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Oil Stabilizes As OPEC Implements Cuts

Oil Stabilizes As OPEC Implements Cuts

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Crude Oil Inventory Draw Fails To Move Market

Crude Oil Inventory Draw Fails To Move Market

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New Tax System Spurs BP to Invest $1 Billion in Alaska’s North Slope

BP has just announced that it intends to invest $1 billion into increasing the crude oil production along Alaska’s North Slope.

The plans include the installations of an additional two new drilling rigs in Prudhoe Bay, as well as new well work and drilling, and an upgrade to existing facilities.

BP also hopes to begin a separate $3 billion project to develop the west end of the Prudhoe Bay field, dependent on their ability to negotiate an agreement with its partners in the area, Conocophillips and Exxon Mobil. This project would follow a two to three year period of analysing the potential of the area, and could lead to as many as 110 new wells being drilled.

Janet Weiss, BP’s regional president for Alaska, explained the reasons behind the investment plans, saying that “there’s a lot more potential out there than when we brought these facilities up several decades ago, so we need some more facility capacity. It’s really about smartly using technology and the gathering centers’ capacity to fully utilize what’s up there and expand upon that.”

Related article: The Arctic is Thawing, but Hasn’t Released Trapped CO2

BP hopes that the investment will reverse Alaska’s declining levels of oil production. Prudhoe Bay still remains the largest field in the US, but output has been falling ever since 1988 when the field was producing 2.02 million barrels a day.

The recent change to the tax laws in Alaska are the main reason for the new investment decisions, according to BP. Oil production will now be taxed at a flat rate of 35%, whereas before companies were taxed at a base rate of 25% that then climbed as oil prices rose, to as much as 50%.

By. Joao Peixe of Oilprice.com



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