BP reviews its spending plan for Alaska in 2008

Posted: Friday, December 28, 2007

FAIRBANKS - BP is reviewing its 2008 spending plan for Alaska in response to a recent oil production tax increase.

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The change will lessen the amount of money BP has to invest and will likely have a significant impact on the oil giant's work plan, BP spokesman Steve Rinehart said Wednesday.

"We had teams of people here reviewing virtually every part of our 2008 work plan," Rinehart said.

Rinehart said he couldn't say whether the recent increase in the state's oil production tax would lead to a reduction in BP's spending in Alaska from last year or a reduction from what the company had planned to spend in 2008.

"It will affect the pace and scale" of investments, he said. "What exactly, which exact projects, which particular work activities will be affected first - we have not made that determination yet."

Lawmakers approved the tax increase Nov. 16. It was signed into law by Gov. Sarah Palin last week.

BP has spent almost $2 billion in Alaska in 2007, including about $1.2 billion for operations and $700 million for capital projects, Rinehart said.

Doug Suttles, president of BP Exploration (Alaska) Inc., said in a statement provided by Rinehart that he hopes Palin and state lawmakers will revisit the tax once its impact on investment becomes clear.

Earlier this month ConocoPhillips Alaska president Jim Bowles said that his company also was reviewing planned investments in response to the tax hike. Bowles said he expected the company to ultimately spend less than the $1 billion allocated for Alaska in a global capital spending plan prepared before the tax increase and released this month.

During a special legislative session on oil taxes, oil company representatives warned of impacts on North Slope investment, but the failed to convince lawmakers to leave the tax alone.



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