BP to pump $1 billion into its Alaska drilling efforts

[xchrom]

http://grist.org/news/bp-to-pump-1-billion-into-its-alaska-drilling-efforts/

Not content with wrecking the Gulf of Mexico’s ecosystem, BP has announced that it is expanding its operations at the far northern end of the country, on Alaska’s North Slope.

BP plans to increase its spending in the region by $1 billion over five years, increasing its fleet of oil rigs at the North Slope from seven to nine by 2016.

The announcement came after state leaders reduced taxes on oil companies. In May, Gov. Sean Parnell (R) signed legislation that cuts oil taxes to a flat 35 percent — down from a progressive tax that went above 50 percent during times of high prices.


From The Wall Street Journal:

The British oil company’s new investment could help Alaska stave off declining oil production and increased competition from the lower 48 states, where new drilling techniques have spurred an oil boom in recent years. BP credited its decision to Alaska’s cut in oil taxes.

[Old Codger]

1. They will now

Produce more millionaire politicians...

[FogerRox]

2. Just as soon as those ICE platforms prove themselves

http://www.thearcticsounder.com/article/1129looking_ahead_shell_oil_weighs_options_for



http://www.nytimes.com/2013/01/18/business/energy-environment/rivals-watch-travails-of-shell-arctic-drilling.html?pagewanted=all&_r=0

Or not.

[Nihil]

3. "BP credited its decision to Alaska’s cut in oil taxes."

There's nothing quite like cutting your own throat for political principles is there?

[Socialistlemur]

4. Some background information

The BP leases are located in the North Slope of Alaska. Most of the productin is from land, a small amount from an artificial island located close to shore.

I visited friends in Alaska last year, and there were serious concerns in the air because the state had increased taxes too much when Sarah Palin was governor. The increased taxes had reduced activity and the main pipeline from the north slope was having problems operating because the oil flow was too low. During my visit I was asked to have a discussion with a couple of government (state of Alaska) representatives to explain what I thought from the economics standpoint (being an outsider with experience and a reputation with that right wing crowd for being some what of a radical leftwinger they thought I could bring the whole issue some fresh air).

My observation was that lowering taxes was reasonable as long as they could project increased state revenues over time, with appropriate discounting. In other words, those oilfields are already there, the environmental footprint is stamped, and they might as well continue to produce the oil to collect tax revenues and avoid unemployment. So I guess you can say I had a small part in this event. I think it's non sense to tell 400 thousand Alaskans you'll let the state go broke and they can all head south because the state isn't viable. Long term they'll have to learn to live without oil, but right now they do need to build up their cash reserves.