The Alliance October 23, 2008 Energy Security Erec Isaacson Vice President, Commercial Assets ConocoPhillips Alaska, Inc.
Cautionary Statement FOR THE PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 The following presentation includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. You can identify our forward-looking statements by words such as anticipates, expects, intends, plans, projects, believes, estimates, and similar expressions. Forward-looking statements relating to ConocoPhillips operations are based on management s expectations, estimates and projections about ConocoPhillips and the petroleum industry in general on the date these presentations were given. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Further, certain forward-looking statements are based upon assumptions as to future events that may not prove to be accurate. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements. Factors that could cause actual results or events to differ materially include, but are not limited to, crude oil and natural gas prices; refining and marketing margins; potential failure to achieve, and potential delays in achieving, expected reserves or production levels from existing and future oil and gas development projects due to operating hazards, drilling risks, and the inherent uncertainties in interpreting engineering data relating to underground accumulations of oil and gas; unsuccessful exploratory drilling activities; lack of exploration success; potential disruption or unexpected technical difficulties in developing new products and manufacturing processes; potential failure of new products to achieve acceptance in the market; unexpected cost increases or technical difficulties in constructing or modifying company manufacturing or refining facilities; unexpected difficulties in manufacturing, transporting or refining synthetic crude oil; international monetary conditions and exchange controls; potential liability for remedial actions under existing or future environmental regulations; potential liability resulting from pending or future litigation; general domestic and international economic and political conditions, as well as changes in tax and other laws applicable to ConocoPhillips business. Other factors that could cause actual results to differ materially from those described in the forward-looking statements include other economic, business, competitive and/or regulatory factors affecting ConocoPhillips business generally as set forth in ConocoPhillips filings with the Securities and Exchange Commission (SEC), including our Form 10-K for the year ending December 31, 2007, as updated by our quarterly and current reports on Forms 10-Q and 8-K, respectively. ConocoPhillips is under no obligation (and expressly disclaims any such obligation) to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise. Slide 2
Oil Supply Challenge MMBPD 140 120 100 80 60 40 20 Observed decline Projected global oil demand Natural decline Required capacity addition 19 MMBPD 22% of 2010 demand 59 MMBPD 57% of 2020 demand 88 Existing production 0 2005 2010 2015 2020 2025 2030 Significant capacity additions required Source: Based on IEA World Energy Outlook 2007, natural decline forecast at 8% rate Observed decline forecast at 4.5% rate requires substantial investment Slide 3
North Slope Historic Production 2192 1918 Thousands of Barrels per Day 1644 1370 1096 822 545 274 0 Source: Alaska Department of Natural Resources 2007 Annual Report Slide 4
Increasing Cost Environment PPI 240 220 200 U.S. Oil Field Equipment & Machinery Cost PPI Recent cost growth nearly 10%/yr 180 160 140 Historic cost increases 2-3%/yr 120 1990 1995 2000 2005 Source: US Bureau of Labor Statistics, 2008 Slide 5
70% 60% 50% 40% 30% 20% 10% 0% Slide 6 1994 1996 1998 2000 2002 2004 2006 2008 1992 1990 1988 1986 Oil Price Volatility 1974 1976 1978 1980 1982 1984 Source: EIA, 2008 Volatility is trending upward
Limited Access Abroad 1960s Today Full IOC access NOC reserves (equity access) Russian companies NOC reserves 1% Russia 14% 85% Full IOC access 7% 12% 8% 73% IOC = International oil company NOC = National oil company NOC reserves (no equity access) Only 7% of world reserves are fully accessible by IOCs Source: PFC Energy, Oil & Gas Journal, BP Statistical Review 2007 Note: Excludes unconventional crude oil and bitumen reserves Slide 7
Most of our Oil is Imported United States, 41% Canada, 12% Canada, 12% Saudi Arabia, 7% Saudi Arabia, 7% Venezuela, 6% Other, 10% Other, 10% Virgin Virgin Islands, Islands, 2% 2% Russia, 2% Iraq, Iraq, 3% 3% Nigeria, Nigeria, 6% 6% Mexico, Mexico, 5% 5% Algeria, Algeria, 3% 3% Angola, 3% Source: API, The Truth About Oil and Gasoline: An API Primer, June 6, 2008 Slide 8
Finding New Sources of Energy Traditional sources of oil and gas New sources Alternative energy Renewable fuels Slide 9
Energy Diversity Traditional Sources Oil and natural gas Onshore Offshore Slide 10
Alaska North Slope Gas North Slope known resource ~ 35 Tcf Prudhoe Bay 8 Bcf/d gas of production currently reinjected 4 Bcf/d represents 6-8% of total US demand Source: DOE Report, 2008 Alaska Gas Owners Others State ConocoPhillips BP ExxonMobil Slide 11
2008-2009 Exploration Exploration for 2009: 2 wells in NPRA Focusing on the Greater Mooses Tooth Unit Delineating known accumulations Slide 12
Chukchi Sea Initial Drilling 5 wells from 1989-1991 Resulted in two discoveries Chukchi Sea Program Area OCS Sale 193 Held Feb 6 th, 2008 ~5400 tracts (30mm acres) 488 tracts acquired by industry MMS Resource Estimate 11.3 BBO & 51.8 TCF Burger #1 discovery ~14 TCF (on Shell and ConocoPhillips leasehold) Source: MMS Chukchi Sea Province Summary, 2006 Slide 13
Restricted Access at Home 36.8 billion barrels of U.S. Oil Off Limits Pacific 10.4 Bbl Lower 48 4.8 Bbl Atlantic 3.8 Bbl Alaska 14.2 Bbl Gulf/Deepwater 3.6 Bbl Potentially enough oil and natural gas to power 20 million cars for 60 years and 60 million homes for more than 42 years (API, The Truth About Oil and Gasoline: An API Primer, September 19, 2008) Slide 14
Energy Diversity - New Sources Heavy oil, oil sands Natural gas hydrates Slide 15
Heavy Oil Resource Estimates Oil Oil Resource (OOIP billion mmstb) STB) 6000 6 5000 5 4000 4 3000 3 2000 2 1000 1 0 Ugnu West Sak Water Floodable Water Floodable (Current Dev. Area) (Current Dev. Area) Ugnu Thermal Ugnu Thermal Ugnu Non-Thermal Ugnu Non-Thermal Viscous West Sak (Western West West Sak) Sak) West West Sak Sak 10.4 10.4 B bbls B bbls Ugnu Ugnu20.2 20.2 B B bbls bbls 20 50 75 100 200 400 500 750 1,000 2,500 Viscosity (cp) 5,000 10,000 25,000 100,000 1,000,000 More Slide 16
Gas Hydrate Potential Ongoing technology development Patented methane hydrate technology DOE field trial Gas hydrates execution team Source: USGS, from DOE 1998a Slide 17
Energy Diversity - Alternatives & Renewables Alternative fuels Ethanol Next-generation biofuels Renewable diesel fuel Coal gasification Renewable energy Wind Solar Other low-carbon sources Slide 18
Oil and Gas Half of our Energy in 2030 The U.S. will require 19% more energy in 2030 * Excludes ethanol and other biofuels, they are counted in biomass and renewables Source: API, The Truth About Oil and Gasoline: An API Primer, June 6, 2008 Slide 19
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