BP, Hilcorp say they’ve closed part of Alaska oil, gas deal

Long before the shale revolution, a vital contributor to U.S. oil production were stripper wells, small holes producing trickles of crude with the aid of iconic pumping machines known as nodding donkeys, such as the one shown here in 2012 in Los Angeles. With oil prices down 57 percent since June, these smallest of producers will be the first to succumb to the Great Oil Bust of 2015. T CREDIT: Bloomberg News photo by Patrick T. Fallon).

By BECKY BOHRER Associated Press
JUNEAU, Alaska (AP) — BP announced Wednesday it has closed part of its planned $5.6 billion sale of assets and operations in Alaska to Hilcorp, including the transfer of leases in the Prudhoe Bay oil field and Point Thomson gas field.

William Lin, an executive vice president for BP, in a statement called this a “new era for Prudhoe Bay.” Jason Rebrook, president of Texas-based Hilcorp Energy Co., said that with the action, the company is “significantly growing and strengthening our footprint in Alaska.”
BP, in a release, said the assets included in this portion of the agreement “comprise the vast majority of the deal value.”

The portion of the sale that includes BP’s interest in the trans-Alaska pipeline system remains under regulatory review.

With completion of the sale, Hilcorp would control more than 460,000 acres in Alaska, second to ConocoPhillips Alaska, according to a memo from a committee of state officials that Gov. Mike Dunleavy tasked with keeping him apprised of the transaction.
Exxon Mobil also is a major North Slope company.
The state announced Monday that the commissioners of the departments of Natural Resources and Environmental Conservation had approved the transfer of BP’s interest in 176 oil and gas leases within the Prudhoe Bay, Point Thomson and Milne Point units on the North Slope. BP surface use permits also were amended to reflect the change in permit holders, the state said.

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Hilcorp also is assuming the role of operator of the Prudhoe Bay unit, officials said.
ConocoPhillips and Exxon have bigger ownership shares at Prudhoe but the operator doesn’t always have to be the one with the biggest share, said Larry Persily, a former federal coordinator for Alaska gas pipeline projects. Big decisions, though, can’t be made without partner permission, he said.

In April, BP announced it had renegotiated financial terms with Hilcorp, which BP said reflected the low oil-price environment at that time. North Slope oil prices skidded to near or below $10 a barrel in late April. More recently, they have edged above $40 a barrel.
This time last year, prices were in the mid-to-upper $60 a barrel range.
BP, in announcing the planned sale last August, said it was part of an attempt to divest $10 billion in assets by 2020.
The memo to Dunleavy states BP agreed to be secondarily liable for the dismantlement, removal and restoration relating to North Slope assets in place at the time of the deal.