BP and ConocoPhillips swap Alaska and Shetland interests

The FTSE 100 oil major said the first agreement was to purchase a 16.5% interest from ConocoPhillips in the BP-operated Clair field, west of Shetland in the UK, buying a ConocoPhillips subsidiary that would hold that interest in the field.

As a result, BP would hold a 45.1% interest in Clair and ConocoPhillips would retain a 7.5% interest.

Separately, BP said it 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 Company.

Details of the transactions were not being disclosed but, excluding customary adjustments, the transactions together were expected to be cash neutral for BP and ConocoPhillips.

The transactions, which would be subject to State of Alaska, US federal and UK regulatory approvals and other approvals, were anticipated to complete in 2018.

"This is a further step in focusing our portfolio around core assets and developments which have the potential for significant growth,” said BP Upstream chief executive Bernard Looney.

“Clair is a key advantaged oilfield 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.”

BP said the “giant” Clair field west of Shetland had a “complex” fractured reservoir estimated to have had more than seven billion barrels of hydrocarbons originally in place.

The field is operated by BP, which currently holds a 28.6% interest.

Production from Clair's first phase of development began in 2005, and the field produced an average of 21,000 barrels of oil equivalent a day in 2017.

A major second development phase, Clair Ridge, was expected to start production later this year with production capacity of 120,000 boed.

Appraisal had also identified potential for future stages of development of Clair.

The Greater Kuparuk Area is operated by ConocoPhillips Alaska, and includes the Kuparuk oilfield and the satellite fields of Tarn, Tabasco, Meltwater and West Sak.

In 2017, the Greater Kuparuk Area had average daily gross oil production of approximately 108,000 barrels a day.

The agreement would also include BP's interest in the Kuparuk pipeline, which transports oil from the Greater Kuparuk Area to the inlet of the Trans-Alaska Pipeline (TAPS) at Pump Station 1.

BP said the transaction would not affect its position as operator and co-owner in the Prudhoe Bay oilfield in Alaska.