BP Alaska capex up 25% for 2014; new Prudhoe Bay seismic set

BP plans a 25 percent increase in its capital investment in Alaska this year.

Janet Weiss, president of BP Exploration (Alaska), told the Anchorage Chamber of Commerce Feb. 10 that planned capex in Alaska this year is $1.2 billion, compared to $896 million actually spent in 2013.

Weiss said that $1.2 billion includes a 40 percent increase in activities such as drilling and well work which are designed to increase production, as well as major projects.

Under the state’s new production tax, passed last year as Senate Bill 21, BP plans over the next five years to reinvest nearly 90 cents of every dollar earned in Alaska in the state, Weiss said, crediting oil tax reform with resetting the balance.

“We’re back in the game to attract capital back to Alaska,” she said.

More wells will be drilled this year than in 2013, she said, and while there were “significantly more” well work jobs in 2013 than in 2012, “significantly more” are planned in 2014.

Weiss said the focus will be on light oil development.

New seismic

An application on the Bureau of Ocean Energy Management website says BP requested permits for this ocean bottom sensor seismic survey with a transition zone component on state and private lands in early 2013, but notified agencies in February of 2013 that the survey would not be conducted that year.

The current application says the survey will gather “high-resolution seismic data” on existing reservoirs, including Niakuk areas covered in 1985 and Point McIntyre areas covered in 1990. “A complete set of OBS data has not previously been acquired within the proposed survey area,” the application says.

Milne Point

Weiss said that area has the first development drilling program in more than five years, with seven coil tubing wells planned for 2014.

Work also continues on projects BP has discussed previously, she said.

At Sag River there are “both technical and economic challenges” but progress has been made on some challenges. While some of the cost challenges still need to be worked out, “we are moving forward with a 15-well program in 2015-16,” Weiss said. If that program is successful, full development could mean as many as 200 wells and some 200 million barrels of resources.

BP is also looking at a potential 80 million barrels of new production of viscous oil in the Schrader horizon at Milne Point, 100 percent owned by BP. Northwest Schrader development would require $1-2 billion in capital investment. Weiss said trials over the next few years will address whether this would be an economic project.

BP had previously announced plans for two additional rigs at Prudhoe — one in 2015 and one in 2016 — and appraisal of developments at the west end of Prudhoe, which garnered working interest owner support after passage of the oil tax change.

Asked in the audience question and answer session when new oil would begin to flow, Weiss said some work was started ahead of the passage of the Senate Bill 21 oil tax reform, and drilling has fairly immediate returns. At the west end of Prudhoe Bay, infrastructure needs to be put in place. The impact of the addition of rigs in 2015 and 2016 will be seen in the 2018 timeframe, she said.

The referendum

She said that if that tax reform were pulled down, investments already initiated would be reassessed, noting that at Prudhoe Bay it just takes one of the major owner companies to stop a project.

Senate Bill 21 is also connected to the liquefied natural gas project, Weiss said, because a healthy light oil business is needed for an LNG project, and because markets will notice whether Alaska provides a stable environment for a large project.

—Kristen Nelson