FILE - In this undated file photo showing the 800-mile Trans-Alaska pipeline that feeds 950,000 barrels of oil a day to the West Coast snakes it way across the tundra north of Fairbanks, Alaska. BP, a major player on Alaska's North Slope for decades, is selling all of its assets in the state, the company announced Tuesday, Aug. 27, 2019. Hilcorp Alaska is purchasing BP interests in both the Prudhoe Bay oil field and the trans-Alaska pipeline for $5.6 billion, BP announced in a release. (AP Photo/Al Grillo, File)
The 800-mile Trans-Alaska pipeline that feeds 950,000 barrels of oil a day to the West Coast snakes it way across the tundra north of Fairbanks, © AP

BP has agreed to sell its Alaskan business to Hilcorp for $5.6bn, ending its 60-year history in the US state as the UK energy company disposes of assets to strengthen its balance sheet.

The sale to Houston-based Hilcorp, a privately owned operator, includes BP’s exploration and production business and its pipelines division in Alaska, including its stake in the giant Prudhoe Bay field and Trans Alaska Pipeline.

BP is reconfiguring its US portfolio, and also plans to sell $10bn of global assets over the next two years to pay for its acquisition of US shale operations from miner BHP last year. By the end of July, the company had made divestments worth $1.5bn.

Bob Dudley, chief executive of BP, said on Tuesday: “We are steadily reshaping BP and today we have other opportunities, both in the US and around the world, that are more closely aligned with our long-term strategy.”

Shareholders have put pressure on oil and gas majors such as BP to curb their spending, boost returns and concentrate on strategic areas. BP is developing its US shale business, including assets in the Permian and Eagle Ford basins, as it battles rivals including ExxonMobil and Chevron who plan to accelerate production there in the coming years. It is also developing its deepwater assets in the Gulf of Mexico, where it is bringing on new projects.

FILE - In this Aug. 18, 2006 file photo BP workers, in the background, remove insulation from an oil transit pipeline at the Prudhoe Bay oil field on Alaska's North Slope. BP, a major player on Alaska's North Slope for decades, is selling all of its assets in the state, the company announced Tuesday, Aug. 27, 2019. Hilcorp Alaska is purchasing BP interests in both the Prudhoe Bay oil field and the trans-Alaska pipeline for $5.6 billion, BP announced in a release. (AP Photo/Al Grillo)
BP workers, in the background, remove insulation from an oil transit pipeline at the Prudhoe Bay oil field on Alaska's North Slope. © AP

The UK company began operations in Alaska in 1959 and has 1,600 employees there. Its net oil production in the state is expected to average nearly 74,000 barrels a day this year.

BP operates Prudhoe Bay, the most prolific oilfield in US history on the coast of the Arctic Ocean in northern Alaska. It has produced over 13bn barrels of oil and is estimated to have the potential to produce at least another 1bn barrels more. Alongside that, BP holds non-operating interests in the Milne Point and Point Thomson fields.

In 2014 Hilcorp purchased stakes in four BP-operated Alaska North Slope oilfields. Already the largest private operator in Alaska, Hilcorp will double its production in the state. Last year BP sold its interest in the Kuparuk field to ConocoPhillips.

Rowena Gunn at consultancy Wood Mackenzie said: “This will not be the last deal in the region. ExxonMobil may be next to follow BP, Anadarko, Pioneer and Marathon in the list of companies having sold out of Alaska.” ConocoPhilips and Hilcorp now control almost three-quarters of Alaska’s production.

Oil and gas development in Alaska has been at the centre of political battles for decades.

Once a major producer, Alaska now makes up a fraction of total US output of more than 12m b/d. The state accounts for about 500,000 b/d, down from a peak of 2m b/d in 1988.

This Thursday, Aug. 22, 2019, photo shows smoke from wildfires obscuring the Chugach Mountains in Anchorage, Alaska. The smoke was from two wildfires, one burning north of Anchorage and the other south. (AP Photo/Mark Thiessen)
Alaska is prized by locals and environmentalists for its wildlife © AP

Some local groups and environmentalists have sued the Trump administration, accusing it of hiding information about the impact of oil production in the Arctic National Wildlife Refuge in the northwestern part of the state.

The region has been long coveted by the oil industry for its development potential, but it has been prized by locals and environmentalists for its wildlife.

Get alerts on Oil & Gas industry when a new story is published

Copyright The Financial Times Limited 2019. All rights reserved.
Reuse this content (opens in new window)

Follow the topics in this article