After the State cut taxes, BP launches and ambitious $1 B North Slope expansion program.
BP announced that it will sink $1 billion into revving up crude production from Alaska’s declining North Slope, weeks after the state decided to give the oil industry a $750 million annual tax cut. The British oil giant plans to add two drilling rigs to its Prudhoe Bay field, bringing the count up to nine, the highest in about six years. New well work and drilling, along with upgrades of existing facilities, could support 200 new jobs, the company said. BP said it expects to increase well work on the North Slope as soon as the fourth quarter of 2013, with the first additional rig expected on-site by 2015. A second would arrive in 2016.
Separately, with the agreement of its working interest partners at Prudhoe Bay, including ConocoPhillips and Exxon Mobil Corp., BP will begin evaluating another $3 billion in additional development projects in the field’s west end. The prospective development could include the construction of drilling pads and expansion of existing ones, possibly facilitating the drilling of more than 110 wells, following two to three years of appraisal and engineering work.
BP also will begin expansions and upgrades aimed at reducing bottlenecks at existing Prudhoe Bay facilities and better using the capacity of gathering centers that separate oil from natural gas and water. As the field has aged, more water is pulled out of the ground along with oil, and the facilities have been adapted to that dynamic. But newer areas generally yield an oilier mix. Handling them more efficiently can mean more production overall.
In Alaska, BP has been a major producer for decades and the resource potential for the future is significant. After more than 30 years of production, Prudhoe Bay remains the largest oil field in America. The North Slope still has considerable amounts of light oil, viscous and heavier oils, and natural gas that are more difficult to fully develop.
BP employs over 1,300 people directly in Alaska. The latest announcement will lead to another 200 high paying direct jobs.