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BP budgets some $1.5 billion for Alaska projects in 2005
Kristen Nelson
BP Exploration (Alaska)’s 2005 operating and management budget will be about the same as it was in 2004, some $800 million, but the company’s capital budget will increase by $50 million, from $650 million this year to about $700 million in 2005.
Daren Beaudo, the company’s Alaska spokesman, told Petroleum News that $350 million of the capital budget in both years is allocated for building new double-hulled tankers to move BP’s Alaska crude oil.
For BP’s ongoing oilfield activities on the North Slope, the company said in an October report that its “employment in Alaska, and the number of Alaskans working for the company, remained steady in 2003,” with that trend continuing into 2004.
The dollar amount BP spent with Alaska businesses on goods and services to support ongoing oil field activities in 2003 “declined slightly compared with 2002,” the company said in its report. Its overall spend on North Slope producing fields it operates totaled $954 million for 2003, compared to $1.083 billion in 2002. Goal of 80 percent with Alaska suppliers and contractors BP said that in 2003 it “spent $797.6 million with Alaskan suppliers and contractors,” 83.4 percent of its total operations expenditures. In 2002, 86.5 percent was spent with Alaska suppliers and contractors.
The information is contained in “Alaska Hire 2003,” an annual report BP prepares on “commitments our company made in 1996 when the Alaska State Legislature approved modifications to BP’s Northstar leases on the North Slope.” Those leases were converted from net profit share to fixed royalty prior to the development of the Beaufort Sea Northstar oil field.
BP’s overall spend since 1997 on the North Slope fields it operates has varied from a low of $511 million in 1999 to a high of $1.193 billion in 2001, with an average Alaska spend over the period of 83.7 percent. BP said the 1999 low of $511 million reflected “a slowdown in drilling and other activity, due to low oil prices and uncertainties over the acquisition of ARCO.”
BP’s third-party spend (contracts for services like maintenance and drilling; and expenditures for goods, including equipment and general industrial commodities) to support North Slope fields it operates, was $792 million in 1997; $791 million in 1998; $511 million in 1999; $720 million in 2000; $1.193 billion in 2001; $1.083 billion in 2002; and $954 million in 2003.
Beaudo said the increased expenditures beginning in 2001 are a result of BP taking over as operator of the entire Prudhoe Bay field (the field had been operated half by BP and half by ARCO Alaska, prior to the acquisition of ARCO Alaska by Phillips Petroleum, now ConocoPhillips).
He said there are two main drivers in variability of BP’s third-party spend: “increasing efficiencies” since BP began operating all of Prudhoe in 2001; and “the drilling program, which accounts for about half of the total spend.”
Beaudo said the 2003 budget “was originally very close to 2002, at just about $1.1 billion,” but the final figure came in closer to $950 million.
“Our 2004 spend is also in the same range of just over $1 billion, so in reality we’re looking at a stabilizing of this goods and services spend at about $1.1 billion annually for the near future,” Beaudo said.
The average of BP’s spend with Alaska firms has ranged from 80 percent in 1999 to 86.5 percent in 2002, with an average over the period of 83.7 percent. BP said its goal is for more than 80 percent of its annual expenditures to be made with firms based in Alaska. Alaska spend for contract services and goods The $796 million spent with Alaska-based contractors and suppliers during 2003 is 83.4 percent of a total $953.7 million BP spent to support North Slope producing fields that it operates. Of the $953.7 million, $744 was for contracts for services such as maintenance and drilling, and $209.6 million was for goods, including equipment and general industrial commodities.
BP said firms supplying services include drilling companies such as Nabors Alaska Drilling and Doyon Drilling Inc. and oilfield services companies such as Alaska Petroleum Contractors and VECO Alaska Inc. In the category of industrial equipment and supplies used to operate its North Slope fields, BP said one category “includes specialized machinery and materials that are most efficiently ordered directly from manufacturers and are not produced in Alaska, such as turbines used in field processing facilities and tubular steel used in wells.” The second category, general industrial supplies and equipment, ranges from groceries and cleaning materials to vehicles and communications equipment, the company said.
BP’s residency statistics show “that, on average, 84.2 percent of BP Exploration (Alaska)’s employees are state residents, although the Alaska Department of Labor and Workforce Development shows only 69.2 percent are eligible to receive the state’s Permanent Fund Dividend. BP said the difference occurs “because not all of BP’s resident employees have lived in Alaska long enough to be eligible for the PFD.”
A link to the report online is at: http:/Alaska.bp.com
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