BP 2013 Annual Report Download - page 244

• In June BP announced plans to add $1 billion of new investment over
five years beginning 2015 in the Alaska North Slope fields by adding
two additional drilling rigs, one each in 2015 and 2016. Changes in the
state’s oil tax statute helped to enable this increased investment. In
addition, BP secured support from the other working interest owners
at Prudhoe Bay to begin evaluating an additional $3 billion of new
development opportunities, including facility expansions, a new well
pad, and expansion of two existing well pads.
• BP continued to work jointly with ExxonMobil, ConocoPhillips and
TransCanada throughout 2013 to advance the Alaska LNG project. In
February 2013 a lead concept for the project was announced,
consisting of a North Slope gas treatment plant, an 800-mile
(approximately) pipeline to tidewater and a three-train liquefaction
facility, with an estimated capacity of 3bcf/d (15-18 million tonnes per
annum). An initial summer field season to collect data that will support
filing of necessary regulatory permits was completed. In October
selection of the lead site for the liquefaction facility was announced as
Nikiski, Alaska, located on the south-central Alaskan coast. In January
2014 BP, ExxonMobil, ConocoPhillips and TransCanada signed a heads
of agreement (HOA) with the State of Alaska enabling state
participation in the $45 – $65 billion Alaska LNG project. The HOA sets
out guiding principles for the parties to negotiate project-enabling
contracts once enabling legislation is passed and provides a road map
for state equity ownership in the project.
Also in Alaska, BP owns a 48.4% interest in the Trans-Alaska Pipeline
System (TAPS). The TAPS transports crude oil from Prudhoe Bay on the
Alaska North Slope to the port of Valdez in south-east Alaska.
• In April 2012 the two non-controlling owners of TAPS, Koch
(3.08%) and Unocal (1.37%) gave notice to BP, ExxonMobil
(21.1%) and ConocoPhillips (29.1%) of their intention to withdraw as
an owner of TAPS. The transfer of Koch’s interest to the remaining
owners (BP, ExxonMobil and ConocoPhillips) was agreed and approved
by regulatory authorities, and closed in July with an effective date of
August 2012. The remaining owners and Unocal have not yet reached
agreement regarding the terms for the transfer of Unocal’s interest in
TAPS and are currently engaged in litigation.
• In September 2012 BP, ExxonMobil and ConocoPhillips entered into
two settlement agreements on the pooling of costs on TAPS. In July
the Federal Energy Regulatory Commission (FERC) issued an order
approving the two settlement agreements, and implementing cost
pooling between TAPS owners under the terms of the settlement
agreements.
In Canada, BP is currently focused on oil sands development and intends
to use in situ steam-assisted gravity drainage (SAGD) technology, which
uses the injection of steam into the reservoir to warm the bitumen so
that it can flow to the surface through producing wells. We hold interests
in three oil sands leases through the Sunrise Oil Sands and Terre de
Grace partnerships and the Pike Oil Sands joint operation. In addition, we
have significant exploration interests in the Canadian Beaufort Sea. The
award of four offshore leases in Nova Scotia that were successfully bid
for in 2012 was completed in 2013.
• Phase 1 of the Sunrise Oil Sands SAGD development, in which we
have a 50% non-operated interest, is under construction and is
expected to commence operations in late 2014. The production
capacity of Sunrise Phase 1 is expected to be 60mb/d of bitumen.
• A major seismic programme on the Nova Scotia exploration leases is
planned for the summer of 2014. The focus of the seismic programme
will be to shoot 3D seismic on the 14,000km2lease area in depths
ranging from 100 metres to 3,500 metres.
South America
In South America, BP has upstream activities in Brazil, Argentina, Bolivia,
Chile, Uruguay and Trinidad & Tobago.
In Brazil, BP has interests in 24 exploration and production concessions,
six of which are operated by BP, across six basins. Five of these
concessions are subject to government and regulatory approvals.
