LONG BEFORE oilmen fracked the Permian basin, they came to Prudhoe Bay. Spanning more than 800 square kilometres of Alaska’s North Slope—an area the size of New York City—it remains one of the most productive oilfields in American history. In 1977 BP began pumping the black stuff from Prudhoe Bay, whence a new pipeline transported it over 1,300km of frigid wilderness to the port of Valdez. The project was a triumph of engineering and a testament to BP’s ambition. This month the British giant achieved a different feat: it sold its stake in Prudhoe Bay and other Alaskan oilfields to Hilcorp, a smaller firm. When, in April, it looked as if the $5.6bn sale might be at risk, BP said it would extend a loan to Hilcorp to help close the deal.
BP’s eagerness to sell its Alaskan business reflects a broader shift. Oil and gas firms, which report second-quarter earnings in the coming weeks, are cutting investment and trying to sell billions of dollars’ worth of resources. Even before covid-19 lockdowns hit energy demand and oil firms’ profits, investors were wary of big projects. Now the risk of costly stranded assets has grown more obvious. Last month BP and Royal Dutch Shell, an Anglo-Dutch rival, said they would take write-downs of up to $17.5bn and $22bn, respectively, on assets. The oil majors are ever keener to own only the cheapest,...
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