada; Europe, Middle East and
North Africa; Asia Pacific; and Other International.
For operating segment and
geographic information,
see Note 23
We explore for,
produce, transport and market
crude oil, bitumen, natural gas,
LNG and NGLs on a worldwide
basis.
At December 31, 2021, our operations
were producing in the U.S., Norway,
Canada, Australia, Indonesia,
Malaysia, Libya, China and Qatar.
Business and Properties
Table of Contents
3
ConocoPhillips
2021 10-K
The information listed below
appears in the "Supplementary Data
- Oil and Gas Operations" disclosures following
the Notes to Consolidated Financial Statements
and is incorporated herein by
reference:
●
Proved worldwide crude oil, NGLs, natural
gas and bitumen reserves.
●
Net production of crude oil, NGLs, natural
gas and bitumen.
●
Average sales prices of crude oil,
NGLs, natural gas and bitumen.
●
Average production
costs per BOE.
●
Net wells completed, wells in progress
and productive wells.
●
Developed and undeveloped
acreage.
The following table is a summary of the proved
reserves information included in the "Supplementary
Data - Oil and
Gas Operations" disclosures following
the Notes to Consolidated Financial Statements.
Approximately 86 percent
of our proved reserves are in countries
that belong to the Organization
for Economic Cooperation
and
Development.
Natural gas reserves are converted
to BOE based on a 6:1 ratio: six MCF of natural
gas converts to
one BOE.
See Management's Discussion
and Analysis of Financial Condition and Results of Operations
for a
discussion of factors that will enhance
the understanding of the following
summary reserves table.
Millions of Barrels of Oil Equivalent
Net Proved Reserves at December
31
2021
2020
2019
Crude oil
Consolidated operations
2,964
2,051
2,562
Equity affiliates
63
68
73
Total
Crude Oil
3,027
2,119
2,635
Natural gas liquids
Consolidated operations
644
340
361
Equity affiliates
33
36
39
Total
Natural Gas Liquids
677
376
400
Natural gas
Consolidated operations
1,523
1,011
1,209
Equity affiliates
617
621
736
Total
Natural Gas
2,140
1,632
1,945
Bitumen
Consolidated operations
257
332
282
Total
Bitumen
257
332
282
Total
consolidated operations
5,388
3,734
4,414
Total
equity affiliates
713
725
848
Total
company
6,101
4,459
5,262
Business and Properties
Table of Contents
ConocoPhillips
2021 10-K
4
Alaska
The Alaska segment primarily explores for,
produces, transports and markets
crude oil, natural gas and NGLs.
We
are the largest crude oil producer in Alaska
and have major ownership interests
in two of North America's
largest
oil fields located on Alaska's
North Slope: Prudhoe Bay and Kuparuk.
We also have a 100 percent
interest in the
Alpine Field, located on the Western
North Slope.
Additionally, we
are one of Alaska's
largest owners of state,
federal and fee exploration
leases, with approximately
1.3 million net undeveloped acres at year
-end 2021.
Alaska
operations contributed
19 percent of our consolidated liquids
production and 1 percent of our consolidated
natural gas production.
2021
Crude Oil
NGL
Natural Gas
Total
Interest
Operator
MBD
MBD
MMCFD
MBOED
Average Daily Net Production
Greater Prudhoe Area
36.1
%
Hilcorp
67
16
12
85
Greater Kuparuk Area
89.2-94.7
ConocoPhillips
73
2
73
Western North Slope
100.0
ConocoPhillips
38
2
39
Total
Alaska
178
16
16
197
Greater Prudhoe Area
The Greater Prudhoe Area includes the Prudhoe
Bay Field and five satellite fields, as
well as the Greater Point
McIntyre Area fields.
Prudhoe Bay,
the largest conventional
oil field in North America, is the site of a large
waterflood and enhanced oil recovery
operation, supported by a large
gas and water processing operation.
Prudhoe Bay's western
satellite fields are Aurora,
Borealis, Polaris, Midnight Sun
and Orion, while the Point
McIntyre, Niakuk, Raven,
Lisburne and North Prudhoe Bay State fields are
part of the Greater Point McIntyre
Area.
Field installations include seven production
facilities, two gas plants, two
seawater plants and a central
power
station.
In September 2021, rotary drilling commenced after
18 months
of no drilling, resulting in four wells drilled and
brought online.
To help offset
decline, efforts were focused
on increasing rate through
well work, capacity
enhancements,
less downtime,
and NGL production.
Greater Kuparuk Area
We operate the Greater
Kuparuk Area, which consists
of the Kuparuk Field and four satellite fields:
Tarn, Tabasco,
Meltwater and West
Sak.
