Financially Strapped Alaska Gives Go-Ahead to ConocoPhillips Drilling

ConocoPhillips finally gets permission to expand Alaska’s existing North Slope oil field. But it’ll cost the company $7 million in payments to the state and it has to pledge to drill a well by June and make other development steps.

The $7 million in payments will exist only if ConocoPhillips will bring the new leases into production in the coming years. If the company accepts the deal, it might lose the Tofkat-area leases if it does not drill in time.

The targeted area is about 9,000 acres and extends south from ConocoPhillips’ existing Colville River Unit. ¬†Alaska is pushing the speedy drilling to replace revenue after the state decided against auctioning the Tofkat area in a competitive lease sale.

The state is reported to be desperately seeking new revenue to solve its $2.5 billion deficit.