BP, ConocoPhillips agree to Clair/Alaska asset swap

BP has entered agreements to buy a 16.5% interest from ConocoPhillips in the Clair oil field west of Shetland.

Offshore staff

ABERDEEN, UKBP has entered agreements to buy a 16.5% interest from ConocoPhillips in the Clair oil field west of Shetland.

In exchange,ConocoPhillips would receive BP’s participating interest in the Kuparuk and satellite oilfields in Alaska.

The Clair transaction would lift BP’s operated stake in the field to 45.1%, with ConocoPhillips retaining 7.5%.

Separately BP has entered into agreements to sell to ConocoPhillips its entire 39.2% interest in the Greater Kuparuk Area on the North Slope of Alaska as well as its holding in the Kuparuk Transportation Co.

The transactions, subject to the state of Alaska, US federal, UK regulatory and other approvals, should go through later this year, BP said.

BP Upstream chief executive Bernard Looney said: “Clair is a key advantaged oil field for our North Sea business, a giant resource whose second phase is about to begin production, and which holds great potential for future developments.

“In Alaska, this transaction will increase our focus on managing our deep resource base at the massive Prudhoe Bay oilfield and help enable a more competitive and sustainable business for BP.”

The giantClair field, discovered in 1977, has a complex fractured reservoir with more than 7 Bboe (originally) in place.

Production from the first-phase development, targeting 300 MMboe, started in 2005 and last year the field produced on average 21,000 boe/d.

A second development phase,Clair Ridge, is targeting a further 640 MMboe and is due to start production later this year, reaching 120,000 boe/d at peak. BP has also identified potential for further stages of development.

Current partners are: BP, ConocoPhillips, Shell, and Chevron.

Luke Parker, vice president, corporate analysis at Wood Mackenzie, said Clair South, a 300-MMboe project, should reach a final investment decision in 2021, with first production in 2025, at a capital cost of around $2.9 billion.

“BP clearly believes in Clair’s long-term potential,” he said. “We expect production to rise until 2027, with scope for upside through increased recovery and recent exploration success.

“The swap takes its stake in Clair to 45.1%, which is probably as much as it would like at this stage, given the risk profile. This is the second deal on awest of Shetland asset this year (Shell farmed into Cambo), underlining the majors’ commitment to the area.”

Parker added that ConocoPhillips may well decide to withdraw from the UK at some point. “The residual 7.5% stake in Clair would be the big prize in any asset package on offer: that stake is worth as much, by our estimates, as the other 50+ assets that ConocoPhillips still holds in the UK.”

07/05/2018

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