One of Alaska’s “Big Three” oil companies is stepping entirely away from its major role in the state, leaving its position as the company that oversees Prudhoe Bay and its partial ownership of the trans-Alaska pipeline.
BP announced Tuesday it is has reached an agreement to sell its entire business in Alaska to the private, Texas-based Hilcorp Energy Company for $5.6 billion.
BP Alaska currently employs over 1,600 people, according to a 2018 company report, and it pays hundreds of millions of dollars in taxes and royalties to the state each year.
In a statement, Bob Dudley, BP group’s chief executive, said, “We are extraordinarily proud of the world-class business we have built, working alongside our partners and the State of Alaska, and the significant contributions it has made to Alaska’s economy and America’s energy security.”
But Dudley added, ”We are steadily reshaping BP and today we have other opportunities, both in the U.S. and around the world, that are more closely aligned with our long-term strategy and more competitive for our investment.”
The sale is still pending state and federal regulatory approvals.
BP’s exit from Alaska has been rumored for years, but the gossip intensified in the weeks leading up to the announcement, appearing on internet message boards and the trade publication Petroleum News.
Larry Persily, a longtime observer of Alaska’s oil industry, said the move is not surprising for an international company like BP.
“My guess would be it’s just a matter of looking at their portfolio and saying, ‘We have a finite amount of money and a finite amount of management attention. Where is it going to be most profitable to devote that money and attention for the next 20-to-30 years?” Persily said.
The company had largely stopped exploring for more oil in Alaska, instead focusing its efforts on stemming the decline of oil production at Prudhoe Bay. It did conduct a massive 3D seismic survey of Prudhoe Bay this winter, seeking more “pockets of oil” to help keep the field producing longer.
In 2014, BP turned four other North Slope oilfields over to Hilcorp to operate, selling off the Endicott, Northstar and much of its interest in Milne Point, as well as the not-yet-developed Liberty Project.
Hilcorp is both the largest private oil company in the state and among the biggest private oil companies in the world. The company has been operating in Alaska since 2012.
In a statement, Jason Rebrook, president of Hilcorp, said, “Hilcorp has a proven track record of bringing new life into mature basins, including Alaska’s Cook Inlet and the North Slope, and we have a clear understanding that an experienced local workforce is critical to success.”
This story has been updated.