Slope investments may top $5B with BP plans


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A caribou browses along oil transit pipelines on the North Slope in this file photo. BP Exploration Alaska announced a billion-dollar investment plan for the Slope involving several new rigs and additional development of the Prudhoe Bay field in response to the signing of Senate Bill 21 lowering state oil taxes.

File Photo/Al Grillo/AP

BP announced June 3 it is planning $1 billion in new investment on the North Slope and possibly $3 billion more due to changes in the state’s oil tax policy signed into law May 21 by Gov. Sean Parnell. ConocoPhillips is also planning new projects, and while no figures have been given those could easily increase the total of pending new projects to $5 billion.

BP said it will add two drilling rigs to its Alaska North Slope fields over the next five years and will ramp up “workovers” on existing wells to increase production later this year, the company said.

ConocoPhillips’ announcement of new work, made in late April, included putting another “workover” rig to work late this year in the Kuparuk River field, where it is operator. ConocoPhillips also said it would be working on additional developments in the Kuparuk field as well as in the National Petroleum Reserve-Alaska, where the company has made discoveries.

BP’s investments will be in the Prudhoe Bay and Milne Point fields, which it operates. The company’s plan overall calls 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.

The additional Prudhoe Bay developments being evaluated by BP and its partners, ConocoPhillips and ExxonMobil, are in the west end of the Prudhoe Bay field.

They include the expansion and “de-bottlenecking” of field production facilities to improve the handling of natural gas and water from that area, the construction of a new drilling pad, expansions of existing pads, and 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. 

ConocoPhillips’ has meanwhile identified the additional workover rig slated for the Kuparuk field as the Nabors rig 7ES unit. In its late April announcement ConocoPhillips also 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.

“We hope to sanction the Kuparuk drill site DS-2S in late 2014 or early 2015,” ConocoPhillips spokeswoman Natalie Lowman said.

In the NPR-A, ConocoPhillips hopes for the same timing for a project in its “Greater Moose’s Tooth Unit”, with possible sanction of a project in late 2014 or early 2015 Lowman said. In the April announcement ConocoPhillips said it was beginning engineering and permitting work for the NPR-A project following the Legislature’s approval of the tax bill.

ConocoPhillips is operator in the Moose’s Tooth Unit for itself and its minority partner Anadarko Petroleum. The developments in the Prudhoe and Kuparuk fields require the consent of all three major North Slope producers, BP, ConocoPhillips and ExxonMobil Corp.

All three companies own a share of the fields, along with others with small percentages, but one or another company would be designated as operator.

“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,” BP’s president Weiss said.

BP, ConocoPhillips and ExxonMobil are 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.

All three companies have previously said that keeping the oil production business on the North Slope economically healthy through changes in the state oil tax are important to the gas project. That’s because oil production is needed to help pay for the infrastructure that is also needed for gas production.

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

 

Tim Bradner can be reached at tim.bradner@alaskajournal.com.

 

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