BP Exploration Alaska ramped up its North Slope drilling and well activity in 2013 and plans further increases in 2014.
Drilling of new wells increased 30 percent last year over the previous year, an increase of about 100 wells, according to information made available by the company. Well intervention work, mostly remediation of older producing wells, was up 40 percent, according to the company.
BP operates Prudhoe Bay, Milne Point and Endicott oil fields on the Slope.
Well activity and new development work is being stepped up by BP and ConocoPhillips, the two major North Slope operators, following changes to the state’s oil and gas production tax by the state Legislature last April. The new tax went into effect Jan. 1.
BP spokeswoman Dawn Patience said plans for BP’s 2013 activity were in place previously but that the tax change has now encouraged expanded activity for 2014 and beyond.
“We see a further uptick in drilling,” she said.
BP added two new drill rigs last year to its North Slope drilling fleet to bring the total number of rigs working for the company to seven. Two more will be added in 2015, bringing the total to nine, Patience said.
BP is doing the design work for 67 percent more wells to be drilled in 2016 over 2012, according to the company.
ConocoPhillips is also increasing work in the Kuparuk River field, where it is operator. The company added one new drill rig there in 2013, will add a second in February, and is also planning a new production pad. ConocoPhillips is also working on a new production project in the National Petroleum Reserve–Alaska, GMT-1.
Drilling creates a lot of jobs.
“Each drilling rig directly employs 100 people on the North Slope, plus operations jobs and other jobs designing the wells. In all, each rig directly adds a couple of hundred jobs to the Alaska economy,” BP Alaska President Janet Weiss said Jan. 10 at “Meet Alaska,” a conference and tradeshow sponsored by the Alaska Support Industry Alliance in Anchorage.
“Under the new oil tax reform law, BP plans to reinvest nearly 90 cents of every dollar we make here over the next five years in Alaska. We’re investing more, and a bigger percentage than we did previously, an increase from 60 percent from previous years under ACES,” the previous state oil tax law, Weiss said.
The new investment is coming none too soon.
“Of the 13 oil-producing U.S. states in 2011 and 2012 there was only one where production declined. That was Alaska. All the others increased, even California, which recently surpassed Alaska in oil production,” Weiss said.
In Prudhoe Bay, where BP is the operator, the field owners, which include ConocoPhillips and ExxonMobil as well as BP, have pledged $1 billion in investment in near-term field work as well as the start of development planning for a $3.2 billion project in the western end of the field, Weiss said at the Meet Alaska conference.
The west end project includes a major new well pad with 118 wells and production facilities. It is the first significant addition to Prudhoe Bay in a decade, Weiss said. “This is 200 million barrels of new oil reserves, ultimately adding 40,000 barrels per day of new production down TAPS (Trans-Alaska Pipeline System),” she said.
Another project BP will tackle, Weiss said, is development of the Sag River formation, a thin, economically marginal reservoir section overlying the main Prudhoe Bay reservoir. The company will begin a 16-well drilling program in 2015 and 2016, and 200 new wells could eventually be drilled, Weiss said. The project is expected to add another 200 million barrels of reserves, she said.