Kuparuk is located 40 miles west
of the Prudhoe Bay Field.
Field installations include
three central production facilities
which separate oil, natural
gas and water,
as well as a seawater treatment
plant.
Development drilling at Kuparuk consists
of rotary-drilled wells and horizontal
multi-laterals from existing well
bores utilizing coiled-tubing drilling.
We operated a coiled-tubi
ng drilling rig in the fourth quarter of 2021, resulting
in five operated wells drilled and
brought online.
Western North Slope
On the Western North Slope, we operate
the Colville River Unit, which includes the Alpine Field and
three satellite
fields: Nanuq, Fiord and Qannik.
The Alpine Field is located 34 miles west of the Kuparuk
Field.
Field installations
include one central production facility
which separates oil, natural
gas and water.
The Greater Mooses Tooth
Unit is the first unit established entirely
within the National Petroleum Reserve
Alaska
(NPR-A).
In 2017, we began construction
in the unit with two drill sites: Greater Mooses Tooth
#1 (GMT-1) and
Greater Mooses Tooth
#2 (GMT-2).
GMT-1 achieved
first oil in 2018 and completed drilling
in 2019.
In 2021, the
third and final construction season for
GMT-2 was successfully
completed,
and drilling operations commenced
during the second quarter.
First oil for GMT-2
was achieved in the fourth quarter
of 2021, as planned.
During 2021, we operated a conventional
rotary rig and an extended reach drilling rig
in the Western North Slope,
resulting in seven operated
wells drilled and brought online.
Business and Properties
5
ConocoPhillips
2021 10-K
Exploration
Appraisal of the Willow Discovery,
located 36 miles from Nuiqsut in the Bear Tooth
Unit in the NPR-A, was
conducted in 2020.
There was no appraisal activity
in 2021. In August 2021, an Alaska federal judge
vacated the
U.S. government's
approval granted to
our planned Willow project previously approved
by the BLM in October
The Department of Justice did not appeal the decision and
neither did we.
We are actively supporting the
BLM and Department of Interior as they conduct
the Supplemental Environmental
Impact Statement process to
address issues highlighted by the federal
district court.
In the interim, we are continuing
with FEED work in service
of a final investment decision.
The Stony Hill 1 well located to
the east of the Greater Mooses Tooth
Unit within the NPR-A was plugged and
abandoned in 2021 and expensed as a dry hole.
A 3D seismic survey covering 234 square miles was
completed in 2020 on state
and federal lands.
We are currently
evaluating this seismic data for
future exploration opportunities.
In late 2021, the Coyote Brookian
topset exploration prospect
in the Kuparuk River Unit was tested
with a near
vertical sidetrack from an existing
wellbore.
The well was fracture stimulated
and will undergo well testing early in
2022 to confirm longer term deliverability.
Transportation
We transport the petroleum
liquids produced on the North Slope to Valdez,
Alaska through an 800-mile pipeline
that is part of Trans
-Alaska Pipeline System (TAPS).
We have a 29.5 percent
ownership interest
in TAPS, and we
also have ownership interests
in and operate the Alpine, Kuparuk
and Oliktok pipelines on the North Slope.
Our wholly owned subsidiary,
Polar Tankers,
Inc., manages the marine transportation
of our North Slope
production, using five company-owned, double
-hulled tankers, and charters
third-party vessels, as necessary.
The
tankers deliver oil from
Valdez, Alaska,
primarily to refineries on the west coast
of the U.S.
Lower 48
The Lower 48 segment consists of operations
located in the 48 contiguous U.S. states
and the Gulf of Mexico.
The
segment is organized into
the Permian and Gulf Coast and Rockies
business units with a portfolio of low cost of
supply, short
cycle time, resource-rich unconventional
plays, and conventional
production from legacy assets.
Based on 2021 production volumes, the Lower 48 is the company's
largest segment and contributed
55 percent of
our consolidated liquids production and
64 percent of our consolidated natural
gas production.
In 2021, we completed two acquisitions
significantly increasing our Permian position
in the Lower 48.
On January
15, 2021, we completed the acquisition of Concho
adding complementary acreage across
the Delaware and
Midland basins.
On December 1, 2021, we completed the acquisition of Shell's
Delaware Basin position adding
significant Texas
acreage in the Delaware Basin.
The accounting close date used for
reporting purposes of the Shell
transaction was December 31, 2021.
