IE 11 is not supported. For an optimal experience visit our site on another browser.

ConocoPhilips: $50 oil 'unsustainable'

Oil prices are not sustainable at their current level above $50 a barrel but are also unlikely to fall back to the $20 levels of the past, the head of U.S. oil giant ConocoPhillips said on Thursday.
/ Source: Reuters

Oil prices are not sustainable at their current level above $50 a barrel but are also unlikely to fall back to the $20 levels of the past, the head of U.S. oil giant ConocoPhillips said on Thursday.

“I don’t think necessarily that $50 to $55 oil is sustainable. I also think the probability of seeing $20 oil is not that probable,” ConocoPhillips Chairman and CEO James Mulva told reporters after the company’s annual shareholder meeting.

U.S. oil futures prices on Thursday rose to $51 a barrel, with continued concerns over rising global demand countering recent builds in consumer nation stockpiles.

Mulva said ConocoPhillips remained interested in finding and producing new oil in places like Iraq, Libya and potentially Alaska’s Arctic National Wildlife Refuge -- if it opens up to drilling under the White House energy plan.

Mulva said poor security in Iraq, which has the second-largest oil reserves behind Saudi Arabia, remained a serious barrier to entering the country’s oil industry.

Regarding Libya, Mulva told reporters the company continued to make progress toward re-entering the North African nation. “Hopefully, in the next several months, we’ll re-enter,” Mulva said. “It’s just a matter of time.”

ConocoPhillips is a member of the Oasis Group of companies that had to abandon their oil concessions in Libya when the U.S. expanded sanctions in the 1980s.

Mulva said ConocoPhillips -- the largest oil producer in Alaska -- was no longer actively lobbying Washington to open up the contentious Arctic National Wildlife Refuge to drilling, though he would not rule out activity there if the government opens it to exploration.

“Our objective as a company is to produce, through the use of technology, what we’ve already found,” Mulva said, adding “we’ll see what happens” in terms of ANWR.

Refining investment
Mulva said ConocoPhillips, which is also the largest refiner in the United States with more than two million barrels per day of capacity, would invest heavily to increase its ability to handle cheaper, more-abundant sour crudes.

Mulva said Houston-based ConocoPhillips, which held its annual meeting at a hotel next door to its headquarters, is committed to spending $3 billion between 2006 and 2010 to increase its capacity to refine heavy sour crude.

“We’re spending this money to process low-quality crude into high-quality refined products,” Mulva told shareholders. Most of the spending will be in the U.S., he said.
Mulva said the company would increase its heavy sour crude oil refining capacity to 41 percent from 28 percent.

Spending likely would be concentrated in the U.S. Midwest, which would take Canadian heavy oil, and on the U.S. Gulf Coast, which receives heavy sours from South America and the Middle East.

Furthermore, the company plans to up its refining capacity for oils with high acid content to 24 percent from 11 percent.

At the meeting, shareholders overwhelmingly re-elected Mulva as chairman along with fellow directors Norman Augustine, Larry Horner and Charles Krulak.

A union-sponosored proposal to tighten executive pay was shot down by a large margin, too. However, another proposal to require a majority vote -- rather than a plurality -- in the election of directors passed with a 50.65 percent vote.

Mulva acknowledged the apparent sentiment of nearly half his shareholders, saying the board would give “more consideration” to changing its election standard.