BP to Exit Alaska in Setback For State -- WSJ
28 Agosto 2019 - 02:02AM
Noticias Dow Jones
By Miguel Bustillo and Bradley Olson
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (August 28, 2019).
BP PLC is exiting Alaska after six decades, marking the latest
blow to the state's oil industry, which has diminished amid the
rise of shale drilling in the continental U.S.
The British oil company is selling all of its Alaska assets,
including its share of the giant Prudhoe Bay oil field and its
interests in the Trans-Alaska Pipeline System, to Hilcorp Energy
Co. for $5.6 billion. Privately held Hilcorp, based in Houston, is
Alaska's largest private operator.
For BP, it is the end of an era. The London company and its
predecessors have been producing and exploring for Alaskan oil for
decades, and participated in many of the largest discoveries on the
state's remote northern edge. BP was also a key player behind the
development of the 800-mile Trans-Alaska Pipeline, which carries
crude to the Port of Valdez.
"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," BP Chief Executive Bob
Dudley said.
"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," he added.
On its own, Alaska once pumped two million barrels a day, enough
crude to rival some members of the Organization of the Petroleum
Exporting Countries. Now, Alaska is only the sixth-largest
producing state in the U.S., behind Texas, North Dakota, New
Mexico, Oklahoma and Colorado, all of which have seen output surge
due to fracking.
"Psychologically, it's a hit to Alaska," said Larry Persily, a
journalist and former federal and state official working on oil and
gas issues in the state. "BP and its predecessor companies have
been here for decades, and Alaska clearly isn't as important in
global oil as it used to be."
Wood Mackenzie analyst Rowena Gunn said other major companies
could follow BP in leaving the state. "This will not be the last
deal in the region," she said. Exxon Mobil Corp. is the biggest
remaining oil-and-gas company in the state.
Yet even with the departure of a giant company like BP, the
state has seen renewed interest from operators after a number of
large discoveries in recent years. ConocoPhillips, Spain's Repsol
SA, Italy's Eni SpA and small explorer Armstrong Oil & Gas have
all been involved in identifying new opportunities in Alaska.
Hilcorp will pay BP $4 billion in the short term and a $1.6
billion earnout from the assets afterward, the company said. They
will be part of the company's Hilcorp Alaska affiliate. The deal is
subject to state and federal approval, and the companies expect it
to close by next year.
"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," said Hilcorp
Energy President Jason Rebrook. "Hilcorp has a proven track record
of bringing new life to mature basins."
Hilcorp has acquired BP assets in Alaska before, including a
2014 deal for BP's interests in four oil fields and associated
pipelines. Mead Treadwell, a former Alaska lieutenant governor,
said he was happy to see Hilcorp continue to expand in the
state.
"Hilcorp has proved itself in Alaska as a low-cost operator that
is very, very interested in expanding production," he said.
The sale is part of a larger BP initiative to divest $10 billion
in assets over 2019 and 2020, the company said.
BP said it started working in Alaska in 1959. It drilled the
initial confirmation well for the Prudhoe Bay oil field in 1968,
and began producing oil from it in 1977. The oil field has to date
pumped 13 billion barrels, making it the most prolific in American
history, the company said. BP has remained its operator and
currently has a 26% working interest in the field.
BP also said it owns exploration lease interests in the Arctic
National Wildlife Refuge, among other Alaska holdings. But the
company's production in the region has fallen over time. BP
estimates its net oil production from Alaska will average 74,000
barrels a day this year.
--Russell Gold contributed to this article.
Write to Miguel Bustillo at miguel.bustillo@wsj.com and Bradley
Olson at Bradley.Olson@wsj.com
(END) Dow Jones Newswires
August 28, 2019 02:47 ET (06:47 GMT)
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