BP announces $1B plan for North Slope work after tax reform


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BP announced June 3 it is planning $1 billion in new investment and two drilling rigs to its Alaska North Slope fields over the next five years due to changes in the state’s oil tax policy signed into law recently by Gov. Sean Parnell.

BP’s investments will be in the Prudhoe Bay and Milne Point fields, which it operates.

The announcement follows an announcement by ConocoPhillips in late April that it would increase activity in the Kuparuk River field, where ConocoPhillips is operator.

BP’s plans call for an increase in drilling and well-work activity, the upgrading of existing facilities and the addition of up to 200 new jobs in the state, giving a boost to both the company’s operations and the state’s economy.

The two new rigs will bring BP’s drilling fleet on the North Slope to nine rigs, company spokeswoman Dawn Patience said.

In addition, BP said it has secured support from ConocoPhillips and ExxonMobil Corp., the other major working interest owners at Prudhoe Bay to begin evaluating an additional $3 billion worth of new development projects.

These projects, located in the west end of the Greater Prudhoe Bay Area, could continue for nearly 10 years, further increasing the state’s oil production and providing additional jobs, according to the announcement.

BP will issue a request for proposals beginning this summer for the two additional rigs for Prudhoe Bay, the press release said. The first rig is expected to be in place by 2015 and the second in 2016.  BP also said it expects to increase well work as soon as the fourth quarter of 2013, a move that should improve the performance of existing wells at the Prudhoe Bay and Milne Point fields. 

This would involve more activity by specialized workover rigs and coiled-tubing well units to do technical work on producing wells that typically results in greater production. ConocoPhillips is also planning an increase in well work in the Kuparuk River field, where it is operator. In late April ConocoPhillips announced it will bring an additional workover rig to the Kuparuk field.

The additional Prudhoe Bay developments being evaluated by working interest owners are in the west end of Prudhoe Bay and include the expansion and “de-bottlenecking” of existing Prudhoe Bay facilities to improve the handling of natural gas and water, constructing of a new drilling pad and expansions of existing pads, and including the drilling of more than 110 new wells.

The appraisal phase of this will take two to three years and will include engineering work and regulatory approvals for multiple development projects, BP said in its announcement.  

There may also be an additional production pad in the Kuparuk River field. In its late April announcement ConocoPhillips said it is evaluating a new pad in the southern part of the field following the drilling of an exploration well in that area in 2010.

BP is also a major partner in the Kuparuk field with a 39 percent interest, and ExxonMobil has a small additional interest, so projects in Kuparuk need the consent of all three companies, just as in Prudhoe Bay.

“Now that an improved tax structure is in place, oil and gas projects can once again move forward, keeping Alaska competitive in the midst of America’s recent energy renaissance,” Weiss said.

BP is also working with other companies and the state of Alaska to commercialize Alaska North Slope natural gas as part of a joint concept selection group focused on a South Central Alaska LNG project.

“We believe it is the right time to focus on how we move this project forward,” Weiss said.

BP is one of the largest oil producers in Alaska, and BP-operated oil fields account for two-thirds of all Alaska production. BP has 2,300 Alaska employees.

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