August 27, 2019
BP announced that it has agreed to sell its entire business in Alaska to Hilcorp Alaska, based in Anchorage, Alaska. Under the terms of the agreement, Hilcorp will purchase all of BP’s interests in the state for a total consideration of $5.6 billion.
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 Alaska, and BP Pipelines (Alaska) Inc.’s interest in the Trans Alaska Pipeline System (TAPS).
Bob Dudley, BP group chief executive, said: “Alaska has been instrumental in BP’s growth and success for well over half a century and our work there has helped shape the careers of many throughout the company. 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.
The deal includes BP’s stake in Prudhoe Bay, the 800-mile trans-Alaska pipeline, the Point Thomson and Milne Point fields, and leases in the Arctic National Wildlife Refuge, on land owned by an Alaska Native village corporation.
Hilcorp will inherit the BP building in Anchorage, where many of BP’s employees work, said Megan Baldino, a BP spokeswoman. The deal does not include oceangoing oil tankers owned by BP that move crude oil out of Alaska, though BP and Hilcorp are in conversations about those assets, Baldino said.
How BP’s employees will be affected is unknown, said Baldino.
“Hilcorp will have to come in, look at our business and determine what the organization looks like moving forward,” she said.
Today's announcement marks the start of an exciting new chapter for Prudhoe Bay - Janet Weiss
Janet Weiss, regional president, BP Alaska, added: “Today’s announcement marks the start of an exciting new chapter for Prudhoe Bay. Alaska has been a core part of BP for 60 years and saying goodbye will not be easy. Our people have achieved incredible success over the decades developing and maintaining these hugely important assets, but we are confident this sale is in BP’s and the state’s best interests and the business will be best positioned for the future with Hilcorp. We will do all we can to ensure they are able to quickly build on the strong foundation that we and others have built here.”
BP began working in Alaska in 1959, drilling the confirmation well for the Prudhoe Bay oilfield in 1968 and in the mid-1970s helped build the 800-mile Trans Alaska Pipeline. BP began producing oil from Prudhoe Bay in 1977. The giant oilfield – the most prolific in U.S. history – has to date produced over 13 billion barrels of oil and is estimated to have the potential to produce more than one billion further barrels. Read a timeline of BP and Hilcorp in Alaska.
BP’s net oil production from Alaska in 2019 is expected to average almost 74,000 barrels a day. BP operates Prudhoe Bay, with a working interest of 26%, and holds non-operating interests in the producing Milne Point and Point Thomson fields. It also holds non-operating interests in the Liberty project and exploration lease interests in the Arctic National Wildlife Refuge (ANWR). In addition to shares in TAPS and its operator the Alyeska Pipeline Service Company, BP is divesting its midstream interests in the Milne Point Pipeline and the Point Thomson Pipeline.
Approximately 1,600 employees are currently associated with BP’s Alaska business and BP is committed to providing clarity about their future as soon as possible as part of the transition process with Hilcorp.
Hilcorp has been operating in Alaska since 2012 and is today the largest private oil and gas operator in the state, currently operating more than 75,000 barrels of oil equivalent a day (boe/d) gross production. In 2014 Hilcorp purchased interests from BP in four operated Alaska North Slope oilfields.
BP continues to develop its business in the U.S., where between 2005 and 2018 it invested over $115 billion, more than any other energy investor. In the second quarter of 2019, BP’s net oil and gas production from the U.S. averaged over 921,000 boe/d, from major interests in Alaska, onshore Lower 48 and deepwater Gulf of Mexico.
In late 2018, BP acquired a portfolio of high-quality onshore US oil and gas interests from BHP for $10.5 billion, adding 190,000 boe/d net production. BP also continues to develop its business in the deepwater Gulf of Mexico, bringing on a series of new projects on its major producing assets. The new $9 billion Argos platform on the Mad Dog field is expected on stream in 2021.
Bob Dudley added: “Our exit from Alaska does not in any way diminish BP’s commitment to America. We remain very bullish on the U.S. energy sector. In just the last three years we have invested more than $20 billion in the U.S. and we will continue to look at further investment opportunities here.”
Alex DeMarban is a longtime Alaska journalist who covers the oil and gas industries and general assignments. Reach him at 907-257-4317 or email@example.com.