BP announced on Tuesday that it has agreed to sell interests in four BP-operated oilfields on the North Slope of Alaska to Hilcorp. The sale agreement includes all of BP’s interests in the Endicott and Northstar oilfields and a 50 percent interest in each of the Liberty and the Milne Point fields. The sale also includes BP’s interests in the oil and gas pipelines associated with these fields.
“This agreement will help build a more competitive and sustainable business for BP in Alaska” said BP Upstream Chief Executive Lamar McKay. “It will allow us to play to two of our great strengths, managing giant fields and gas value chains. We will now concentrate on continuing development and production from the giant Prudhoe Bay field and working to advance the future opportunity of Alaska LNG.“
The agreement does not affect BP’s position as operator and co-owner of the Prudhoe Bay oilfield nor its other interests in Alaska. BP also expects to submit a development plan for Liberty by the end of 2014. As a result of the sale and subject to approval, Hilcorp is expected to become the operator of the Endicott, Northstar and Milne Point oilfields and their associated pipelines and infrastructure.
“There are some big benefits from this transaction,” said Janet Weiss, President of BP’s Alaska Region. “BP will be able to focus on maximizing production from Prudhoe Bay and advancing the Alaska LNG opportunity. Hilcorp takes ownership of two mature oil fields ready for new investment and activity, and it will operate a third field that is primed for accelerated production. And, the state gets another accomplished operator working the North Slope. Thanks to tax reform, Alaska is now on course for increased investment and production and even the possibility of LNG.”
Approximately 250 employees are associated with the assets included in the agreement and the company is committed to providing clarity about their future as soon as possible. The majority of those BP employees at or supporting Milne Point, Endicott and Northstar are expected to be offered positions with Hilcorp with no break in employment.
Together the assets included in the sale represent approximately 19,700 barrels of oil equivalent a day (boe/d) of net production for BP, less than 15 percent of BP’s total net production on the North Slope.
The sale, which will be subject to state and federal regulatory approval, is anticipated to be complete by the end of the year. Financial details of the transaction are not being disclosed.
In response to the news announced by BP on Tuesday, Alaska’s Governor Sean Parnell said yesterday, “Today’s announcement means another entrepreneurial company will be working to accelerate production and find additional reserves on the North Slope,” Governor Parnell said. “Hilcorp has a proven record of improving production in Cook Inlet, and their new North Slope commitment shows the More Alaska Production Act has created the right environment to attract new companies and competition to the North Slope.”
The announcement comes just days after the Legislature passed Senate Bill 138, Governor Parnell’s bill authorizing Alaska’s participation in the world-scale, Alaska LNG Project, a $45 – $65 billion project that would commercialize Alaska’s vast, untapped reserves of North Slope gas for Alaskans and markets beyond.
“I applaud the thorough and bipartisan deliberations the Legislature had on Senate Bill 138 and believe the process is already bearing fruit,” said Governor Parnell. “Today’s announcement is important, because it builds on BP’s previous commitments of billions of dollars in new oil investments at Prudhoe and Alaska’s legacy fields, and reflects a focus on advancing the Alaska LNG Project, and unlocking gas from Prudhoe and Pt. Thomson.”