BP, ConocoPhillips Reduce 2010 Spending Plans in Alaska

Prudhoe Bay, Alaska
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HOUSTON (Dow Jones), Nov. 19, 2009

BP and ConocoPhillips have reduced their capital spending and developmental budgets for Alaska in 2010 because of higher costs to produce mature fields, disappointing exploratory results and the state's new tax regime, the companies said.

London-based BP's 2010 capital spending will be $850 million, or down 15% from more than $1 billion this year, John Minge, president of BP Exploration (Alaska) Inc. said Wednesday during a conference. One-third of next year's budget will be spent on infrastructure renewal, one-third in drilling and one-third in growth projects, he added. BP's Alaska budget includes projects such as the development of heavy oil and the Liberty prospect in the Beaufort Sea.

Minge said Alaska's new tax system, which was enacted in 2007 and increases rates on companies when oil prices rise, makes the state relatively unattractive for investment in new developments.

ConocoPhillips, the third-largest U.S. oil company by market value, is also cutting spending next year. The Houston-based company plans no exploration wells in 2010 after disappointing results from past explorations, said Charlie Rowton, a company's spokesman. The company is changing its focus to offshore exploration in the Chukchi Sea, where it expects to start drilling in 2012, he added.

BP and ConocoPhillips are owners, along with Exxon Mobil Corp., of Prudhoe Bay, the largest oilfield in the U.S. BP is the field's operator.  

Copyright (c) 2009 Dow Jones & Company, Inc.

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