British multinational oil and gas giant BP will cease its Alaska operation in the most prolific oilfield in U.S. history to date, and will sell its entire business in that state, the British company said in a statement on Tuesday

Hilcorp Alaska, an affiliate of Hilcorp Energy Company based in Texas, will pay $5.6 billion for BP's interests in the state of Alaska.

The sale will include BP's entire upstream and midstream business in Alaska, including BP's interest in the 800-mile (1,287 kilometers) Trans Alaska Pipeline System, which the British firm helped build during the mid-1970s.

BP has faced criticism from environmental organizations for drilling and exploring in Alaska, but Group Chief Executive Bob Dudley said the recent decision is part of the company's long-term goals.

"Alaska has been instrumental in BP's growth and success for well over half a century," he said in the statement, adding the company has other opportunities in the U.S. and around the world that are more closely aligned with the firm's long-term strategy.

Dudley said the sale of the Alaska assets is also part of BP's $10 billion divestment plan for the next two years.

Currently, some 1,600 employees are associated with BP's Alaska business and the firm said “it would provide clarity about their future once the transaction is approved by state and federal regulators.”

BP began working in Alaska in 1959, drilling the confirmation well in 1968 in Prudhoe Bay oilfield, located in the north of Alaska near the Beaufort Sea just south of the Arctic Ocean.

BP started producing oil from Prudhoe Bay in 1977, and has a 26% stake in the asset, which became the most prolific oilfield in U.S. history. It has since produced over 13 billion barrels of oil, and is estimated to have the potential to produce more than one billion further barrels, according to the statement.

BP's oil production from Alaska this year is expected to average almost 74,000 barrels per day (bpd), which constitutes a small portion of the 921,000 bpd it produced during the second quarter of 2019 from all of its operational U.S. fields.

Dudley said BP has invested more than $20 billion in the U.S. over the last three years.

The buyer, Hilcorp, is currently the largest private oil and gas operator in Alaska, currently producing more than 75,000 bpd in the state.

In 2018, Prudhoe Bay oil production amounted to around 270,000 bpd, accounting for more than half of Alaska's total oil production.

By Ovunc Kutlu

Anadolu Agency

energy@aa.com.tr