Prices, tax mean less petroleum investment

Posted: Friday, November 21, 2008

ANCHORAGE - Executives of major petroleum companies say work on some Alaska projects will be dialed back now that the price of crude oil has dropped.

BP Exploration (Alaska) Inc. president Doug Suttles said lower oil prices, escalating field costs and the state oil tax hike last year led BP to shelve some projects.

Suttles spoke Wednesday in Anchorage at the Resource Development Council's annual conference.

One project held up is a $120 million natural gas "partial processing" plant in the western Prudhoe Bay oil field.

The project would separate gas from the oil, water and gas that comes out of wells. Gas would be injected underground.

"We've just indefinitely suspended the project," Suttles said

BP and its partners also plan to drill fewer development wells next year, he said.

North Slope crude oil closed Wednesday at $49.12 per barrel.

Despite the falling price, industry executives said they plan to stay on track with other projects, including three new oil fields in the Beaufort Sea.

Jim Bowles, president of Conoco Phillips Alaska Inc., said the company plans to drill two holes this winter on the eastern fringes of the National Petroleum Reserve-Alaska.

Bowles said rapidly rising construction costs also are a challenge to the oil industry these days.

"The fundamental cost of our industry has changed over the last few years," he said.

Trending this week:


© 2018. All Rights Reserved.  | Contact Us