On March 30, BP Alaska President Janet Weiss answered the following questions for Petroleum News about BP’s first 40 years and its next 40 years in Alaska, as well as questions about the number of rigs currently running in the giant oil field and what state government can do to insure oil production remains stable and the state attracts investment.
The most startling facts: Prudhoe Bay produced 55 percent of all the production in the trans-Alaska oil pipeline, in 2016 output from Prudhoe declined less than 1 percent, but without continued investment Prudhoe production would decline at more than 10 percent per year.
Petroleum News: What does Prudhoe Bay’s next 40 years of production look like?
Janet Weiss: Prudhoe Bay remains one of North America’s largest oil fields and its production declined less than 1 percent over the past year, averaging 281,800 barrels of oil equivalent each day. The Trans Alaska Pipeline System grew its overall throughput by 2 percent, at 517,868 barrels a day. Prudhoe Bay will continue as an important foundation for Alaska’s oil and gas industry well into the future.
Another promising part about the future of Alaska’s North Slope is the list of companies operating successfully and the list of companies exploring: Caelus, Hilcorp, ENI, Repsol and Armstrong. The interest of these companies demonstrates that Alaska is open for business. It’s important for the future that we keep Alaska open for business.
With more companies operating on the North Slope, the cost structure changes for the better. This change means that more development opportunities become competitive sooner - which leads to more oil down TAPS.
Petroleum News: BP, or British Petroleum, opened its first office in Alaska in 1959. In two years it will celebrate its 60th anniversary in the state. What does the future hold for the company in Alaska?
Janet Weiss: Yes, BP was here at Alaska statehood in 1959. It was that Alaska can-do spirit that made the start of Prudhoe Bay possible 40 years ago, and I’m proud that BP was there on day one. It’s a challenging environment today, where hydrocarbons are actually more abundant and therefore low cost oil is the name of the game.
Like other Alaska oil and gas companies BP is challenged to become more competitive in a low oil price environment. The Alaska oil and gas industry cannot wait for oil price to save us; we need to ensure we continue to have options that compete at these lower oil prices.
I believe it takes three things to make this step change: it takes efficiencies; it takes technologies; and it takes Alaska fiscal policies that keep us competitive.
Across the North Slope, new companies and existing operators are partnering creatively with our suppliers to reduce costs. Developments that used to take $80/bbl oil price may be possible to be developed at $50/bbl oil price - that is a really big deal.
The good news is that another 40-plus years of opportunity and economic strength from the oil and gas industry can happen in Alaska. This seems a tall order when we face such challenging times as a state with such sizeable budget woes.
Petroleum News: In November 2016 you said BP was operating at a $1.5 million per day cash flow deficit in Alaska, even after reducing activity on the North Slope and cutting operating costs. At the same time, I believe you or another BP executive said BP’s Alaska production was stable in 2016. Is the company still operating at this cash flow deficit in 2017? What do you expect the deficit, or gain, to be by the end of 2017?
Janet Weiss: We expect to be cash flow positive in 2017. While not offsetting the losses of the last two years, our focus on efficiency is delivering results. Even in the low price environment BP invested $1.8 billion in its Alaska operations ($1.2 billion operating expense, $600 million capital). Of that we spent more than $1 billion with 300 Alaska vendors. Economics impact our investment decisions and without continued investment, the field production would decline at more than 10 percent per year - not less than 1 percent decline we celebrated for Prudhoe’s 40th.
Petroleum News: How many drilling rigs are currently working at Prudhoe? Do you expect that number to increase in the next year?
Janet Weiss: In the low price environment we’ve reduced our activity down to two rigs at Prudhoe Bay and improved our efficiency. We are pursuing wellwork which can be done less costly and more efficiently by non-rig equipment such as coil tubing. We’re working to continue to improve our efficiencies so that in 2017 at $50/bbl we want to be at least break even in the state of Alaska. That’s how BP Alaska continues to compete for investment dollars.
There has been a fundamental shift in our industry - this is not just cycle change in commodity price. Alaska needs to be on the front foot of this change. We cannot wait for oil prices to rise.
Petroleum News: When you were appointed to your current position BP was operating four fields on the North Slope and had about 2,200 employees and more than 6,000 contractors. What are those numbers now in first quarter 2017?
Janet Weiss: Today Prudhoe Bay supports more than 16,000 Alaska direct and indirect jobs. In Alaska BP employs 1,700 employees and 78 percent are Alaska residents: Recruiting, training and hiring Alaskans remains among our top priorities. There are also more than 4,000 contractors doing work for BP in Alaska. In 2016, we spent $1 billion with 300 Alaska vendors.
Petroleum News: How much longer do you expect to be in your position in Alaska? Is it correct to say you have been working for BP since 1986, starting in Alaska? I know you also worked in Wyoming and the Gulf of Mexico for the company. How many total years have you worked in Alaska for BP?
Janet Weiss: I’ve spent 23 of my 31 years in oil and gas industry here in Alaska. I plan to be here as long as I’m adding value and inspiring our employees to take on the ownership role of a safe and sustainable business in Alaska. At BP safety is the foundation of everything we do, every single day.
My leadership role is about finding ways every employee can begin to engage more fully in the Alaska business and so that every employee, not just leadership, can begin to improve the business and to think like owners. It’s about having our whole team engaged and improving our bottom line.
Petroleum News: As BP’s chief executive in Alaska, what do you consider your greatest accomplishments to date? What more do you want to achieve in your time here?
Janet Weiss: Prudhoe Bay produces 55 percent of all the production in the Trans Alaska Pipeline System. That’s a huge responsibility - one I do not take for granted. I’m very humbled and inspired to be in this job at this time. Not just as the first woman in the job, but the first long-time Alaskan to earn this job. It’s given me a unique perspective during a very challenging period of low oil prices. I know great challenges bring out the best in Alaskans, and I’m most proud of the way our employees and contractors have taken on this lower for longer oil price environment, working to make the future more sustainable, more enduring.
Petroleum News: What has BP (in North America) done over the past decade to do away with the “glass ceiling” for the advancement of women in upper management and executive positions?
Janet Weiss: When I joined the oil and gas industry in the mid-80s, it was a challenging time and place. The price of oil was low, companies were consolidating and there were not a lot of women in industry. I had to prove myself. Prove that I had the intellect, prove that I could solve problems, and prove that I belong here.
I’ve spent 23 of my 31 years in oil and gas industry here in Alaska. During my career, I led the Gulf of Mexico Shelf operations with 150 production platforms; I also ran our western Wyoming gas fields. Sometimes it was an issue to be the only woman on an offshore oil platform, but our leadership has responded to change.
Today we have a lot more women joining industry and more in leadership, and, education has made that possible. At BP we work to attract, motivate, develop and retain the best talent from diverse perspectives - our ability to be competitive and to thrive globally depends on it.
Petroleum News: What can state government do to improve its policies so as not to encourage more production and exploration on the North Slope?
Janet Weiss: Alaska has a choice. Yes, the state is facing a fiscal crisis, but it can still have a healthy and competitive oil and gas industry. There are three key principles that will determine if Alaska’s oil and gas industry is the economic engine that continues to drive the state.
• First, the state must encourage (not discourage) more oil down TAPS.
• Next the state needs to keep the new explorers and new operator companies on the North Slope. That means keeping them there with good policy, don't drive the new entrants away.
• Finally the state should not shorten the life of the backbone fields, Prudhoe Bay and Kuparuk. We need Prudhoe Bay and Kuparuk to continue to build upon. A shorter economic life comes from diminishing the competitiveness of the opportunities, or excessively penalizing the base economics of these fields.