For additional information related
to these acquisitions,
see Note 3
Business and Properties
ConocoPhillips
2021 10-K
6
2021
Crude Oil
NGL
Natural Gas
Total
MBD
MBD
MMCFD
MBOED
Average Daily Net Production
Delaware Basin
162
27
584
286
Midland Basin
89
9
229
136
Permian-Other
11
2
40
20
Total
Permian
262
38
853
442
Eagle Ford
116
53
251
211
Bakken
59
16
117
94
Gulf Coast and Rockies-Other
10
3
119
33
Total
Gulf Coast and Rockies
185
72
487
338
Total
Lower 48
447
110
1,340
780
At December 31, 2021, we held 10.8 million net acres
of onshore conventional and
unconventional acreage in the
Lower 48, the majority of which is either held by production
or owned by the company.
Our unconventional
holdings total approximately
2 million net acres in the following areas:
●
560,000 net acres in the Bakken, located
in North Dakota and eastern
Montana.
●
200,000 net acres in the Eagle Ford,
located in South Texas.
●
654,000 net acres in the Permian-Delaware
Basin, located in West
Texas
and southeastern New Mexico.
●
266,000 net acres in the Permian-Midland Basin,
located in West Texas.
●
293,000 net acres in other areas with unconventional
potential.
The majority of our 2021 onshore production activities
were centered on continued
development of assets, with
an emphasis on areas with low cost of supply,
particularly in growing unconventional
plays. Our major focus in
2021 included the following areas:
●
Delaware Basin-We operated
six rigs and two frac crews on average
during 2021, resulting in 92
operated wells drilled and 95 operated
wells brought online.
Primarily as a result of our Concho
acquisition, production increased in 2021 compared
with 2020, averaging 286 MBOED and
79 MBOED,
respectively.
●
Midland Basin-We operated
five rigs and two frac crews on
average during 2021, resulting
in 118
operated wells drilled and 102 operated
wells brought online.
Primarily as a result of our Concho
acquisition, production increased in 2021 compared
with 2020, averaging 136 MBOED
and 6 MBOED,
respectively.
●
Eagle Ford-We operated
four rigs and two frac crews
on average in the Eagle Ford
during 2021, resulting
in 93 operated wells drilled and 160 operated
wells brought online.
Production increased in 2021
compared with 2020, averaging
211 MBOED and 186 MBOED, respectively.
●
Bakken-We operated
one rig and one frac crew for parts of the
year in the Bakken,
resulting in 6
operated wells drilled and 21 operated
wells brought online.
Production increased in 2021 compared
with 2020, averaging 94 MBOED and
78 MBOED, respectively.
Dispositions
In the second half of 2021, we completed the sale of certain
noncore assets in the Lower 48.
In January 2022, we
entered into an agreement
to sell our interests in
additional noncore assets in the Lower 48.
This transaction is
expected to close in the second quarter
of 2022.
See Note 3
Facilities
We operate and own,
with varying interests, centralized
condensate processing facilities
in Texas
and New Mexico
in support of our Eagle Ford, Delaware
and Midland assets.
Business and Properties
7
ConocoPhillips
2021 10-K
Canada
Our Canadian operations consist of the Surmont
oil sands development in Alberta and the liquids-rich Montney
unconventional play in
British Columbia.
In 2021, operations in Canada contributed
8 percent of our consolidated
liquids production and 4 percent of our consolidated
natural gas production.
2021
Crude Oil
NGL
Natural Gas
Bitumen
Total
Interest
Operator
MBD
MBD
MMCFD
MBD
MBOED
Average Daily Net
Production
Surmont
50.0
%
ConocoPhillips
69
69
Montney
100.0
ConocoPhillips
8
4
80
25
Total
Canada
8
4
80
69
94
Surmont
Our bitumen resources in Canada are produced
via an enhanced thermal oil recovery method called SAGD,
whereby steam is injected into
the reservoir,
effectively liquefying the heavy
bitumen, which is recovered and
pumped to the surface for further processing.
Operations include two central processing
facilities for treatment
and blending of bitumen.
At December 31, 2021, we held approximately
600,000 net acres of land in the
Athabasca Region of northeastern
Alberta.
The Surmont oil sands leases are located approximately
35 miles south of Fort McMurray,
Alberta.
Surmont is a
50/50 joint venture with Total
Energies SE that offers
long-lived, sustained production.
We are focused on
structurally lowering costs,
reducing GHG intensity and optimizing asset performance.
In 2021, we began processing a portion
of Surmont's blended bitumen at the Diluent Recovery
Unit constructed in
Alberta, unlocking additional value for the
asset by providing market access
to our heavy crude oil.
In 2019, Surmont implemented the use of condensate
for bitumen blending through the central
processing facility
2; enabling the asset to lower blend ratio
and diluent supply costs, gain protection
from synthetic crude oil supply
disruptions and gain optionality on sales products.
The alternative blend project was
complete in October at
central processing facility 1.
Full Surmont Heavy Dilbit (condensate
bitumen blend) was produced across
both
facilities in the fourth quarter of 2021.
