After six decades in Alaska, BP is saying adieu, selling assets worth $5.6 million to Texas-based Hilcorp Energy Co., which has a track record of success in extracting oil from mature oilfields.
“It’s always sad to see a legacy company like that leave,” said Kara Moriarty, president and chief executive officer of the Alaska Oil and Gas Association, but, she added, that Hilcorp’s track record “shows when they go into a mature basin like Prudhoe Bay they use innovation to extract more oil.”
When the news broke on Tuesday, Aug. 27, Moriarty called it both historic and bittersweet.
“Alaska is losing a giant – a major company; yet welcoming an expanding presence by Hilcorp,” she said. “For over 40 years BP has been key to Alaska’s economy and community by employing thousands of Alaskans, generating millions of barrels of production and generously donating to charities across Alaska. And while we will miss BP’s presence and leadership, we welcome Hilcorp’s continued investment and commitment to Alaska as they become one of our state’s largest oil producers.
The sale, which still requires federal and state approval, would include BP’s interests in Prudhoe Bay oil fields, the Point Thomson gas field and the trans-Alaska pipeline. Harvest Alaska, a Hilcorp affiliate, will acquire BP’s stake in the oil pipeline. The move is part of BP’s effort to divest itself of $10 billion in assets by 2020.
Hilcorp President Jason Rebrook issued a statement saying his company has a record of “bringing new life to mature basins, including Cook Inlet and the North Slope, and we have a clear understanding that an experienced local workforce is critical to success.”
According to Larry Persily, who served as federal coordinator of the Alaska Natural Gas Transportation Project from 2010 to 2015, Hilcorp is known for picking up projects left by others and “wringing more money out of them.”
Hilcorp made its foray into Alaska in 2012 after passage of the Cook Inlet Recovery Act. Since then, the company has invested over $4 billion in Alaska and become the state’s largest producer of natural gas. In 2014, Hilcorp expanded to the North Slope by purchasing BP’s North Star and Endicott fields and teamed up with BP in the Milne Point and Liberty fields. Hilcorp is currently pursuing several new projects, including Liberty, which lies in shallow waters of the Beaufort Sea.
“We do not know the full details or implications of this news today, so we are very mindful of the uncertainty this is likely to cause I the short term for many Alaskan employees and contractors” Moriarty said. “I have confidence in both companies and their decision-making as we go through this transition. Alaska only has a handful of producing companies in the state and after today we have one less company here – a company some claimed would never leave, It’s a recognition that the oil and gas industry is ever-changing, and nothing is guaranteed.”
Justin Furnace, a vice president for Hilcorp Energy Corp., told The Associated Press in an email that plans for BP employees “will develop as we determine how we will integrate the acquisition into Hilcorp’s existing operations.”
BP currently employs some 1,600 people in Alaska.
Sen. Lisa Murkowski, R-Alaska, extended her thanks to BP “for its long-standing partnership on resource production in our state and for the many significant and lasting philanthropic contributions it has made in our communities.
“Hilcorp has a strong record of hiring Alaskans and I hope they will continue and strengthen our record of responsible production on the North Slope,” she said.
Rep. Don Young, R-Alaska, noted the important role that BP has played in Alaska for 60 years, as a significant contributor to the state’s economy, “I would like to thank them for their decades of service,” he said. ”It is difficult to see a great company leave, not only because of our strong shared history in Alaska, but more critically because so many of our family members and friends have built great careers with this company.
Young said he looked forward to working with Hilcorp, and that during the transition, he would support the current BP employees working on the North Slope.
The Associated Press contributed to this story.