BP Testimony to House Resources and House Energy Damian Bilbao, - PowerPoint PPT Presentation

BP Testimony to House Resources and House Energy Damian Bilbao, Head of Finance, Developments and Resources April 25, 2012

Agenda BP in Alaska How BP makes investment decisions What could growth in investment mean for Alaska’s future 4/25/2012 2

BP in Alaska since 1959 • 53 years in Alaska � Office opened in 1959 • $13.4 billion in upstream spend with Alaska Firms the last 10 years • 2,100 Employees (82% Alaska residents) � 275 APICC students hired in last 10 years � 54 internships, 100+ fulltime jobs in last 5 years • 6,000+ Contractors • $70 million of direct community investment since 2001 4/25/2012 3

Agenda BP in Alaska How BP makes investment decisions What could growth in investment mean for Alaska’s future 4/25/2012 4

Global investment is limited and goes to the most attractive regions 4/25/2012 5 Source: DOR presentation to House Resources, April 21, 2012

The tax policy will greatly influence how many projects move forward Hopper of Opportunities Efficiency � Healthy base business + Technology � Brightwater, Multi-lateral drilling, Lo Sal, etc. + Tax � $5 billion in potential new Change investment •Prudhoe I Pad = •Kuparuk Eastern NEWS •Prudhoe Sag @ scale PRODUCTION •Add’l drilling in legacy fields GROWTH 4/25/2012 6

Agenda BP in Alaska How BP makes investment decisions What could growth in investment mean for Alaska’s future 4/25/2012 7

Declining production is a crisis GF Revenue versus Appropriations FY13 to FY 18 Spring 2012 Revenue Forecast With 4% GF Growth beginning in FY2014 9,000 General Fund Expenses (4% GF growth) General Fund Revenue Revenue (6% production decline) Revenue (4% production decline) 8,000 7,000 $mm 6,000 5,000 4,000 3,000 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 Source: Office and Management and Budget presentation to House Resources, April 25, 2012 4/25/2012 8

Two-thirds of production in 2020 derives from activity performed from 2012 to 2020 Legacy Field Production mb/d gross 700 Add'l opportunities* $5 billion of Projects 600 Continued Wellwork and Drilling Natural Base Decline 500 -4% 400 -6% 300 -16% 200 100 0 2012 2020 * Indicative 4/25/2012 9

Key Messages • ACES is a no growth policy that bets Alaska’s future on high oil prices • Legacy fields are the only near-term option for new production • If taxes do not change, our business will have to • Other regions, like Alberta, have lowered taxes and increased investment and production 4/25/2012 10