Tag Archives: bp alaska

BP’s asset sale to Hilcorp signals new era of independent oil in Alaska

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.

Hilcorp is not a stranger to the state. It made a big move into Alaska in 2011 and 2012, acquiring assets in the Cook Inlet from Chevron and Marathon Oil.

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.

Contact Amanda Coyne at amandamcoyne@yahoo.com

Rumor alert: Exxon is poised to take over BP

According to people who keep track of such things, there’s “chatter” that ExxonMobil Corp., is poised to make a bid to take over BP. There’s also chatter that the chatter is bunk, but it was enough to make BP’s stock take a jump, if only temporarily.

Rumors that one company or another was going to take over BP have abound since the Deepwater disaster. In Alaska, there’s been chatter for longer. There may be nothing to all of this, but stack enough rumors atop each other, and they begin to mean something.

And in Alaska, where three majors — BP, Exxon, and ConocoPhillips – have the lease rights to nearly all the producing oil fields in the state, we should watch such rumors closely.

The last big oil takeover in Alaska was in 2000, when BP bought Arco, the company that discovered the Prudhoe Bay gusher. Tony Knowles was the governor then, and it was a major battle. After some heated lobbying, the Federal Trade Commission got involved over market consolidation and potential anti-trust issues.

FTC regulators required BP to sell its Arco Alaska assets. ConocoPhillips bought them, leaving BP with about a 30 percent stake on the North Slope. Exxon has about the same stake.

The deal was better for Alaska after the FTC’s involvement. If Alaska lost one of its majors and the competition that it spawned, the state would lose in both tangible and intangible ways. Back then, Alaska had a governor that was willing to fight, at least a little, for the state’s interest.

If talks of a merger prove to be valid, Alaska’s leadership will need to step up to insure that the state’s interests are protected.

Contact Amanda Coyne at amandamcoyne@yahoo.com

Bye bye oil taxes. Hello gas taxes.

Most of us have been enjoying the glorious summer and trying to forget the last two oily legislative sessions. Trying to forget the endless committee hearings, the excruciating testimony from oil executives. Progressivity. Hyperbolic curves. Internal rates of return. Capital expenditures. New producer areas, etc …

While we have been catching fish and amnesia, ExxonMobil is rumored to be hard at work trying to convince Gov. Sean Parnell to call a special session this fall to create a statutory framework to establish and provide authorization to negotiate issues related to gas commercialization.

In other words, just when you thought it was all over, now gas taxes are going to again rear their gaseous heads.

Currently, gas is taxed at an effective rate of 35 percent prior to credits, roughly the same rate as oil. But it’s much less valuable.

According to sources, Parnell isn’t going for the special session idea. He’s upset, they say, that Exxon hasn’t committed enough resources this summer to advance the fabled, up to $65 billion large diameter natural gas pipeline.

In a press release sent last month, Parnell said that although there was progress being made, the companies aren’t “moving as quickly as Alaskans expect.”

Still, Exxon, the North Slope’s biggest gas lease holder, continues to push, and is trying to convince the other major producers — BP and Conoco Phillips – – to push with them.

The Department of Natural Resources has engaged a contractor to model various tax regimes. Acting Commissioner Joe Balash and Department of Revenue’s Mike Pawlowski are said to be working with the contractors and meeting with the producers.

It’s unclear if Exxon’s push has to do with the large diameter line, the one that has been dreamed about for more than 30 years. Or if the push is about the bullet line that’s supposed to bring natural gas to Alaskans if the big line doesn’t.

Or if has to do with the 200 million barrels of liquid condensates at Point Thomson. By 2016, Exxon expects to be producing 10,000 barrels of condensates per day at the Point Thomson site. Condensates are kind of a liquid gas. As it stands, when they are produces they will be treated like gas for royalty purposes but will be taxed like oil.

Perhaps it’s all of the above. One thing’s for sure: if it there isn’t a special session to deal with gas taxes they will be dealt with in the next session. And the committee hearings again will be endless and excruciating.

Contact Amanda Coyne at amandamcoyne@yahoo.com