BP told lawmakers Thursday that it plans to take tax deductions and credits for repair work to corroded pipes on the North Slope.
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In a letter to members of the House and Senate, Doug Suttles, president of BP Exploration Alaska Inc. writes:
"BP follows the law when it files its taxes. Accordingly, BP will assume appropriate deductions & credits for the costs associated with the repair and replacement of the Prudhoe Bay Oil Transit lines."
BP figures it will be able to deduct about $11 million from its 2006 taxes because of the repair work.
Lawmakers, anticipating this move from BP, have introduced bills in the Senate and House that would prohibit deductions for facility repairs they believe are the product of neglectful maintenance.
More than half of the 60 lawmakers in the House and Senate support the bills.
Sen. Tom Wagoner, R-Kenai, introduced his bill last Friday.
"All I want the bill to do is give the state another tool to give a thorough review of situations such as we are in," Wagoner said.
Corrosion was blamed for two leaks in Prudhoe Bay pipeline operated by BP for majority partners Exxon Mobil Corp. and ConocoPhillips.
The first leak - one that spilled more than 200,000 gallons - occurred last March. The second in August forced a partial shut down of the Prudhoe Bay field that lasted for weeks.
BP is currently replacing 16 miles of pipeline in Prudhoe Bay, at a cost of about $250 million.
During the shutdown, lawmakers passed a new taxing system, but a group of senators and representatives failed to get a provision taking into account neglectful maintenance.