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 Company 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 at 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 plummeting.
“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 part of the sale involving Prudhoe Bay and other oil field assets 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.”
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.
Myers said he didn’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 anticipated 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.