No Obligation to Enhance Recovery.....Sorry Charlie
There is no obligation by BP to practice enhanced recovery on the BPT wells. When production declines to level prescribed by the BPT prospectus, the trust is terminated and funds liquidated. BP takes the wells back and can decide to start enhanced recovery methods based on technical knowledge of the producing horizons and in accordance with the most economical and beneficial recovery methods.
Fact check from the Annual report. Listed under risk factors is the possible construction of a natural gas pipeline from the North Slope of Alaska. This could accelerate the decline in royalty production from the Purdhoe Bay field. "Currently, natural gas released from pumping oil is reinjected into the ground, which helps to maintain reservoir pressure and facilitates extraction of oil from the field." Did you really believe that the operators would not utilize current best practices to extract this oil?? And they have been doing this for years.
The Prospectus and annual report clearly state that BP is under no obligation to utilized enhanced recovery methods to boost oil production. Why should they for the Trust, when BP can benefit directly when the Trust production is taken back by BP under terms of the Prospectus?
A bigger threat is the amount of oil being produced from the overall North Slope (not just BPT properties) dropping to a level at which the Trans Alaska pipeline can no longer operate. In that event production would have to stop as there would be no transportation for the oil.
It's correct about the NG pipeline. BPT gets royalties only from oil production, nothing for gas. As there is no gas pipelines, the gas is re-injected which helps resevoir pressure. If a NG pipeline were constructed, that gas would not be available for injection and so oil production would drop.
They have been talking on and off about an NG pipeline for years and nothing has happened, so I wouldn't worry for now. We currently don't need Alaskan gas in the lower 48 or in Canada) but if a LNG terminal was planned for Alaska then it might be worth following.
This is mostly incorrect, starting from the point of believing BP is even the operator of this trust.
It is only called BPT for (very) historical reasons and BP is just one of about 30 operators for the trust property.