BP will exit the Alaska oil market after 60 years following the sale of its entire business to Anchorage-based private oil and gas operator, Hilcorp Alaska, for $5.6 billion.
The sale will include BP Exploration (Alaska) Inc., which owns all of BP's upstream oil and gas interests in Alaska, and BP Pipelines (Alaska) Inc.’s interest in the Trans Alaska Pipeline System (TAPS).
With the sale, BP is looking to reshape the company and pursue other opportunities in the United States and around the world more closely aligned with its long-term strategy, according to Bob Dudley, BP group chief executive.
Hilcorp is the largest private oil and gas operator in Alaska, operating more than 75,000 barrels of oil equivalent a day.
The deal follows BP’s plan to divest $10 billion of assets over 2019 and 2020.
BP began operations in Alaska in 1959, drilling the confirmation well for the Prudhoe Bay oilfield in 1968 and in the mid-1970s helped build the 800-mile Trans Alaska Pipeline. BP started producing oil from Prudhoe Bay in 1977.
Prudhoe Bay, the most prolific oilfield in United States’ history, has produced more than 13 billion barrels of oil to date and is estimated to have the potential to produce more than 1 billion additional barrels. In the second quarter of 2019, BP’s net oil and gas production averaged more than 921,000 barrels of oil equivalent a day.
BP’s net oil production from Alaska in 2019 is expected to average almost 74,000 barrels a day.
“Our exit from Alaska does not in any way diminish BP’s commitment to America,” said Bob Dudley, BP group chief executive in a statement. “We remain very bullish on the U.S. energy sector. In just the last three years, we have invested more than $20 billion in the U.S. and we will continue to look at further investment opportunities here."
The company expects to make a “safe and smooth transition of operations” to minimize the impact on employees, partners, and local, state and federal government officials.
The transaction is expected to close in 2020, subject to state and federal regulatory approval.
