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BP: Prudhoe Bay production costs down
KRISTEN NELSON Petroleum News
Bernard Looney, BP’s chief executive, upstream, recently used Prudhoe Bay as an example of how the company is driving down its breakeven costs.
At the company’s 2017 strategy update, held Feb. 28, Looney said the company had maintained its overall base decline at less than 2.5 percent over five years by improving facility reliability and focusing on well work and infill drilling.
In BP’s transcript of the event Looney said that 2016 was a particularly good year for the company, with base decline of less than 1 percent, plant reliability of 95 percent and overall operating efficiency in excess of 85 percent.
Looney said the Prudhoe team “has been focused on developing the most advantaged barrels from across the field - executing well work and optimizing field activities.”
“The results have been fantastic - in spite of reduced drilling, we have reduced decline - holding production almost flat. And the result is a business whose overall breakeven is down by 40 percent,” he said.
Over 2016 BP reduced the number of rigs working at Prudhoe from five to two. The company told Petroleum News in January that it held production at Prudhoe Bay, the North Slope’s largest field, virtually flat in 2016, compared to annual declines averaging 4 to 6 percent in past years.
40th anniversary Looney noted that Prudhoe is about to celebrate its 40th anniversary. The field was initially projected to have a 25-year life, he said, “so the team on the ground has done an extraordinary job. We have driven the breakeven down by 40 percent and we think there is more to come.”
He recognized BP Exploration (Alaska) President Janet Weiss, saying she “and the team believe there is more to come.”
Weiss told the Resource Development Council’s annual meeting last November that the focus at Prudhoe over the next few years would be to improve competitiveness by reducing costs both for operations and for new developments, with a goal of making programs that used to require $80 oil to be economically competitive, economically competitive at $55 per barrel oil, the number BP officials noted in the strategy presentation as being their expectation for 2017.
Looney said BP believes more operating efficiency is possible and said the Prudhoe team has been down in the Lower 48 looking at the basin there and what they can take back to the North Slope with them.
“We believe that there are decades ahead of us in Prudhoe,” Looney said, but that will require continuing “to drive that breakeven price in the right direction.”
He also mentioned technology. “I think this is an area where the modernization and transformation agenda has got massive, massive leverage. So there is a lot to do in Prudhoe yet.”
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