BP American Production Co. has sold its stake in the San Juan Basin natural gas and oil field to a European renewable energy company.
In an emailed statement to The Durango Herald on Wednesday, a BP spokesman said the energy giant agreed to a sale of its San Juan Basin assets for an “undisclosed amount” to IKAV, a European energy company, which, according to its website, specializes in wind and solar development.
“(BP) will continue to operate the San Juan Basin assets until closing and will work with IKAV during the coming months to ensure a safe and seamless transition,” the spokesman wrote.
A representative with IKAV declined to comment Wednesday afternoon. According to the company’s website, IKAV has offices throughout Europe – in Hamburg, Germany; Paris; Milan; Madrid; and Luxembourg – but not the U.S.
IKAV was founded in 2010 by Constantin von Wasserschleben, who lives in Hamburg, where the company is headquartered. Since 2011, the company reports it has made more than 50 individual investments, mostly in renewables, with 500 megawatts of solar and 800 megawatts of wind projects.
In 2013, for instance, IKAV bought 7.9 megawatts of solar capacity on Sardinia, according to RenewablesNow.com. More recently, IKAV has been making moves to acquire geothermal energy, reports in ThinkGeoEnergy.com show.
The Herald couldn’t find any U.S. investments from IKAV, and it’s unclear what the company’s plans are for the aging natural gas field that spans across Southwest Colorado and northern New Mexico.
BP announced in August 2018 its intent to pull out of the San Juan Basin as part of a larger company strategy to divest up to $6 billion in order to fund the purchase of U.S. shale oil and gas assets in other regions.
According to a spokesman, BP operates about 1,390 wells in Colorado, and another 2,440 wells in New Mexico.
The move follows a growing trend of operators dropping out of the natural gas field considered past its heyday: ConocoPhillips sold its stake in the San Juan Basin for $3 billion in 2016. And in August 2018, Williams Partners sold its assets for $1.125 billion.
The San Juan Basin was once one of the leading producers of natural gas in the country.
Discovered in the early 1920s, the San Juan Basin is one of the oldest producing areas in the U.S., but the field didn’t flourish until the 1990s. Now, there are more than 30,000 wells in the basin.
But production has waned since the mid-2000s, largely attributed to lower global prices and the discovery of other energy fields where it is easier and cheaper to operate.
Still, BP has maintained over the years that its operations are profitable.
The company’s production of natural gas, according to state records, has remained consistent since 2013, after a dip from the peak years between 2000 and 2011 when the industry was booming.
In 2017, BP accounted for more than half of the total natural gas production in La Plata County, and 75% of new drilling permits. That year, BP produced more than 162 million cubic feet of natural gas.
BP has also made significant investments to modernize and update its equipment in the field and has tested new technologies in the area. It also recently moved its offices to downtown Durango.
In 2018, BP’s area manager John Mummery said the San Juan Basin has enough reserves for about 20 to 30 years of viable production.
“La Plata County still has a robust future,” Mummery said. “We’re constantly finding new formations, implementing new technologies.”
At the time, BP announced its intent to leave the region. Local officials worried over the loss of the company’s 200 or so high-paying jobs and the hit that would have on the broader local economy.
As a result of the wider downturn in the San Juan Basin, for instance, La Plata County’s property tax revenue has declined nearly 50%, from $29.4 million in 2010 to $14.9 million in 2018.
In 2018, oil and gas operations were expected to account for nearly $4 million of the county’s total projected property tax revenue of $14.9 million. BP consistently ranks among the top five taxpayers in the county.
“BP has been a longtime member of our community and assures us that it will be a smooth transition to IKAV,” said La Plata County Commissioner Gwen Lachelt. “We look forward to meeting the IKAV representatives and learning more about their company and plans for our region.”