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Prices force slowdown BP defers Liberty project; suspends fabrication for Northstar for one year but ice road and gravel island work proceeds on schedule Kristen Nelson PNA News Editor
BP Exploration (Alaska) Inc. said Jan. 7 that it began ice road construction for the Northstar project earlier in the week, but is suspending module fabrication work in Anchorage for one year due to low oil prices. (See related photo feature on page 12.)
“We are committed to the Northstar project and still wish to develop Northstar,” Octavio Pastrana, head of BP’s eastern North Slope business unit, said in a statement. “We plan to begin gravel placement for island construction later this winter, pending receipt of necessary federal and state permits.
“However, continuing low oil prices require that we slow the pace of Northstar development, and module fabrication work is being suspended for one year.” Low oil prices drive reduced spending BP spokesman Paul Laird told PNA that BP has been spending an average of half a million dollars a day on Northstar since the resumption of fabrication work this fall. Spending will be reduced to about $350,000 a day by suspending fabrication work. “We need to showdown the pace of development in order to reduce our overall spending,” Laird said.
Alaska Interstate Construction Co. is building the eight mile ice road. It will be used to transport gravel to expand Seal Island to five acres and to provide logistical support for construction.
BP has a 98 percent interest in Northstar and is field operator. Murphy Exploration & Production Co. holds the remaining 2 percent interest. Liberty already deferred Development of BP’s Liberty prospect, offshore between Endicott and Badami on the eastern side of the North Slope, has already been deferred for at least a year in reaction to lower oil prices, Laird said. The decision to defer that project was made late last year. Liberty, he noted, was not yet a project approved by BP for full development.
Liberty is an offshore accumulation in federal outer continental shelf waters slated to be developed in a style similar to Northstar — from an offshore gravel island with a pipeline to shore buried under the ocean floor. The U.S. Minerals Management Service is working on an environmental impact statement for Liberty.
Laird said personnel reductions announcements are expected to be announced by the end of January. The target is to reduce costs by 30 percent overall, including drilling, development work and staff cuts.
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