Hilcorp quietly takes over BP’s stakes in Prudhoe Bay and other Alaska oil fields

Hilcorp’s Innovation drilling rig on the North Slope. (Courtesy photo)

Update, Wednesday:

It’s official: The sale of a big chunk of BP’s business in Alaska has quietly closed. 

Hilcorp Alaska announced in a written statement Wednesday morning that it has taken over BP’s 26% interest in Prudhoe Bay, plus its stakes in the Milne Point and Point Thompson fields. The privately-owned company has also now become the operator of the massive Prudhoe Bay, a major change to Alaska’s oil and gas landscape. The sale launches Hilcorp into the position of Alaska’s second-largest oil producer.

“Today we are significantly growing and strengthening our footprint in Alaska,” Jason Rebrook, president of Hilcorp Energy Company, said in the statement.

Hilcorp said it has nearly tripled its workforce in Alaska as a result of the $5.6 billion sale, growing to more than 1,400 employees. It said it expects to add more workers in the coming months. In December, BP said roughly half of its Alaska employees had taken a job with Hilcorp. 

BP Alaska also released a statement Wednesday morning announcing that part of the sale had closed, nearly a year after the company revealed its plans to sell its entire Alaska business to Hilcorp and exit the state.

BP said it will continue to work with Hilcorp and state regulators to close the second part of the deal, which includes its interest in the 800-mile trans-Alaska pipeline. 

Hilcorp said it expects to close the rest of the sale by the end of September, marking the end to BP’s more than 60 years of operation in Alaska.

In their statements, both BP and Hilcorp executives thanked employees for their work on the transition. 

Original story, Tuesday:

A big piece of one of Alaska’s largest oil industry deals is set to quietly close by the end of the day Tuesday.

Hilcorp Energy will take over BP Alaska’s oil and gas leases within Point Thomson, Milne Point and the massive Prudhoe Bay oil field. The transfer is expected to happen around midnight, and marks the close of a major part of the $5.6 billion deal first announced by the oil companies last August.

It follows an announcement from state commissioners late Monday afternoon that they’d approved the sale of BP’s oil field assets to Hilcorp after a months-long analysis of the transaction and after stress testing Hilcorp’s finances. 

“Today’s announcement represents a major milestone in the BP-Hilcorp review process,” Gov. Mike Dunleavy said in a statement Monday about the commissioners’ approval.

The sale will launch Hilcorp into the position of Alaska’s second largest oil producer, and the privately-owned company will become the operator of Prudhoe, the largest oil field on the North Slope and one of North America’s most productive. It will also move BP one big step closer to exiting the state after more than 60 years here.

Meanwhile, the second key piece of the sale remains under review. 

The Regulatory Commission of Alaska is still assessing BP’s sale of its pipeline assets, including its interest in the 800-mile trans-Alaska pipeline. The RCA has said it will reach a final decision by the end of September.

Sean Clifton, with the Alaska Division of Oil and Gas, said the two companies alerted the state in April about their plan to split the deal into two parts. The companies also publicly announced several other changes to the transaction as an oil-price war and the coronavirus pandemic sent crude prices crashing. 

“This is not something DNR needed to approve, being a business decision among private parties,” Clifton said about the decision to divide the deal.

BP and Hilcorp said little publicly Tuesday about closing the first chunk of that deal. There didn’t appear to be any large events planned by the companies to mark the transfer.

A BP spokeswoman confirmed Tuesday that the company anticipated closing the first part of the sale by the end of the day. She declined to comment further. A Hilcorp spokesman also declined to comment. More information is expected from the companies on Wednesday. 

Mark Myers is a geologist and energy consultant, who has served as a DNR commissioner in Alaska and as the national director of the U.S. Geological Survey. He said one of the biggest changes some Alaskans may first notice is Hilcorp’s smaller workforce

“They’re a leaner company,” he said in a phone interview Tuesday. “So they’re going to do it with less people.”

RELATED: About half of BP’s Alaska employees have accepted a job with Hilcorp

Over the nearly year-long review of the sale, Hilcorp has faced criticism for its safety and environmental record and received praise for its innovation and ability to revive aging infrastructure, including at Milne Point. 

RELATED: Hilcorp revived this declining North Slope oil field. Can it do the same for Prudhoe Bay?

Myers said he doesn’t expect any immediate changes to oil production out of Prudhoe.

Hilcorp, he said, will be working with two other main partners: ExxonMobil and ConocoPhillips, which each own a roughly one-third stake in the field.

Myers said he anticipates Hilcorp will first focus on training its employees, transitioning the hundreds of BP workers it has hired and learning more about the complexities of the oil field.

“There are a lot of opportunities, but they’re going to have to compare them within that field and run the economics on them as well,” he said.

BP has said up to 50 of its employees who planned for early retirement will help with Prudhoe operations for 90 days after the sale closes. 

Reach reporter Tegan Hanlon at thanlon@alaskapublic.org or 907-550-8447.