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BP won't pursue Alaska project in current form

Posted: July 10, 2012 - 12:02am

JUNEAU — BP PLC has decided not to pursue a huge oil project off Alaska’s coast in its current form.

It’s the latest setback for BP’s Liberty project, and it raises questions about how, or whether, the project will be pursued in the future. BP, at one time, expected initial production to begin in 2011.

The project, which BP had said would “set standards for Arctic oilfield development while minimizing the onshore and offshore environmental footprint,” called for using a manmade gravel island in the Beaufort Sea as a drilling base. It also called for a rig drilling horizontally for six to eight miles to tap what BP estimates is a 100-million-barrel reserve of recoverable oil. It had anticipated oil production of up to 40,000 barrels per day.

The project faced criticism, particularly after the massive 2010 oil spill in the Gulf of Mexico.

In late 2010, BP announced it was suspending construction of the large oil rig to review engineering and design plans and ensure the project could be done safely. That review, which also looked at changes in federal regulations, was recently completed, and BP Alaska spokeswoman Dawn Patience said Monday that the project, as currently designed, doesn’t meet BP’s tests and modifications would have to be made to the rig. She said changes that would be necessary for the project to meet BP’s standards would raise the estimated $1.5 billion cost substantially more and delay drilling by several more years.

She did not define “substantially.”

The latest delay was first reported by the Alaska Journal of Commerce.

Patience said BP has reached out to federal regulatory agencies within the U.S. Department of Interior. She said the outcome of those talks would determine how BP might proceed.

“As long as it’s feasible and ... discussions with regulators continue, we’re going to continue to look for ways that we could potentially develop this project,” she said. “Obviously, we have a lot invested over time in it.”

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