On Tuesday BP announced that it’s selling, for an undisclosed price, 15 percent of its Alaska assets to Hilcorp, one of the largest independent, privately-held oil companies in the United States. The fields it’s selling are Endicott and Northstar. It’s also selling half of its interests in the Liberty and Milne Point fields.
All told, the fields currently produce about 20,000 barrels of oil a day, only a fraction of the 520,000 or so daily barrels of oil produced from all North Slope fields, including Prudhoe Bay. But it’s a lot for a smaller company like Hilcorp, which all told produces about 85,000 barrels a day.
In a statement, Janet Weiss, President of BP Alaska, said that the deal would free up BP to focus on Prudhoe Bay, still the largest oil field in North America, and to advance “the Alaska LNG opportunity.”
The Alaska state Legislature just passed legislation to advance the up-to-$65 billion large diameter natural gas pipeline, which would carry gas from the Slope some 800 miles to tidewater in Southcentral Alaska.
The assets were likely more attractive to Hilcorp after the Legislature passed oil tax reform last session, which significantly lowers the state take on oil when prices are high. The sale will likely provide fodder for those who are working to repeal the oil tax, which voters will vote on in August. So far, the oil companies, including BP, ExxonMobil and ConocoPhillips have spent more than $6 million campaigning against the repeal.
Shortly after the announcement, state Sen. Hollis French, who is running for lieutenant governor and has been one of the most vocal advocates of repeal, said that BP “cashed out in Alaska, proving once again that oil taxes do not dictate the operations of global energy producers.”
Others see it differently. Several elected officials issued press releases and made statements in support of the sale. Bill Walker, who is running for governor as an independent, was also positive about the sale. “We need a whole bunch more companies like Hilcorp,” he said.
For one, they are committed to local hire, Walker said. Secondly, they’re likely to be more aggressive in producing oil.
Independents are generally more nimble and quicker than major oil companies, which can sit on assets to work on other, more attractive oil plays in other parts of the world.
Too, many have long argued that the three major oil companies’ stronghold on the North Slope has hindered development by scaring independents away. After BP acquired ARCOs’ assets in 1999, a Charter Agreement signed by BP was supposed to help give independents access to the Slope. But the majors are still not known for being particularly friendly in allowing access to their facilities.
Last year, during legislative testimony on the new oil tax regime, Bill Armstrong, president of Armstrong Oil & Gas — a North Slope lease holder that has attracted Pioneer, ENI and Repsol to the Slope — was asked about his company’s relationship with the majors. Armstrong likened it to the abusive relationship between Ike and Tina Turner. “We’re Tina,” he said.
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