BP, Conoco in UK-Alaska Asset Swap
BP announced July 4 it is to increase its share in the giant UK Clair field and sell its interest in Alaska’s Kuparuk field. ConocoPhillips is the counterparty in both cases.
The deal will be cash-neutral for both parties, said BP. Neither disclosed details. Completion is expected by end-2018. Clair is chiefly an oilfield; Kuparuk currently only produces oil.
BP is to buy a 16.5% stake in Clair field, a core west of Shetland asset that it already operates, increasing its stake to 45.1%. ConocoPhillips will retain a 7.5% interest. (Others are Shell 28% and Chevron 19.4%). Separately BP has agreed to sell its entire 39.2% interest in the Greater Kuparuk Area on the North Slope of Alaska as well as BP’s holding in the Kuparuk Transportation Company to ConocoPhillips.
The giant Clair field has over 7mn barrels of oil equivalent estimated in place and in 2017 produced 21,000 boe/d - most of which BP acknowledges is oil. Clair was discovered 1977 and started producing 2005. A major second development phase, Clair Ridge, is due to start production in 2H2018 with production capacity of 120,000 boe/d. Appraisal has identified potential for future stages of development, said BP.
Gas from BP’s Schiehallion, Foinaven and Clair fields (all west of Shetland) has been piped north for decades to Magnus, the UK’s most northerly field. To reach Magnus, it passes through one gas subsea pipeline system (WOSPS) to the Sullom Voe oil terminal, and then another (EOSPS). BP acknowledges that without such gas, Magnus - which it has operated and from which it has produced oil since 1983 - would never have been developed. Magnus then decides whether to re-inject the gas, or transport it to the UK onshore market at St Fergus, via the NLGP and Flags subsea gas pipeline systems.
Conoco-operated Greater Kuparuk Area includes the Kuparuk oilfield and the satellite fields of Tarn, Tabasco, Meltwater and West Sak which together produced 108,000 b/d gross in 2017. The deal does not affect BP’s position as operator and co-owner in the Prudhoe Bay oilfield in Alaska.
BP upstream chief Bernard Looney said the deal was about "focusing our portfolio around core assets and developments" with growth potential, including Clair as a key advantaged North Sea oilfield.
ConocoPhillips CEO Ryan Lance said the deal continues "our strategy of coring up our legacy asset base in Alaska, while retaining an interest in the Clair Field in the UK."