BP's Tuesday announcement that it will sell its interests in four North Slope oil fields to Hilcorp Energy is fueling debate over the effects of Alaska's oil tax reform law.
Former state Senate president Chancy Croft says the sale demonstrates that Senate Bill 21, Gov. Sean Parnell's package of reduced oil taxes passed by the state Legislature last year, isn't stimulating new development as backers said it would. A ballot initiative on whether to repeal SB21 will be put before voters during the state's Aug. 19 primary elections.
"They're not investing money that they got out of any Senate Bill 21," Croft said. "They're simply using the money from selling their assets, and instead of continuing to develop those assets they're retrenching and selling those assets."
Croft says on paper BP's move looks like divesting, despite BP's claim that it proves SB21 is working and drawing new players to invest in the North Slope.
Hilcorp will become the new operator of three of the four fields. BP spokesperson Dawn Patience says the sale will let the company continue to focus on Alaska's largest oil field and its work on liquefied natural gas.
"What BP does well is manage giant oil fields," Patience said. "Prudhoe Bay is the largest oil field in North America and we have a lot of investment in technology and new opportunities there."
The University of Alaska Anchorage's Institute of Social and Economic Research is set to present its findings from a recent economic impact analysis of SB21 on May 1.