|
BP has no plans to wind down Alaska operations, says London But state appears to have dropped from company’s core areas; Wood Mackenzie Alaska analyst suggests BP might be willing to relinquish some of its exploration acreage; ANWR may be reason Shell recently bid on North Slope acreage Derek Brower PNA London Correspondent
The Alaska oil industry’s largest investor, BP, has no plans to wind down operations or sell its assets in the state’s upstream and denies that it has cut back on spending, a senior spokesman from the company’s corporate headquarters in London told PNA Nov. 19.
BP’s expected international spending for the next year “has not changed in any way, shape or form,” said spokesman Ian Stuart. “There is no spending freeze,” he said, adding adamantly that the company was not interested in selling any of its Alaska assets.
The commitment from BP will reassure industry observers in Alaska, where BP’s recent exploration activities have been limited, prompting speculation that the British major was considering rationalising some of its portfolio.
At the same time, Royal Dutch/Shell, which withdrew from the Alaska upstream several years ago, has stepped up its efforts to re-build a position in the state, leading some to speculate that it could be a buyer for assets BP was putting up for sale. Shell backed up its ambitious talk earlier this month when it bought rights to 10 leases in the state’s recent lease sale (see PNA issue of Oct. 28). But even with the return of Shell, any downsizing by BP of its own involvement would be painful for Alaska.
Scott Mitchell, an Alaska analyst from the Edinburgh, Scotland-based oil and gas consultancy Wood Mackenzie, said he thought BP was unlikely to be considering pulling out of the state. Such a move “would simply not make sense,” he said. “Any buyer would have to be offering BP something it really wanted,” he added.
Alaska seems to have dropped from BP’s core areas However Mitchell acknowledged that Alaska now seemed to have dropped from BP’s “core areas”, which he said were the Gulf of Mexico and West Africa. “In terms of exploration (in Alaska), BP hasn’t been active at all.” (See related story on page 10.)
That being the case, Mitchell added, BP might be willing to relinquish some of its exploration acreage. Among the producing assets, however, none of “value” to the company would be sold, he believes. “There might be some peripheral fields of little value (that BP might wish to sell), but no major assets.” Among the “peripheral” fields is the troubled Badami, Mitchell added. “But I don’t see that anyone would want to buy it.”
In any case, other factors suggest BP is going nowhere, believes Mitchell.
One major factor remains the vast untapped natural gas reserves the company has in the ground in Alaska. “There’s lots of future potential if they want to get the gas to the Lower 48.” BP would not ignore that fact, he said.
Shell drawn by ANWR But foremost among the attractions of the state is the possibility of an opening of the coastal plain of the Arctic National Wildlife Refuge. Given the possibility that ANWR may soon be open for exploration, Mitchell said, BP is unlikely to pass off its prime position in the line-up for entry — particularly when the sensitive issue of U.S. security of supply is focusing attention once again on the domestic energy resources available in Alaska.
An ANWR opening is also what is attracting Shell to the state again, says Mitchell. The company wants a position in the state in order to get into ANWR when and if it opens, he says. “The Prudhoe Bay area has been drilled out, so Shell sees ANWR as a longer-term growth potential.”
Raoul Restucci, president of Shell Exploration & Production Co., made clear recently that the company would be eager to explore in ANWR if it is opened for drilling. “Can we perform in those areas?” he was reported as saying. “The answer is ‘yes.’ Can we be environmentally compliant? The answer is ‘yes’.”
Restucci added that Alaska remained “highly prospective country and as new blocks and leases are released we will evaluate them.”
Whether the riches of ANWR have persuaded Shell to sniff around assets BP is currently sitting on, as some suggest, remains speculation. A spokeswoman at the Anglo-Dutch major’s London head office reiterated the company’s enthusiasm to grow its position in Alaska, but refused to comment on “market rumours.”
Editor’s note: Freelance writer Derek Brower is Petroleum News • Alaska’s London correspondent. He is a regular contributor to Petroleum Economist, where he has been a senior staff writer covering the Middle East, Latin America, the European Union and Eastern Europe. He is working on a Ph.D.
| 