What are some facts about Prudhoe Bay Royalty Trust?


Quick Answer

The BP Prudhoe Bay Royalty Trust is a gas and oil royalty trust that pays dividends from a portion of the revenue generated by BP Alaska in the Prudhoe Bay oil field. It is the largest conventional gas and oil trust in the United States.

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Full Answer

The Prudhoe Bay Royalty Trust receives a royalty of 16.42 percent of the first 90,000 barrels of daily production from the oil field. The royalty is distributed to Trust shareholders as a quarterly dividend. While the Trust receives dividend payments as long as petroleum production by BP Alaska continues in the area, the Trust has no control over operational decisions by BP Alaska.

For many years, the Prudhoe Bay oil field was the largest oil field in North America, but a report from the U.S. Department of Energy in April 2015 downgraded the field to third largest in proven reserves, with two shale oil fields in Texas overtaking Prudhoe Bay in both proven reserves and annual production. The change in rankings stems from a shift in economics of shale oil extraction. Shale oil reserves once considered unrecoverable now count as proven reserves due to changes in oil prices and extraction technology.

Prudhoe Bay remains the largest conventional oil field in North America. The Trust estimates that dividend payments will continue through 2027. Of the original 24 billion barrels of oil that geologists originally estimated to be present in Prudhoe Bay, drilling activities have extracted 12.5 billion barrels.

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