BP - a major player in the largest oil field in America
December 11, 2012
BP is the one of the world’s ‘super major’ hydrocarbon producers. It has had its reputation sullied by the Deepwater Horizon oil spil disaster of 2010. Yet in Alaska, BP has been a corporate superstar producing North Slope oil and gas over 3 decades.
After more than 33 years of production, Prudhoe Bay remains the largest oil field in North America and ranks among the 20 largest fields ever discovered worldwide. When production started at the Prudhoe Bay field the recovery rate of the 25 billion barrels of oil in place was expected to reach 40 percent—now it’s more than 60%.
In 2010 BP’s Prudoe Bay operations:
- Employed 2,000 people (82% Alaska residents).
- Resulted in capital investments of $810 million. BP’s Operating budget meanwhile was $1.3 billion.
- BP’s net production rate was ~166,000 barrels of oil equivalent per day. Its gross production rate for BP fields ~520,000 barrels of oil equivalent per day
BP contributed $2.3 billion total payments in taxes and royalties (cumulative).
- Interestingly, at Prudhoe Bay, up to 8 billion cubic feet of natural gas is produced daily and injected back into the ground to maintain reservoir pressure and produce more oil. This injection has improved the recovery and extended the life of the field beyond initial estimates.
- BP has a production island offshore that just celebrated its 10th anniversary. “Northstar” is 6 miles offshore the Prudhoe Bay field, just outside the barrier islands. In 10 years, however, there have been no significant accidents or spills. Northstar is still served by a hovercraft that carries 16 to 18 people during the open water summer season, and during the fall “freezeup” and spring “breakup” seasons. Northstar’s oil production operation has performed very well. There are now 26 producing wells and six other wells that inject natural gas to maintain reservoir pressure, which helps sustain the oil production. There are also two “disposal” wells dedicated to injecting water that is produced with the crude oil. Production is declining at Northstar, but this is expected. The field is producing about 15,000 barrels of oil per day, down from its peak production rates of 60,000 to 65,000 barrels per day in the first years of operations. Through 2010, Northstar had produced about 148 million barrels of oil.
- BP has invested more than $100 million in a heavy oil development project. The goal of the pilot project is knowledge, experience and data collection.
so far, and expects to operate the pilot for three to five years.
- BP is the largest owner (47%) of the Alyeska Pipeline Service Company, operator of TAPS. The 800-mile-long Trans Alaska Pipeline System (TAPS) is one of the largest pipeline systems in the world. It stretches from Alaska’s North Slope to Valdez, crossing three mountain ranges, and 800 rivers and streams.
- Four double-hulled, state-of-the-art Alaska-class tankers now transport BP’s North Slope oil to refineries in Cherry Point, Washington via the port of Valdez.
Meanwhile, the mother corp, BP, is still facing the consequences of the disastrous Deepwater Horizon oil spill that occurred in April, 2010 in the Gulf of Mexico. The US Environmental Protection Agency (EPA) has announced BP’s temporary suspension of being able to bid on contracts with the US government. BP executives agreed to create a $20 billion spill response fund. Yet the eventual costs to BP of this spill could easily exceed this amount. BP recently sold its non-strategic Gulf assets.
BP plc (ticker BP on NYSE) is a British multinational oil and gas company headquartered in London, United Kingdom. It is the third-largest energy company, with 2011 revenues topping $387 B.
BP has operated in Alaska since 1959. It is the largest player on the North Slope. The company has a solid record of accomplishments, not the least of which is the Northstar offshore platform and a plethora of innovative drilling technologies.
Alaska’s tax structure has come under a fire of criticism for levying high taxes at high oil prices, the sort of prices that have driven the Lower 48 to a boom in production. Alas, Alaska’s oil production is still declining, unlike North Dakota, Texas several other states.
- a)http://www.bp.com/sectiongenericarticle.do?categoryId=9030181&contentId=7055693 and http://www.bp.com/liveassets/bp_internet/globalbp/STAGING/global_assets/bp_us_assets/downloads/a/abp_wwd_alaska_bp_in_alaska_2011.pdf