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BP’s future in a word: Growth
Richard Campbell President of BP Exploration (Alaska) Inc.
After 40 years in Alaska, following a decade of declining North Slope production, BP’s business plan in Alaska can be summed up in a single word: Growth.
BP and its industry partners have launched aggressive drilling and development programs that are expected to increase BP’s net liquids production almost 20 percent — to 350,000 barrels per day — over the next 18 months. Our goal is to sustain our production at that level far into the future, while simultaneously achieving commercial sales of North Slope natural gas.
If we are successful, if we accomplish all we believe is achievable, North Slope hydrocarbon production will be higher in 2010 than it is today and a new generation of Alaskans will be looking forward to long careers in the Alaska oil industry.
This year our capital spending will exceed $800 million, a substantial increase from last year’s $650 million. Over the next five years we expect to invest more than $3.5 billion in a wide range of development projects and programs to support our growth strategy. Drilling twice as many wells This year we plan to drill about 160 wells on the North Slope - twice as many as last year and more than three times the number we drilled in 1999.
We and our partners are accelerating the pace of satellite field development near Kuparuk and Prudhoe Bay. At Kuparuk, we are working with Phillips to develop the newly discovered Meltwater field. At Prudhoe, five satellite fields will soon be in production, yielding as much as 70,0000 barrels per day of new oil.
We are proceeding with careful development of the West Sak and Schrader Bluff fields, which contain an estimated 15 billion barrels of cold, viscous, and very difficult to produce oil. Our heavy oil production technology is improving, and some of our recent wells have been very promising. With continued success, production from these mammoth accumulations will increase. Economic recovery of just 10 percent of the oil in place — 1-2 billion barrels — would be like finding another Kuparuk field.
Northstar, BP’s newest oil field, will begin production in late 2001 and quickly reach a peak production rate of about 65,000 barrels per day. Completion and installation of the largest oil field production modules ever fabricated in Alaska will precede startup. The field contains about 175 million barrels of recoverable oil. NPR-A Trailblazer program under way To add new oil reserves, we have launched our most aggressive exploration program in a decade. It involves drilling six exploration wells, three of which are slated for the National Petroleum Reserve-Alaska.
The NPR-A Trailblazer program is currently under way and includes building a 70-mile ice road to the first ice drilling pad. About 50 miles of the road will be across sea ice and 20 miles will be onshore across tundra. Two additional ice drilling pads, plus 10 miles of supporting ice roads, are planned for the second and third wells. North Slope Borough, federal, and state permits have been received and the project is currently on schedule.
The ability to drill all three wells this winter is contingent on ice construction progress and weather conditions. Partners in the Trailblazer program include Chevron and Phillips Petroleum Co.
We will soon begin building in Nikiski an $86 million gas-to-liquids test facility that will convert 3 million cubic feet of natural gas into an estimated 300 barrels of synthetic crude per day. The project will create an estimated 150-200 construction jobs in Nikiski, with plant start up in 2002. Goal to market ANS gas by 2007 BP has also joined with ExxonMobil and Phillips to determine the viability of a pipeline system to deliver North Slope gas to Canada and the Lower 48 states. Activities over the next year are expected to cost about $75 million and involve 50-100 full time staff from the three companies, with significant contractor support. At BP, our goal is to begin moving gas to market in 2007.
Growth is just part of our commitment to Alaska.
Worker safety and protection of the environment remain our top priority in all we do.
We will continue to train and hire Alaskans, to work with Alaska-based contractors and to purchase supplies and materials from Alaska-based vendors. Last year, BP spent about $600 million with Alaskan companies.
We will continue to support events like the Special Olympics 2001 World Winter Games and organizations like the United Way. We will continue to support our employees as they volunteer their time and talent in their communities.
After 40 years, our belief in and commitment to Alaska is stronger than ever.
We’re looking forward to a bold and exciting future.
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