Montney
The Montney is an unconventional
resource play located
in northeastern British Columbia.
At December 31, 2021,
we held approximately 300,000
acres of land with 100 percent working interest
in the liquids-rich section of the
Montney.
In 2021, development activity consisted
of drilling three horizontal wells and
bringing 12 wells online.
In addition,
construction on the second phase of our processing
facility started.
Exploration
Our primary exploration focus
is assessing our Montney acreage.
In 2022, appraisal drilling and completions
activity within the Montney will continue to explore
the area's
resource potential.
Additionally, we have
exploration acreage in the Mackenzie
Delta/Beaufort Sea Region and
the Arctic Islands.
Business and Properties
ConocoPhillips
2021 10-K
8
Europe, Middle East
and North Africa
The Europe, Middle East and North
Africa segment consists of operations
principally located in the Norwegian
sector of the North Sea; the Norwegian Sea; Qatar; Libya;
and terminalling operations in the U.K.
In 2021,
operations in Europe, Middle East
and North Africa contributed 12 percent of our consolidated
liquids production
and 14 percent of our consolidated natural
gas production.
Norway
2021
Crude Oil
NGL
Natural Gas
Total
Interest
Operator
MBD
MBD
MMCFD
MBOED
Average Daily Net Production
Greater Ekofisk Area
30.7-35.1
%
ConocoPhillips
49
2
41
58
Heidrun
24.0
Equinor
13
1
35
20
Aasta Hansteen
10.0
Equinor
84
14
Alvheim
20.0
Aker BP
9
13
11
Troll
1.6
Equinor
2
58
11
Visund
9.1
Equinor
2
1
46
11
Other
Various
Equinor
6
21
10
Total
Norway
81
4
298
135
The Greater Ekofisk Area is
located approximately
200 miles offshore Stavanger,
Norway,
in the North Sea, and
comprises four producing fields: Ekofisk,
Eldfisk,
Embla and Tor.
The Tor II redevelopment
achieved first
production in December 2020.
This project consisted of 8 wells that
have all been completed and brought
online
as of May 2021.
Crude oil is exported to Teesside,
England, and the natural gas is exported
to Emden, Germany.
The Ekofisk and Eldfisk fields consist
of several production platforms
and facilities, with development drilling
continuing over the coming years.
The Heidrun Field is located in the Norwegian Sea.
Produced crude oil is stored
in a floating storage unit and
exported via shuttle tankers.
Part of the natural gas
is currently injected into the reservoir for
optimization of
crude oil production, some gas is transported
for use as feedstock in a methanol
plant in Norway,
in which we own
an 18 percent
interest, and the remainder is transported
to Europe via gas processing terminals
in Norway.
Aasta Hansteen is a gas
and condensate field located in the Norwegian Sea.
Produced condensate is loaded
onto
shuttle tankers
and transported to market.
Gas is transported through the
Polarled gas pipeline to the onshore
Nyhamna processing plant for final processing
prior to export to market.
The Troll Field lies in the
northern part of the North Sea and consists of the Troll
A, B and C platforms.
The natural
gas from Troll
A is transported to Kollsnes,
Norway.
Crude oil from floating platforms Troll
B and Troll C is
transported to Mongstad,
Norway, for
storage and export.
The Alvheim Field is located in the northern part of the North
Sea near the border with the U.K. sector,
and
consists of a FPSO vessel and subsea installations.
Produced crude oil is exported via shuttle tankers,
and natural
gas is transported to the Scottish
Area Gas Evacuation (SAGE)
Terminal at
St. Fergus, Scotland, through
the SAGE
Pipeline.
Visund is an oil and gas field located in the North
Sea and consists of a floating drilling, production and processing
unit, and subsea installations.
Crude
oil is transported by pipeline to a nearby
third-party field for storage and
export via tankers.
The natural gas is transported
to a gas processing plant at Kollsnes,
Norway,
through the
Gassled transportation system.
We also have varying
ownership interests in two other
producing fields in the Norway sector of the North
Sea.
Business and Properties
9
ConocoPhillips
2021 10-K
Exploration
In 2021, we prepared for a four
well exploration and appraisal
campaign to take place in 2022.
Planned wells
include Slagugle appraisal and exploration
of the Peder,
Bounty and Lamba prospects.
We were awarded
two new exploration
licenses; PL1122 and PL1123; and two acreage additions,
PL891B and
PL1045B.
Transportation
We own a 35.1 percent interest
in the Norpipe Oil Pipeline System, a 220-mile pipeline which
carries crude oil from
Ekofisk to a crude oil stabilization
and NGLs processing facility in Teesside,
England.
