New BP Alaska chief outlines work planned for North Slope
More oil development work for the North Slope is now planned. BP announced Wednesday it will drill more wells and develop new projects on the North Slope, and will evaluate additional prospects in existing fields.
Janet Weiss, BP’s Alaska new president, described the plans in an address to the Resource Development Council’s annual meeting in Anchorage.
The Legislature’s action to revamp state oil taxes this spring has created a more favorable investment climate in Alaska, leading to new activity by industry, Weiss said. That will result in new production and new state revenues.
The projects Weiss announced are in addition to a previous announcement of $1 billion in new drilling BP will do starting later this year, as well as evaluation of $3 billion in potential west-end Prudhoe field projects.
ConocoPhillips also recently announced new projects in the Kuparuk River field, where it is operator, as well as a project in the National Petroleum Reserve–Alaska, where the company holds federal leases along with Anadarko Petroleum Corp., a minority owner.
In the Kuparuk field ConocoPhillips said it will add one drill rig and begin evaluation of a new production pad in the southern part of the field.
Weiss said two new drill rigs to be put to work by BP in 2015 and 2016. The rigs will add 30 to 40 new production wells per year in the Prudhoe Bay and Milne Point fields, in addition to the drilling of wells previously planned. The new rigs will bring BP’s rig fleet to 9 on the North Slope. BP will be soliciting bids from firms to build the rigs soon, she said.
One project BP will tackle soon is development of the Sag River formation, a thin, technically-challenged reservoir that overlies the main Ivishak producing formation of the Prudhoe Bay field, Weiss said.
The first phase of this involves 16 wells, with drilling underway in 2015. This will add 200 new production and injection wells, and add 200 million barrels of new oil production, Weiss said.
In addition, BP will evaluate the Northwest Schrader prospect in the Milne Point field. Technical hurdles must still be overcome, but the project would require $1 billion to $2 billion in new investment, construction of two new well pads and 70 new wells, with about 80 million barrels of new production added.
“These were projects that were sidelined by the state’s tax policies,” prior to the change made by the Legislature in April, Weiss told the Resource Development Council’s annual meeting.
The potential Prudhoe Bay west end projects to be evaluated that were previously announced include “debottlenecking existing facilities and field infrastructure, expansions of existing well pads, construction of one new pad and 100 new wells,” Weiss said.
“We expect appraisal work to last two to three years. Development could last at least 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 production per day,” Weiss said in her RDC speech.
BP is operator of the Prudhoe Bay field for itself and co-owners ConocoPhillips and ExxonMobil as well as the Milne Point field, owned 100 percent by BP.
The tax change by the Legislature effectively lowers the “government take” share of Alaska oil production from about 75 percent under the previous tax law to between 60 percent and 65 percent under the revised tax approved by the Legislature in April, BP’s vice president for external affairs, Phil Cochrane, said at the luncheon.
Tim Bradner can be reached at email@example.com.