BP plc is stepping up its capital investment in Alaska in 2014, the company announced Monday, an increase of about 25 percent to $1.2 billion.
“This includes a 40 percent increase in capital for activities designed to increase production – drilling, well work, and major projects,” said President of BP Exploration Alaska, Janet Weiss, to the Anchorage Chamber of Commerce.
A portion of the investment will be allocated to the Prudhoe Bay field, the Milne Point field and other smaller producing fields.
“As a producer and one of the largest operators in the state, it is our goal to reduce production decline and conduct activity more efficiently and safely,” Weiss told Rigzone in September 2013. “Lately, we have been able to reach this goal when the state reformed its oil tax.”
Last year, the company increased its capital investment in the state when it passed a law modifying the oil production tax, to advance a more competitive tax system which should improve the sustainability of the business, Weiss explained.
BP recently completed a five-well pilot test on the Sag River formation that overlies the main Prudhoe Bay field. The first step of development of this formation is on track for 2015 and 2016, with full development calling for 200 production and injection wells.
“This would provide two dozen rig years of drilling and bring on as much as 200 million barrels of new oil production,” she told Rigzone.
A portion of the budget, about $1 billion, will focus on increasing drilling and workovers of older producing wells on Prudhoe. The company also plans to make a decision next year on a $3 billion project to develop new production facilities on the west end of Prudhoe Bay.
“It would add a new well pad — the first at Prudhoe in more than a decade. We would expand two other existing well pads and debottleneck our facilities, increasing flowline capacity [and] adding surface facilities. This would add 130 new wells and bring on 200 million barrels of new resources, adding 40,000 barrels per day down TAPS, or the Trans Alaska Pipeline System, beginning in 2018,” Weiss told the Anchorage Chamber of Commerce.
BP will also focus on the Northwest Schrader development, “now that we have a more favorable tax environment,” Weiss said.
“This project will represent an investment of $1 to 2 billion and it could include two new pads and 70 new wells and there could be additional drilling in existing pads,” she said. “There’d also be an existing infrastructure upgrade to increase the processing capacity of the Milne Point plant and it would potentially add 80 million barrels of new production.