Facilities
We operate and have
a 40.25 percent ownership interest
in a crude oil stabilization and NGLs processing
facility at
Teesside,
England to support our Norway operations.
Qatar
2021
Crude Oil
NGL
Natural
Gas
Total
Interest
Operator
MBD
MBD
MMCFD
MBOED
Average Daily Net Production
Qatargas Operating
QG3
30.0
%
Company Limited
13
8
373
83
QG3 is an integrated development
jointly owned by QatarEnergy (68.5 percent),
ConocoPhillips (30 percent) and
Mitsui & Co., Ltd. (1.5 percent).
QG3 consists of upstream natural
gas production facilities, which produce
approximately 1.4 billion gross
cubic feet per day of natural
gas from Qatar's North
Field over a 25-year life, in
addition to a 7.8 million gross tonnes-per-year
LNG facility.
LNG is shipped in leased LNG carriers destined for
sale
globally.
QG3 executed the development
of the onshore and offshore assets
as a single integrated development
with
Qatargas 4 (QG4), a joint venture
between QatarEnergy and Shell plc.
This included the joint development of
offshore facilities situated
in a common offshore block in the North Field, as
well as the construction of two
identical LNG process trains and associated
gas treating facilities for both
the QG3 and QG4 joint ventures.
Production from the LNG trains
and associated facilities is combined and
shared.
Libya
2021
Crude Oil
NGL
Natural Gas
Total
Interest
Operator
MBD
MBD
MMCFD
MBOED
Average Daily Net Production
Waha Concession
16.3
%
Waha Oil Co.
37
15
40
The Waha Concession consists of multiple concessions
and encompasses nearly 13 million gross acres
in the Sirte
Basin.
In 2021, we had 22 crude liftings from Es Sider,
compared with five crude liftings from Es
Sider in 2020,
primarily due to the absence of a forced shutdown
after a period of civil unrest that ceased production
in 2020.
Business and Properties
ConocoPhillips
2021 10-K
10
Asia Pacific
The Asia Pacific segment has exploration
and production operations in China,
Indonesia, Malaysia and Australia
In
2021, operations in the Asia Pacific segment
contributed 6 percent of our consolidated
liquids production and 17
percent of our consolidated natural
gas production.
Australia
2021
Crude Oil
NGL
Natural Gas
Total
Interest
Operator
MBD
MBD
MMCFD
MBOED
Average Daily Net Production
ConocoPhillips/
Australia Pacific LNG
37.5
%
Origin Energy
680
113
Australia Pacific LNG Pty Ltd
(APLNG), our joint venture with Origin Energy
Limited (37.5 percent) and China
Petrochemical Corporation
(Sinopec) (25 percent),
is focused on producing CBM from
the Bowen and Surat basins
in Queensland, Australia, to supply the
domestic gas market and convert
the CBM into LNG for export.
Origin
operates APLNG's
upstream production and pipeline system,
and we operate the downstream
LNG facility,
located
on Curtis Island near Gladstone, Queensland, as well as
the LNG export sales business.
We operate two
fully subscribed 4.5-million-metric-tonnes-per-year
LNG trains.
Approximately 2,800 net wells
are
ultimately expected to supply both
the LNG sales contracts and domestic gas
market.
The wells are supported by
gathering systems,
central gas processing and
compression stations, water
treatment facilities and an
export
pipeline connecting the gas fields to the LNG facilities.
The LNG is being sold to Sinopec under 20-year sales
agreements for 7.6 million metric tonnes
of LNG per year,
and Japan-based Kansai Electric Power Co., Inc. under
a
20-year sales agreement for approximately
1 million metric tonnes of LNG per year.
In December 2021, the company announced it has
notified Origin Energy that it is exercising
its preemption right to
purchase an additional 10 percent shareholding
interest in APLNG from Origin Energy
for $1.645 billion, which will
be funded from cash on the balance sheet and subject
to customary adjustments.
The effective date of the
transaction is July 1, 2020 with closing anticipated
to occur in the first quarter of 2022 subject to
Australian
government approval.
There will be no change to the operational
structure of the APLNG joint venture,
whereby
Origin Energy will remain the upstream
operator of the natural
gas production and pipeline system,
and
ConocoPhillips Australia will remain the downstream
operator of the LNG facility.
For additional information,
see Note 4
and
Note 10
Exploration
In 2019, we entered into an agreement
with 3D Oil to acquire a 75 percent interest
in and operatorship
of an
offshore Exploration Permit
(T/49P) located
in the Otway Basin, Australia.
We obtained an additional five percent
interest, increasing our interes
t
to 80 percent,
in June 2020.
A 3D seismic survey acquisition was completed in
October 2021, and this data will be evaluated
for future exploration
opportunities.
