Already the key operator in Alaska’s monster Prudhoe Bay field, the British integrated giant has committed to several new projects in the state now that the Palin Levy has been removed. That includes adding two new horizontal rigs to Prudhoe Bay as well as adding an extra $3 billion in CAPEX to the field. BP has also plans to begin fracking the nearby Sag River formation — which could add as much as 200 million barrels of new oil production.
All in all, those additional rigs and projects should help BP stock see a 40,000 barrel per day jump in its production by 2016. That’s key, as the opportunity is a relatively easy one for BP to tap and add to its production. That should help propel BP stock going forward.
Then there’s pipeline operator TransCanada (TRP), another one of the top energy stocks that should be able to capitalize on this news. While most investors have tied the fate of TRP stock to the much-maligned Keystone XL, TransCanada is already a huge player in Alaska.
TRP recently signed a deal with the Alaskan government to build an 800-mile pipeline that will eventually bring natural gas from the state’s North Slope to a proposed LNG export plant. Unlike the KXL, this project has pretty much been given the green light by Alaska’s government and could serve a huge source of additional cash flows for TRP stock when it’s finally constructed and operational.
Finally, there’s No. 1 Alaskan producer ConocoPhillips (COP) to consider.
Already, COP has the most reserves in the state, and the new tax scheme has it beginning to tap more. During the third quarter, Conoco added an additional rig to its acreage, and that rig has already begun adding to its overall production in the state. Additionally, new projects should add about 16,000 barrels a day to COP’s production by 2015.
And aside from buying into the future TRP LNG pipeline, COP is the sole operator of the Nikiski LNG plant. That facility had been mothballed since 2012. However, with the tax removed, Conoco estimates that it should be able to turn a profit on drilling natural gas nearby and shipping it to Japan and China.
The bottom line: The repeal of the Palin Levy is huge for energy companies in Alaska. The trio of TRP stock, BP stock and COP stock could be some of the biggest winners among energy stocks.
As of this writing, Aaron Levitt did not hold a position in any of the aforementioned securities.