London-based BP PLC (NYSE: BP), which has a major presence in Houston, has completed the multibillion-dollar sale of its operations in Alaska.
Harvest Alaska, a subsidiary of Harvest Midstream, acquired BP Pipelines (Alaska) Inc.’s midstream ownership interests on Dec. 18. That gives Harvest BP’s approximately 49% interest in the Trans-Alaska Pipeline System (TAPS) and 49% of Alyeska Service Co. and other Alaska midstream interests, according to a press release.
Alyeska has operated the 800-mile-pipeline system pipeline for decades and will continue to do so. TAPS can carry 1.1 million barrels per day and runs from the Prudhoe Bay oil field to the Valdez Marine Terminal and has transported more than 18 billion barrels to date.
“The completion of this acquisition is a critical milestone for Harvest,” said Jason Rebrook, CEO of Harvest Midstream. “TAPS is an icon of American ingenuity and has a proven track record of safe and responsible operations with strong relationships in the communities it touches. We are committed to positively building upon this great legacy and we look forward to partnering with Alyeska, other TAPS owners, and the State of Alaska for years to come.”
When BP announced in August 2019 that it would sell all of its operations in Alaska, the deal was valued at $5.6 billion. But Harvest Midstream's portion is only part of the deal.
BP and Houston-based Hilcorp Energy Co. closed the upstream portion of the deal in July 2020. Harvest Midstram is part of Hilcorp.
"Harvest has achieved several significant milestones this year including this historic acquisition as well as our first public bond offering, raising $600 million in new capital.” Rebrook said in the Dec. 18 release. "I’m proud of our team for their hard work and look forward to continuing to build Harvest together as a leading midstream operator in Alaska for years to come.”
As of August 2019, the deal was slated to be a significant part of BP's plan to divest $10 billion of assets over 2019 and 2020. At the time, Andrew Dittmar, senior M&A analyst at Enverus, called the BP Alaska assets a crown jewel portfolio and said the deal was right out of Hilcorp’s playbook. The deal is similar to Hilcorp’s 2017 purchase of assets in New Mexico from ConocoPhillips. BP upped the goal to $15 billion several months ago and announced in June it reached that goal thanks to a $5 billion deal with London-based Ineos.
“The construction and operation of TAPS shows how Alaska’s people, the state and federal government and industry can work together to bring energy to America," Dave Lawler, chairman and president of BP America, said in a separate Dec. 18 release. "BP deeply appreciates being a guest of Alaska and its native communities for over six decades, and we thank the government of Alaska for its professionalism as we worked to finalize this sale. BP is a better company because of our time in Alaska.”