Indonesia
2021
Crude Oil
NGL
Natural Gas
Total
Interest
Operator
MBD
MBD
MMCFD
MBOED
Average Daily Net Production
South Sumatra
54
%
ConocoPhillips
2
294
51
During 2021, we operated two PSCs in
Indonesia: the Corridor Block located in South Sumatra,
and Kualakurun in
Central Kalimantan.
Currently,
we have production from the Corridor
Block.
Business and Properties
11
ConocoPhillips
2021 10-K
Asset Sales
In December 2021, we announced an agreement to sell our
subsidiary that indirectly owns the company's
54
percent interest in the Indonesia
Corridor Block PSC and a 35 percent shareholding interest
in the Transasia
Pipeline Company.
The effective date for
the transaction is January 1, 2021, with closing planned for
the first
quarter of 2022.
South Sumatra
The Corridor PSC consists of two oil fields and seven
producing natural gas fields.
Natural gas is supplied from the
Grissik and Suban gas processing plants
to the Duri steamflood in central Sumatra
and to markets in Singapore,
Batam and West Java.
In 2019, we were awarded a 20-year
extension, with new terms, of the Corridor PSC.
Under
these terms, we retain a majority interest
and continue as operator for
at least three years
after 2023 and retain a
participating interest until
Exploration
We entered into
the Central Kalimantan
Kualakurun Block PSC in 2015 with an exploration
period of six years.
We
completed the firm working commitment
program in 2017, which included satellite
mapping and a 740-kilometer
2D seismic acquisition program.
After completion of prospect evaluation,
both PSC contractors decided
to
relinquish rights and return this block to
the government.
The relinquishment was approved
by the government in
August 2021.
Transportation
We are a 35 percent owner of
a consortium company that has a 40 percent
ownership in PT Transportasi
Gas
Indonesia, which owns and operates the Grissik
to Duri and Grissik to Singapore natural
gas pipelines.
China
2021
Crude Oil
NGL
Natural Gas
Total
Interest
Operator
MBD
MBD
MMCFD
MBOED
Average Daily Net Production
Penglai
49.0
%
CNOOC
28
28
Penglai
The
Penglai
19-3,
19-9
and
25-6
fields
are
located
in
the
Bohai
Bay
Block
11/05
and
are
in
various
stages
of
development.
Phase 1 and 2 include production from all three
Penglai oil fields.
The
Phase
3
Project
in
the
Penglai
19-3
and
19-9
fields
consists
of
three
new
wellhead
platforms
and
a
central
processing
platform.
First
production
from
Phase
3 was
achieved
in
This
project
could
include
up
to
186
wells, 126 of which have been completed
and brought online as of December 2021.
The Phase 4A Project in the Penglai 25-6 field consists
of one new wellhead platform and achieved
first production
in 2020.
This project could include up to 62 new wells,
14 of which have been completed and
brought online as of
December 2021.
On April 5, 2021, a fire occurred on the non-operated
V platform in the Bohai Bay.
On April 6, 2021, the fire was
extinguished.
We worked with
the operator and implemented a
recovery plan resulting in production
resumption
in December 2021.
Exploration
During 2021, exploration activities in
the Penglai fields consisted of two successful
appraisal wells supporting
future developments in the Bohai Bay
Block 11/05.
Business and Properties
ConocoPhillips
2021 10-K
12
Malaysia
2021
Crude Oil
NGL
Natural Gas
Total
Interest
Operator
MBD
MBD
MMCFD
MBOED
Average Daily Net Production
Gumusut
29.5
%
Shell
19
19
Malikai
35.0
Shell
13
13
Kebabangan (KBB)
30.0
KPOC
2
66
13
Siakap North-Petai
21.0
PTTEP
1
1
Total
Malaysia
35
66
46
We have varying stages
of exploration, development and
production activities across approx
imately 2.7 million net
acres in Malaysia, with working interests
in six PSCs.
Four of these PSCs are located in waters
off the eastern
Malaysian state
of Sabah: Block G, Block J, the Kebabangan Cluster
(KBBC), which we do not operate, and
Block
SB405, an operated exploration
block acquired in 2021.
We also operate another
two exploration blocks,
Block
WL4-00 and Block SK304, in waters off the
eastern Malaysian state
of Sarawak.
Block J
Gumusut
We currently have
a 29.5 percent working interest
in the unitized Gumusut Field.
Gumusut Phase 2 first oil was
achieved in 2019.
Development drilling associated
with Gumusut Phase 3, a four-well program,
is planned to
commence in the first quarter of 2022.
First oil is anticipated in 2022.
KBBC
The KBBC PSC grants us a 30 percent working interest
in the KBB, Kamunsu East and
Kamunsu East Upthrown
Canyon gas and condensate
fields.
