The BP era in Alaska is ending.
The London-based oil giant announced it intends to sell all of its Alaska operations and interests to Hilcorp for $5.6 billion, in a major shakeup of Alaska’s oil industry, Kallanish Energy reports.
The transaction includes the giant Prudhoe Bay field on Alaska’s North Slope and the 800-mile Trans Alaska Pipeline.
BP owns 26% of Prudhoe Bay, and has been the operator of the prolific oilfield since 1977. Its partners have been ConocoPhillips and ExxonMobil.
BP in Alaska for 60 years
BP began working in Alaska in 1959, and drilled its confirmation well at Prudhoe Bay in 1968. Prudhoe Bay has produced more than 13 billion barrels (Bbbls) of oil and may be able to produce an additional 1 Bbbls in the future.
BP’s Alaska oil production in 2019 is expected to be about 74,000 Bpd. It has 1,600 workers in Alaska. The fate of the workers is unclear.
Hilcorp is the largest private operator in Alaska. It is a privately-owned independent producer based in Houston, Texas, founded by Jeffery Hildebrand. It’s been in Alaska since 2011, and has become the dominant producer on Cook Inlet and in south-central Alaska.
Hilcorp bought BP assets in Alaska in 2014
In 2014, Hilcorp purchased interests from BP in four operated Alaska North Slope oilfields. It produces more than 75,000 barrels of oil-equivalent per day in gross production.
The sale will include BP’s entire upstream and midstream business in the state, including BP Exploration (Alaska) Inc., that owns all of BP’s upstream oil and gas interests in the state, and BP Pipelines (Alaska) Inc’s interest in the Trans Alaska Pipeline System.
The assets being sold also include the Point Thompson and Milne Point fields and leases in the Arctic National Wildlife Refuge.
‘Instrumental in BP’s growth’
“Alaska has been instrumental in BP’s growth and success for well over a half a century, and our work there has helped share the careers of many throughout the company,” said Bob Dudley, BP Group CEO, in a statement.
“We are extraordinarily proud of the world-class business we have built, working alongside our partners and the state of Alaska and the significant contributions it has made to Alaska’s economy and America’s energy security,” he said.
Part of $10B divestment program
He added, “However, we are steadily reshaping BP and today we have other opportunities, both in the U.S. and around the world, that are more closely aligned with our long-term strategy and more competitive for our investment.”
The deal keys the company’s two-year, $10 billion divestment program for 2019 and 2020, Dudley said.
Hilcorp will pay $4 billion near term and $1.6 billion through a later earnout. The deal is expected to close in 2020.
‘A proven track record’
“Energy is a cornerstone of the Alaskan economy and this investment will help drive growth in local energy production, jobs and state and local revenue for many years to come,” Jason Rebrook, president of Hilcorp Energy Co., said, in a release.
“Hilcorp has a proven track record of bringing new life to mature basins, including Alaska’s Cook Inlet and the North Slope, and we have a clear understanding that an experienced local workforce is critical to success,” he said.
Hilcorp will acquire the BP headquarters building in Anchorage.
The tankers to move Alaska oil to markets is not part of the current deal, but BP and Hilcorp are discussing that option, the Anchorage Daily News reported.
This post appeared first on Kallanish Energy News.
