BP cut $100M from capex after tax change

BP dropped $100 million from its 2008 capital budget because of changes to the state production tax, according to Doug Suttles, president of BP (Exploration) Alaska, who spoke at the Meet Alaska conference on Jan. 25 at the Egan Center in Anchorage.

At the conference, BP announced a capital spending program of $800 million for 2008, up nearly 17 percent from the budget for 2007. But Suttles said the budget would have been higher without the impact of tax changes implemented by state lawmakers this past fall.

“We had planned, before the tax change, to spend another $100 million. That would have equated to a total activity of over $400 million by the time you incorporated the other working interest owners’ shares,” Suttles said.

Suttles said the new, higher taxes are “discouraging investment” in the biggest North Slope fields, causing companies to “slow down or suspend” projects that have become “less attractive.”

“To make that in practical terms: that means at Prudhoe Bay and Kuparuk we are going to be running two less rigs than we would have otherwise, and several projects which we had intended to pursue we have had to put on hold because they are not sufficiently attractive,” Suttles said.

Editor’s note: See full story in last week’s Petroleum News (Jan. 27 edition) from an interview with BP prior to Suttles’ Meet Alaska speech.

—Eric Lidji