In 2020, we recognized dry hole expense
and impaired the associated carrying
value of unproved properties in
the Kamunsu East Field that is no
longer in our development plans.
KBB
During 2019, KBB tied-in to a nearby third-party
floating LNG vessel which provided increased
gas offtake capacity.
Production from the field has been reduced since Janu
ary 2020, due to the rupture of a third-party pipeline which
carries gas production from KBB to
one of its markets.
The pipeline operator has initiated
repairs and is working
toward pipeline testing during 2022.
Block G
Malikai
We hold a 35 percent working
interest in Malikai.
This field achieved first production
in December 2016 via the
Malikai Tension
Leg Platform, ramping to
peak production in 2018.
The KMU-1 exploration well was completed
and started producing through
the Malikai platform in 2018.
Malikai Phase 2 development first
oil was achieved in
February 2021.
Siakap North-Petai
We hold a 21 percent working
interest in the unitized Siakap
North-Petai (SNP) oil field.
First oil from SNP Phase 2
was achieved in November 2021.
Exploration
In 2017, we were awarded operatorship
and a 50 percent working interest
in Block WL4-00, which included the
existing Salam-1 oil discovery and encompassed
0.6 million gross acres.
In 2018 and 2019, two exploration and
two appraisal wells were drilled,
resulting in oil discoveries under evaluation
at Salam and Benum, while two
Patawali wells were expensed
as dry holes in 2019.
Further exploration and appraisal
drilling is planned for 2022.
In 2018, we were awarded a 50 percent
working interest and operatorship
of Block SK304 encompassing 2.1
million gross acres off the coast
of Sarawak,
offshore Malaysia.
We acquired 3D seismic over the acreage
and
completed processing of this data
in 2019.
Exploration drilling is planned for 2022.
Business and Properties
13
ConocoPhillips
2021 10-K
In February 2021, we were awarded
operatorship and an 85 percent
working interest in Block SB405 encompassing
1.4 million gross acres off the coast
of Sabah, offshore Malaysia.
Acquisition of a 3D seismic survey over the
acreage is planned for 2022.
Other International
The Other International segment includes activities
in Colombia as well as contingencies associated
with prior
operations in other countries.
As a result of our completed Concho acquisition
on January 15, 2021, we refocused
our exploration program
and announced our intent to pursue
a managed exit from certain areas.
Colombia
We have an 80 percent
operated interest
in the Middle Magdalena Basin Block VMM-3 extending
over
approximately 67,000 net acres.
In addition, we have an 80 percent working
interest in the VMM-2 Block which
extends over approximately
58,000 net acres and is contiguous to
the VMM-3 Block.
The blocks are currently in
Force Majeure following a preliminary
injunction temporarily suspending hydraulic
fracturing activities.
Argentina
On September 16, 2021, ConocoPhillips Petroleum
Holdings BV signed and closed the sale of shares
in
ConocoPhillips Argentina Holdings
Sarl and ConocoPhillips Argentina Ventures
SRL.
With this transaction,
we
completed the exit from our Argentina
holdings.
See Note 3
Venezuela
For discussion of our contingencies in Venezuela,
see Note 11
Other
Marketing Activities
Our Commercial organization
manages our worldwide commodity portfolio,
which mainly includes natural gas,
crude oil, bitumen, NGLs and LNG.
Marketing activities are performed
through offices in the U.S., Canada, Europe
and Asia.
In marketing our production, we attempt
to minimize flow disruptions, maximize
realized prices and
manage credit-risk exposure.
Commodity sales are generally made at
prevailing market prices at
the time of sale.
We also purchase and sell third
-party volumes to better position the company
to satisfy customer demand while
fully utilizing transportation and storage
capacity.
Natural Gas
Our natural gas production,
along with third-party purchased gas, is primarily marketed
in the U.S., Canada and
Europe.
Our natural gas is sold to a diverse
client portfolio which includes local distribution
companies; gas and
power utilities; large industrials; independent,
integrated or state
-owned oil and gas companies; as well as
marketing companies.
To reduce
our market exposure and
credit risk, we also transport natural
gas via firm and
interruptible transportation
agreements to major market hubs.
Crude Oil, Bitumen and Natural Gas Liquids
Our crude oil, bitumen and NGL revenues are derived from
production in the U.S., Canada, Asia, Africa and
Europe.
These commodities are primarily sold under contracts
with prices based on market indices, adjusted
for location,
quality and transportation.
LNG
LNG marketing efforts are
focused on equity LNG production
facilities located in Australia
and Qatar.
LNG is
primarily sold under long-term contracts with
prices based on market indices.