• In March BP announced the completion of a successful flow test of the
Itaipu-1A well, offshore Brazil. This activity was part of the ongoing
appraisal programme and indicates that commercially viable flow rates
can be achieved from the BP-operated Itaipu discovery, located in the
deepwater sector of the Campos basin.
• In May BP and its partners announced they had been named winning
bidders in eight deepwater blocks offshore Brazil in the Brazilian
National Petroleum Agency’s 11th bid round. BP will be operator of
two of these blocks. Six of the blocks are in the Foz de Amazonas
basin, with the remaining two in the Potiguar and Barreirinhas basins.
• In July BP announced the completion of an agreement with Petróleo
Brasileiro S.A. (Petrobras) to farm in to five deepwater exploration and
production blocks, subject to government and regulatory approvals.
The blocks are in the deepwater Potiguar basin located in the Brazilian
equatorial margin and in total cover an area of 3,837km2.
• In December BP confirmed the Pitu oil discovery, operated by
Petrobras, on block BM-POT-17 in the frontier deepwater of the
Potiguar basin. BP’s farm-in to a 40% interest in this block is subject to
final regulatory approvals.
• In December BP announced the Pitanga exploration well on block
BM-CAL-13 in the Camamu-Almada basin offshore Brazil had
encountered oil shows but no commercial quantities of oil or gas. This
result will cause BP to relinquish the block and triggered a write-off of
$216 million related to the costs of drilling the well, as well as a write-
off of $845 million associated with the value allocated to this block as
part of the accounting related to the acquisition of Devon Energy’s
interest in the block announced in 2010.
• In January 2014 we completed the sale of our interest in the Polvo oil
field (BP 60%) in Brazil to HRT Oil & Gas Ltda for $135 million.
In Argentina, Bolivia and Chile, BP conducts activity through Pan
American Energy LLC (PAE), an equity-accounted joint venture with
Bridas Corporation, in which BP has a 60% interest.
In Uruguay, BP has interests in three offshore deepwater exploration
blocks: blocks 11 and 12 in the Pelotas basin and block 6 in the Punta del
Este basin, together covering an area of almost 26,000km2. The PSAs
provide that BP will hold a 100% interest in the blocks and the
Uruguayan state oil company, ANCAP, will have a right to participate in
up to 30% of any discoveries. BP is preparing to undertake its
commitment to acquire over 13,000km2of 3D seismic data and 3,000km
of 2D seismic data during the first exploration period which ends in
December 2015.
In Trinidad & Tobago, BP holds licences covering 1,806,000 acres
offshore of the east and north-east coast. Facilities include 13 offshore
platforms and one onshore processing facility. Production is comprised of
oil, gas and associated liquids.
BP has a shareholding in Atlantic LNG (ALNG), an LNG liquefication plant,
in Trinidad & Tobago that averages 39% across four LNG trainsawith a
combined capacity of 21 million tonnes per annum. BP sells gas to each
of the LNG trains, supplying 100% of the gas for train 1, 50% for train 2,
75% for train 3 and around 67% of the gas for train 4. All of the LNG
from Atlantic train 1 and most of the LNG from trains 2 and 3 is sold to
third parties in the US and Europe under long-term contracts. BP’s equity
LNG entitlement from trains 2, 3 and 4 is marketed via BP’s LNG
marketing and trading function to markets in the US, UK, Spain and
South America.
Africa
BP’s upstream activities in Africa are located in Angola, Algeria, Libya,
Morocco, Egypt and Namibia.
BP is present in nine major deepwater licences offshore Angola and is
operator in four of these.
• Production from the Plutão, Saturno, Vénus and Marte (PSVM)
development area in Block 31, offshore Angola, which started
production in late 2012, continued to increase as planned, reaching a
maximum rate of just over 150mb/d in 2013.
• In October we had an oil and gas discovery in the pre-salt play of
Angola in Block 20 (BP 30%), operated by Cobalt International Energy,
Inc. This was followed by a successful drill-stem test in December.
aAn LNG train is a processing facility used to liquefy and purify natural gas in the formation of
LNG.
240 BP Annual Report and Form 20-F 2013