BP closes site over loss in Slope rent dispute

Posted: Thursday, January 06, 2011

ANCHORAGE — BP PLC has closed a small portion of the Prudhoe Bay oil field following a judge’s ruling that federal regulators didn’t get approval from the land owners.

Friday’s shutdown of the Raven unit affects less than 1 percent of production from the nation’s largest oil field, but it represents a victory for the Inupiat Eskimo family that has battled BP and the Bureau of Indian Affairs over use of the land.

In November, federal claims court Judge Nancy Firestone said the Oenga family is owed millions in unpaid rent because the BIA improperly allowed BP to tap three offshore oil deposits from the family’s allotment.

In her 168-page ruling, Firestone said the BIA approved BP’s expanded use of the allotment without the family’s consent and violated the family’s contract with the oil company, the Anchorage Daily News reported.

The federal agency told BP a week ago to shut down production from the Raven unit, which produced about 25,000 barrels of oil in November. The unit is the only one of three disputed offshore deposits that BP was still accessing from the allotment, the newspaper reported. BP is still tapping the Niakuk field.

BP Alaska spokesman Steve Rinehart told the Daily News on Tuesday that the company is evaluating a potential appeal. He noted that the closed unit represented only a fraction of Prudhoe’s output.

Oenga family member Tony Delia said last week that the family is willing to renegotiate the lease.

“Earlier this month we made BP a fair offer — pay what is owed and we will renegotiate the lease so they can use our land to produce from Raven and wherever else they want to drill. They haven’t responded,” he said in a statement.

The dispute involves a sliver of land called Heald Point that extends into the Beaufort Sea.

The family acquired its 40-acre allotment at Heald Point decades ago for subsistence hunting. In 1989, family patriarch Andrew Oenga signed a contract allowing BP to use the land as a right of way.

In 2005, eight Oenga family members sued the BIA, claiming that BP was paying less rent than the land was worth. The family said it sued because the BIA, which is in charge of collecting the rent from the oil giant, wasn’t taking action on its behalf.

BP argued in court that it didn’t owe additional money, while the BIA said the family’s claim for unpaid rent was too high, the newspaper reported.

The judge sided with the family. She said the BIA owes the family about $5 million for unauthorized use of the land. Firestone also said BP is paying too little for the land it is authorized to use. She is still considering the exact amount owed.



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