Business and Properties
ConocoPhillips
2021 10-K
14
Energy Partnerships
Marine Well Containment
Company (MWCC)
We are a founding member of
the MWCC, a non-profit organization
formed in 2010, which provides well
containment equipment and technology
in the deepwater U.S. Gulf of Mexico.
MWCC's containment
system
meets the U.S. Bureau of Safety
and Environmental Enforcement
requirements for a subsea well
containment
system that can respond
to a deepwater well control
incident in the U.S. Gulf of Mexico.
Oil Spill Response Limited (OSRL) - Subsea Well
Intervention Service (SWIS)
OSRL-SWIS is a non-profit organization
in the U.K. that is an industry funded joint initiative
providing the capability
to respond to subsea well-control
incidents.
Through our SWIS subscription, ConocoPhillips
has access to
equipment that is maintained and stored
in a response ready state.
This provides well capping and containment
capability outside the U.S.
Oil Spill Response Removal Organizations
(OSROs)
We maintain memberships
in several OSROs across the
globe as a key element of our preparedness
program in
addition to internal response resources.
Many of the OSROs are not-for-profit
cooperatives owned by
the member
companies wherein we may actively
participate as a member of the board of directors,
steering committee, work
group or other supporting role.
In North America, our primary OSROs include the Marine Spill Response
Corporation for the continental
U.S. and Alaska Clean Seas and Ship Escort/Response
Vessel System
for the Alaska
North Slope and Prince William Sound, respectively.
Internationally,
we maintain memberships in
various OSROs
including Oil Spill Response Limited, the Norwegian Clean Seas
Association for Operating Companies,
Australian
Marine Oil Spill Center and Petroleum
Industry of Malaysia Mutual Aid Group.
Technology
We have several
technology programs that
improve our ability to develop
unconventional reservoirs,
increase
recoveries from our legacy fields,
improve the efficiency of our exploration
program, produce heavy
oil
economically with less emissions and implement sustainability
measures.
In early 2021, we established a multi-disciplinary Low
Carbon Technologi
es organization to
support the company's
net-zero road
map for scope 1 and 2 emissions, understand
the new energies landscape, and prioritize
opportunities for future competitive investment.
Throughout 2021, we executed
emissions reduction projects
across our global portfolio including production
efficiency measures and methane and flaring reductions.
We also
completed pre-development
work to evaluate large scale
wind energy opportunities to power our operations
in
the Permian, North Sea and Bohai Bay.
Within the new energies landscape, the company
has prioritized
opportunities in CCUS and hydrogen.
In 2021, CO2 storage sites
were evaluated along the Texas
and Louisiana
Gulf Coast and we initiated activities to
provide carbon capture and storage
to industrial emitters.
2021 also saw
early investments in enabling hydrogen
technologies and we began evaluating
hydrogen opportunities
in both
domestic and international markets
We are the second-largest
LNG liquefaction technology provider
globally.
Our Optimized Cascade
®
LNG
liquefaction technology has been licensed for
use in 27 LNG trains around the world, with feasibility
studies
ongoing for additional trains.
Business and Properties
15
ConocoPhillips
2021 10-K
Delivery Commitments
We sell crude oil and natural
gas from our producing operations
under a variety of contractual arrangements,
some of which specify the delivery of a fixed and determinable
quantity.
Our commercial organization
also enters
into natural gas sales
contracts where the source of the natural
gas used to fulfill the contract can
be the spot
market or a combination of our reserves
and the spot market.
Worldwide, we are contractually
committed to
deliver approximately 1.3 trillion
cubic feet of natural gas
and 159 million barrels of crude oil in the future.
These
contracts have various
expiration dates through
the year 2030.
We expect to fulfill these delivery
commitments
with third-party purchases, as supported
by our gas management agreements; proved
developed reserves; and
PUDs.
See the disclosure on "Proved Undeveloped
Reserves" in the "Supplementary Data
Operations" section following
the Notes to Consolidated Financial Statements,
for information on the
development of PUDs.
Competition
ConocoPhillips is one of the world's
leading E&P companies based on both production and reserves,
with a globally
diversified asset portfolio.
We compete with private,
public and state-owned companies
in all facets of the E&P
business.
Some of our competitors are larger
and have greater resources.
Each of our segments is highly
competitive, with no single competitor,
or small group of competitors,
dominating.
We compete with numerous
other companies in the industry,
including state-owned companies,
to locate and
obtain new sources of supply and to produce
oil, bitumen, NGLs and natural gas
in an efficient, cost-effective
manner.
We deliver our production into
the worldwide commodity markets.
Principal methods of competing
include geological, geophysical
and engineering research and technology; experience
and expertise; economic
analysis in connection with portfolio management;
and safely operating
oil and gas producing properties.