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BP has strong year in Alaska, with
$830M profit, $543M in state taxes
Kristen Nelson Petroleum News
BP Exploration (Alaska) had a good year in 2017, with a profit of $830 million, the company said in a March 29 email.
Taxes and royalties paid to the state of Alaska totaled some $543 million.
The 2017 profit was the result of an improvement in the price of crude oil, a third year of no production decline at Prudhoe Bay and the revision in the U.S. federal corporate income tax rate.
“On the financial front, I am very proud of the progress that BP Alaska, and indeed the entire Alaska industry, has made in adapting to the lower for longer oil price environment,” said BP Alaska Region President Janet Weiss.
Prudhoe Bay production has averaged more than 280,000 barrels per day for three years and the crude oil price improved in fiscal year 2017 to $54.49 per barrel compared to $43.27 per barrel in FY 2016.
The company said its Alaska business is broken out as a requirement of the Prudhoe Bay Royalty Trust, which is traded on the New York Stock Exchange. The BPXA numbers, however, do not take into account the company’s costs for the trans-Alaska oil pipeline, the marine shipping business and the development of Alaska LNG.
“All in all, our entire Alaska regional businesses did make a profit of $118 million in 2017, which is lower than the 20-F reports for the BPXA business by itself,” Weiss said. “We also had positive cash flow for the year at about $619 million following two straight years of losses.”
Alaska activities BP had four vessels supporting operations in Alaska in 2017 at year end, the BP said in its Annual Report and Form 20-F 2017.
In a summary of company activities included in its filing the company said that for the past three years it has “successfully combatted decline at Prudhoe Bay through wellwork and improved operating field efficiencies, with production being largely maintained.”
On the facilities side, BP said that at the nine fields it operates in the Greater Prudhoe Bay area, 2017 infrastructure renewal activities “included compressor replacements, fire and gas system upgrades, safety system upgrades, pipeline renewal, facility piping upgrades and facility-siting projects.”
The company also owns significant interests in eight additional North Slope producing fields operated by others, and an interest in the non-operating Liberty prospect.
BP Alaska LNG LLC executed a cooperation agreement with the Alaska Gasline Development Corp. in January 2017 “detailing BPAL’s commitment to helping the state further develop Alaska LNG. This agreement has been extended to 30 June 2018,” the company said.
Prudhoe, TAPS shares BP holds a 26 percent working interest share and is the operator at Prudhoe Bay. The company said that since production began at Prudhoe in 1977, 12.5 billion barrels of oil have been recovered, compared to an original recovery estimate of 9.6 billion barrels. BP said an estimated 3 billion additional barrels produced so far have been through “innovations in oilfield technology.” Prudhoe remains the third largest oil field in the United States on a proved reserved basis, the company said.
BP Pipelines (Alaska) Inc. owns a 49 percent interest in the trans-Alaska pipeline system, which transports crude oil from the North Slope to Valdez.
Unocal, with a 1.37 percent ownership in TAPS, gave notice in April 2012 that it intended to withdraw as an owner. “The remaining owners and Unocal have not yet reached agreement regarding the terms for the transfer of Unocal’s interest in TAPS,” BP said.
BP said the parties involved in TAPS tariff matters at the Federal Energy Regulatory Commission and the Regulatory Commission of Alaska reached an agreement to settle challenges involving TAPS interstate rates for 2009-15 and to establish a mechanism for calculating interstate rate ceilings for TAPS from 2016 through 2021, “as well as subsequent years unless otherwise terminated.”
BP said the agreement resolves all challenges at the RCA for intrastate rates from 2008 to the present and establishes intrastate rate ceilings through 30 June 2019.
RCA approval was granted in January 2018 and FERC approval in February, BP said.
“Once all appeal periods have run, if the agreements are approved, the parties will proceed with implementing the settlement agreements, including issuing tariff refunds. Implementation will result in production tax and royalty payments to the State of Alaska while releasing some previously accrued liability provisions within BP Alaska,” the company said.
- KRISTEN NELSON
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