Two years after spending more than $300 million to secure leaseholds in the Utica shale play, BP has announced it will not to proceed with the development of its assets in Ohio. Citing poor appraisal results in the region, the energy company announced the decision in its April 29 report of first quarter financial results.
BP’s Upstream segment reported $4.4 billion profit for the first quarter of 2014, compared with $3.8 billion for the previous quarter and $5.7 billion for the first quarter of 2013, according to a company statement. Compared to a year ago, the result was affected by the impact of divestments and higher non-cash costs.
“Following on from the decision to create a separate BP business around its U.S. lower 48 onshore oil and gas activities, and as a consequence of appraisal results, BP has decided not to proceed with development plans in the Utica shale,” the company reported. “The Upstream result includes a write-off relating to the Utica acreage.”
BP will also part with some of its assets in Alaska, divesting interests in four fields to Hilcorp. In addition, the company plans to return to operating in the Gulf of Mexico, following the lifting of its suspension and debarment by the U.S. Environmental Protection Agency following the 2010 oil spill. BP announced it was the highest bidder on 24 new leases in the Gulf of Mexico this past quarter, with final awards subject to regulatory approval.
Among its new major upstream projects that started production during the first quarter of 2014, BP is working on the Shell-operated Mars B in the Gulf of Mexico. Production has also since begun from the Atlantis North Expansion Phase 2 development in the Gulf of Mexico and three further projects continue to make progress towards start up in 2014.
In the Downstream sector, BP’s refining availability was maintained at 95 percent or above for the seventh consecutive quarter. Heavy crude processing at the upgraded Whiting refinery continues to ramp up, the company announced, adding that the refinery was processing around 200,000 barrels per day (bpd) of heavy oil at the end of the first quarter and is expected to reach up to 280,000 bpd during the second quarter.
Overall, BP’s financial results for the first quarter of 2014 showed a $3.2 billion profit, compared with $2.8 billion for the previous quarter and $4.2 billion for the first quarter of 2013. Operating cash flow in the quarter was $8.2 billion.