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BP Exploration to Spend $1.2B in Alaska in ’09

by  Tim Bradner      

Alaska Journal of Commerce     

Monday, December 08, 2008

BP Exploration (Alaska) Inc. will spend $1.2 billion on capital projects in Alaska in 2009, a 30 percent increase over the $900 million spent in 2008, a company spokesman said Dec. 2. The increase comes even as BP suspends some marginal Prudhoe Bay field projects because of lower crude oil prices and state tax effects. 

BP spokesman Steve Rinehart said the $300 million increase over current-year capital spending will be in three new projects as well as the company’s 50 percent share of spending by the Denali pipeline group, a joint venture with ConocoPhillips to plan an Alaska natural gas pipeline. The three new projects BP will invest in include development of Liberty, a small offshore field, continued drilling and testing of heavy oil deposits in the Milne Point field, and BP’s share of a planned gas cycling and condensate production project at Point Thomson, east of Prudhoe Bay on the North Slope. 

It is not certain that initial drilling at Point Thomson will go forward this winter, however. BP and other leaseowners are engaged in a complex dispute with the state of Alaska, which has refused to issue permits for work to begin at the field. Negotiations are underway on a possible settlement to the dispute. 

BP recently announced that it would suspend a $120 million gas processing plant on the western side of Prudhoe Bay because of the deteriorating economic environment caused by lower oil prices and the effects of state taxes on projects in Prudhoe Bay. The tax law does not allow deductions of all costs from Prudhoe Bay and Kuparuk River field projects. 

(C) 2008 Alaska Journal of Commerce, Anchorage

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