BP activity in Alaska down on low prices

BP’s spending, revenues paid to the state of Alaska and employee-count in the state are down, mainly a consequence of low oil prices, the company said in an annual state-by-state economic activity report issued Sept. 12.

The company’s employees in Alaska are down to 1,750 compared with about 2,000 in 2014, some of this due to the oil price reduction and some due to BP’s sale of North Slope producing assets to Hilcorp Energy, BP spokeswoman Dawn Patience said.

When Hilcorp took over operations at the Milne Point, Endicott and Northstar fields about 200 BP employees went to work for Hilcorp.

The company’s spending with contractors and vendors is down, too.

In 2015 BP spent about $1.3 billion with third party vendors, down from about $1.6 billion in 2014.

Over the same two-year period prices for Alaska North Slope crude oil dropped from more than $100 per barrel to less than $40 per barrel currently and at some points reaching the $30-per-barrel range.

There was a very steep decrease in tax and royalty payments to the state of Alaska and municipalities, however, from $2.25 billion in 2014 to $263 million in 2015, according to BP reports.

That drop is a direct consequence of the drop in oil prices, mainly in lower revenues paid under the state’s oil and gas production tax. Because it is a net profits-type tax revenues paid to the state by petroleum producers react sharply to lower prices because there is less income and costs that are still high, including fixed costs.

The combination of those two, lower revenue and high costs, means the per-barrel profit is much lower, and therefore reduces the tax paid to the state.

- TIM BRADNER