4-13-17 BP Alaska Exploration President Outlines Company's Alaska Investments In Spite of Low Oil Price Environment

4-13-17 BP Alaska Exploration President Outlines Company’s Alaska Investments In Spite of Low Oil Price Environment

Announcement from Janet L Weiss, President, BP Alaska Exploration, Inc.

Janet L. Weiss. Northern Gas Pipelines file photo by Dave Harbour.

Last week, BP issued its 2016 Annual Report and the required 20-F form submitted to the US Securities and Exchange Commission. Unfortunately, the 20-F form only tells part of our BP Alaska business story which has caused some confusion and a number of questions that I want to help address.

Let me be very clear, the BP Alaska Region did lose money (negative cash flow) in 2016 to the tune of about $1 million a day (a loss of $358 million for the year). And, the entire Region had a net income loss of $184 million. How can this be when the BP Annual Report 20-F says that BPXA made $85 million net income and paid $464 million in taxes and royalties to the State of Alaska?

There are several important facts to note:

The BP Alaska Region is made up of a number of separate businesses. For accounting purposes each of these businesses reports separately into the BP Group. As many business owners know, we must take into account every aspect of our business.

BPXA (the entity reported in the 20-F form) only represents one piece of our Alaska business. It does not take into account the cost of operating both our pipeline business (TAPS) and our marine shipping business. The BPXA business is specifically broken out as a requirement of the Prudhoe Bay Royalty Trust which is traded on the New York Stock Exchange.

The 20-F is an income statement and does not reflect cash flow. It is based on what our finance folks call “accrual accounting” which does not include ~$600 million of capital we invested in our Alaska business in 2016.

Looking at only one piece of our business is like a restaurant only considering the cost of the food it buys and not taking into account the equipment needed in the kitchen, transportation costs to get the food to your restaurant or the marketing needed to attract patrons.

It’s important to note that even in this low price environment, BP invested $1.8 billion in Alaska ($1.2 billion operating expense, and $600 million capital) in 2016. As a community leader, I wanted to provide you with the complete story directly from me.

Regards,

Janet

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About the Author: wpnorthern

Dave Harbour, publisher of Northern Gas Pipelines, is a former Chairman of the Regulatory Commission of Alaska, a Commissioner Emeritus of NARUC, NARUC's Official Representative to IOGCC and Vice Chairman of NARUC's Gas Committee. He served as Gas Committee Chairman of the Western Conference of Public Service Commissioners. He also served as commissioner of the Anchorage Bicentennial Commission and the Anchorage Heritage Land Bank Commission. He earned a Bachelor of Arts Degree: English, at Colorado State University, a Master of Science Degree: Communications-Journalism at Murray State University and graduated from Utility Regulatory School for Commissioners at Michigan State University. He served as a Vice President for Communications and Public Affairs at Alaska Pacific University, taught bank marketing classes at the University of Alaska and was an English teacher at Los Alamos High School. Harbour served in ranks of Private - Captain during a 4-year assignment with the Army in Korea, Idaho, Georgia and Fort Meade and received the Meritorious Service Medal among other commendations. Harbour is also a past Chairman of the Alaska Council on Economic Education, the Alaska Oil & Gas Association Government Affairs Committee, the Anchorage Chamber of Commerce, the Export Council of Alaska and the Department of Commerce's District Export Council. He is a past President of the Alaska Press Club, American Bald Eagle Foundation, Consumer Energy Alliance-Alaska and Common Sense for Alaska. Harbour was instrumental in founding the American Bald Eagle Research Institute (UAS), the Alaska Support Industry Alliance, the Downtown Anchorage Business Partnership, and Arctic Power. He also served as CEO of several small Alaska organizations, including the Anchorage Parking Authority and Action Security, Inc. Harbour is also Chairman Emeritus of the Alaska Oil & Gas Congress. Harbour's wife, Nancy, is a professional, performing arts administrator and his three boys, Todd, Benjamin and William work in the fields of environmental management, energy marketing and medicine.