Under new fiscal regime
BP chief outlines new North Slope projects
Editor’s Note: BP Alaska President Janet Weiss told the 38th Annual Meeting of the Resource Development Council that the More Alaska Production Act (SB 21) will bring in a new era for Alaska that will be characterized by competitiveness and cooperation and BP’s renewed commitment to Alaska. The following is from her speech.
Being the first woman to serve as BP’s regional president in Alaska: Exciting!
Being the first long-time Alaskan to become BP’s regional president in Alaska: Amazing!
Being BP’s regional president in Alaska in this new era of reinvestment and growth: PRICELESS!
I’ve just celebrated my 28th anniversary with BP and ARCO, and I’ve spent nearly 20 of those years in Alaska—right where I want to be. I never imagined when my husband and I arrived here 27 years ago as newlyweds fresh out of college that our path would lead to such an exciting and challenging role during such an extraordinary point in Alaska’s history.
The passage of SB 21 in the last legislative session signaled something important to industry: that Alaska wants to be a globally attractive place for investment. It’s already having a profound impact on the pace and scale of projects that BP, our partners, and the rest of the industry are pursuing on the North Slope. Alaska has taken an important step toward an “energy renaissance.”
Now it’s up to us to do our part by developing new technologies, operating safely and efficiently, supporting training and education programs that will ensure a skilled Alaska work force, and capturing the investments and new production that will be the cornerstone of Alaska’s future.
This is BP’s commitment to Alaska and America.
BP and our co-owners at Prudhoe Bay are increasing our production-generating investments by $1 billion and adding two drilling rigs on the North Slope, adding 200 more jobs. This will significantly increase the number of new wells and sidetracks, resulting in 30-40 additional wells each year for at least five years. We expect to begin drilling with the new rigs in 2015 and 2016.
We also have co-owner approval to evaluate an additional $3 billion of new development projects in the western region of Greater Prudhoe Bay. These include debottlenecking existing facilities and field infrastructure, expanding existing well pads, constructing a new pad, and drilling more than 100 new wells. The new pad would be the first at Prudhoe in more than a decade.
We expect appraisal work to last 2-3 years. Development could last nearly a decade. These projects would create thousands of direct and indirect jobs, access hundreds of millions of barrels of additional oil at Prudhoe, and eventually generate tens of thousands of barrels of new oil production per day.
But these aren’t the only projects and prospects gaining momentum since the signing of SB 21. The Sag River formation overlying the Ivishak reservoir throughout Prudhoe and neighboring fields poses its own unique set of challenges.
We’ve conducted field tests on new techniques to enhance recovery, and thanks to encouraging results and the improved fiscal climate, we’re moving forward on the first phase of development with a 16-well program in 2015 and 2016. Full development could spawn as many as 200 wells, two dozen rig-years of drilling and as much as 200 million barrels of new oil production.
In the longer term, the Northwest Schrader viscous oil prospect at Milne Point, owned 100 percent by BP, is another potential source of new oil production sidelined under ACES. We’re reworking the economics of Northwest Schrader development under terms of SB 21 as we continue to tackle the formidable technical hurdles it still must overcome before development can proceed. Full development likely would represent a $1-2 billion investment and potentially add 80 million barrels of new production.
Governor Sean Parnell, center, received a standing ovation before a crowd of 1,000 at the RDC Annual Meeting in Anchorage June 26. The governor was recognized for his leadership on SB 21, the More Alaska Production Act. The law lowers the total government take on Alaska oil production from 75 percent to between 60 and 65 percent. The legislature’s action to revamp oil taxes is intended to create a more favorable investment climate.
SB 21 was critical to putting Alaska back into the game for an LNG project as well. BP is working with ConocoPhillips, ExxonMobil, TransCanada and the State of Alaska to commercialize North Slope gas with a Southcentral LNG project. We believe an Alaska LNG project can be globally competitive.
The State plays a huge role in making an LNG project commercially viable. The fiscal framework for gas that will play a critical role in the decision whether to move forward with development is not addressed in SB 21. Nonetheless, SB 21 signaled that the State of Alaska can work through issues and find solutions that encourage investment and are good for the future of all Alaskans.
BP is at mid-life in Alaska; ACES was our mid-life crisis.
We’ve produced a little less than half of the oil and gas in our North Slope portfolio. The remainder represents a world-class opportunity for BP and for all Alaskans.
I could not be more honored or excited to have this new role to play at this unique moment as we begin working together again to turn prospects into projects, and potential into new production that will sustain us for decades.
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