BP outlines new projects to boost production

Under the new oil tax reform law, BP plans to reinvest nearly 90 cents of every dollar it makes on the North Slope over the next five years in Alaska, said Janet Weiss, BP Alaska President. “We’re reinvesting more than we did previously, an increase of 60% from previous years under ACES.”

BP and ConocoPhillips are aggressively pursuing new well activity and development work on the North Slope following changes to the state’s oil and gas production tax by the legislature last April. ACES, the former tax system, has been replaced by the more business-friendly More Alaska Production Act. Its objective is to draw more capital investment back to Alaska to stem declining production and boost state revenue.

Speaking at the Alaska Support Industry Alliance’s Meet Alaska conference in Anchorage last month, Weiss discussed what BP is doing to increase activity on the North Slope and make Alaska part of America’s energy renaissance.

“I’m talking about activity that will help to generate hundreds of jobs for Alaskans, thousands of jobs and business opportunities for Alaskan companies, and tens of thousands more jobs at banks, restaurants, retailers and other businesses throughout the economy and across the state,” Weiss said. “I’m talking about projects that will play a substantial role in supporting Alaska’s economy.”

Weiss pointed to a recently-released report outlining BP’s economic impact on the U.S. Since 2008, the company invested more than $55 billion in the U.S., $14 billion more than the next-biggest energy investor, not including the $26 billion spent on response and restoration in the Gulf of Mexico. BP’s spending and investments created more than 22,000 jobs in Alaska. In 2012, BP spent $1.5 billion with more than 350 Alaska vendors.

The increase in investment is coming none too soon.

Out of the 13 oil and gas producing states, there was only one where production declined – Alaska. All of the others increased – even California, which recently surpassed Alaska in oil production.

“Last spring, Alaska and the State Legislature made the important first step toward joining America’s energy renaissance,” Weiss said. “It’s already having a profound impact on the pace and scale of projects we’re pursuing with our co-owners on the North Slope and as an industry. We’re more globally competitive, and it really has put Alaska back in the game.”

Weiss noted it is now up to BP and the rest of the oil industry to do its part. “BP is committed to playing an important role in Alaska’s energy renaissance,” Weiss said.

“We drilled more wells and conducted significantly more well work jobs in 2013 than we did in 2012. Yes, our 2013 activity levels were in motion ahead of 2013 oil tax reform; but it is an important activity increase as we work together to reduce decline, seeking to incline like those 12 other states,” Weiss added.

BP and its partners at Prudhoe Bay are increasing production-generating investments by $1 billion, including adding two new drilling rigs starting in 2015. That will take BP’s operated rig fleet on the North Slope up to nine – a big increase over 2012, when there were five. It will also significantly increase the number of new wells and sidetracks, resulting in 30 to 40 additional wells being drilled each year.

Weiss pointed out that BP, along with its partners, are appraising an additional $3.2 billion of potential investment in the West End of the Greater Prudhoe Bay area.

“That’s 118 new wells and a new pad – the first new pad at Prudhoe in more than a decade,” Weiss said. “It’s 200 million barrels of new oil resources, and it will ultimately add 40,000 barrels of new production per day down TAPS. It’s hundreds of additional jobs for Alaskans.”

Another opportunity gaining momentum is development of the Sag River formation, a project that’s also more competitive because of oil tax reform. It could lead to another 200 wells, and as much as 200 million barrels of new oil production.

Another area BP has been looking into is viscous oil at Milne Point. The Northwest Schrader area would potentially add 80 million barrels of new oil production and require up to $2 billion of capital investment and hundreds of jobs.

However, this opportunity requires more technology advances before development can move forward.

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