BP cuts Alaska budget by one-third

Kristen Nelson

BP Exploration (Alaska) Inc.’s overall spending in Alaska for 1999 will be $1.6 billion, down a third from $2.4 billion for 1998. The company has said that its Alaska operations must be cash neutral in 1999, with income matching outgo.

“Capital is going from about $750 million in 1998 to about $400 million this year,” BP Exploration (Alaska) spokesman Paul Laird told PNA Feb. 18. The primary components of that reduction, he said, are the Northstar module construction deferral, the deferral for at least a year of Liberty (BP’s proposed offshore project southeast of Endicott), drilling reductions announced earlier and a slower pace of Schrader Bluff viscous oil development.

Shared Services Drilling, Laird said, is now projected to drill only about 50 penetrations in 1999, down from 130 penetrations projected earlier.

While development work at Schrader Bluff is not being suspended, he said, only one new well and three sidetracks are planned in 1999.

Laird said the $400 million in capital spending for 1999 includes: Northstar gravel work, which is contingent on getting the Corps of Engineers permit in time to do that work this year; drilling; and BP’s share of the completion of the Prudhoe Bay MIX project and the Point McIntyre enhanced oil recovery project.

The rest of the spending, Laird said, is on lifting costs, overhead, taxes and transportation. Taxes and royalties, he said, are going down because of lower crude oil prices and lower production; transportation costs are going down because of lower throughput; and lifting costs are going down because of efficiencies.

Worldwide, BP Amoco will spend $7 billion in 1999, down from $10.1 billion in 1998.