NEWS BULLETIN

January 14, 2010 --- Vol. 16, No. 4January 2010

West Alpine on hold; ConocoPhillips loses window for 2010-11

Work on ConocoPhillips Alaska’s Alpine West satellite — the first satellite planned for development in the National Petroleum Reserve-Alaska — has been delayed by at least a year. The company had planned to begin construction in the winter of 2010-11, with two winter construction seasons required.

While the company received permits it needs from the North Slope Borough and the State of Alaska, it has not received its 404 permit from the U.S. Army Corps of Engineers, Helene Harding, vice president of North Slope operations and development, told Petroleum News this morning.

She said they’ve been getting a lot of questions on when the project will go ahead, and felt they needed to make the delay public. The corps has known since mid-December that lack of the permit would delay the project, she said.

A spokeswoman for the Corps of Engineers told Petroleum News that the corps had no comment.

Harding said ConocoPhillips told the corps they had to have the permit by the end of the year.

In fact the original deadline was early November because of long-lead items, but because of changes in the steel market and lowered demand, “we were able to push that out another two months.”

But without the corps permit — and a permit from the U.S. Coast Guard which can only be issued following the corps permit — the company lost its construction window for next year.

“We won’t be able to get prepared for that construction season without the approval to be able to go forward,” Harding said.

Parnell proposes changes to ACES credits

Alaska Gov. Sean Parnell announced today that his administration is proposing some changes to the tax credit rules within the state’s ACES oil production tax to increase incentives for firms to invest in Alaska oil exploration and development. Parnell does not propose any changes to the ACES tax rates.

The specific changes that the administration will ask the Legislature to enact are:

* To make available to in-field, well-related activity, such as in-fill drilling, the 30 percent tax credit currently only available to drilling activities more than three miles from existing wells.

* To enable companies to use all of their capital credits in the year that the credits are earned, rather than having to defer the use of at least half of the credits into the following year.

* To enable new explorers to claim tax credits for exploration costs without having to make subsequent investments equal to the value of the credits.

* To waive state claims for interest on additional taxes that a company might have to pay in arrears, as a consequence of the retroactive application of ACES tax regulations that the state is currently finalizing.

See stories in Jan. 17 issue, available online at noon, Friday, Jan. 15 at www.PetroleumNews.com.


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