Audit: BP used Alaska workers, vendors for Northstar

Posted: Thursday, May 23, 2002

ANCHORAGE (AP) -- Most of the $400 million BP Exploration (Alaska) Inc. spent to develop its Northstar oil field went to Alaska-based contractors and vendors, according to a new legislative audit.

In terms of employment, the audit also found that 68 percent of workers hired by BP and its contractors were Alaska residents.

Local hiring could have been even stronger had BP and the contractors better tapped a pool of unemployed labor in Alaska during Northstar's development, the audit said.

BP spokesman Paul Laird said Tuesday the audit highlighted the company's efforts to make good on promises to maximize Northstar benefits to Alaskans.

''The project brought a whole new industry into the state, the fabrication of large production modules,'' he said.

Those modules, used for housing workers and processing oil and well fluids, rose like leviathans at the Anchorage port in the late 1990s. Building the structures, rising up to 10 stories tall, provided work for hundreds of workers through contractors such as Veco Corp. and Natchiq Inc. Before, such structures were built in places such as Louisiana and shipped north.

The modules sailed by barge to a small, man-made gravel island about six miles northwest of Prudhoe Bay. Since it began production in November 2001, the Northstar field has produced as much as 64,000 barrels of crude oil a day.

With about 175 million barrels of recoverable oil, it is the first offshore field in the U.S. Arctic not connected to land by a causeway.

Northstar was built after the Legislature passed a bill in 1996 to amend BP's lease on the Northstar prospect, which was considered a marginal field on the North Slope, home to several larger fields.

The new law offered financial incentives for BP to move ahead with Northstar.

Part of the deal was that BP would ''use its best efforts'' to advertise for and hire Alaska residents, contractors and vendors.

''They were encouraged, but there were no mandatory thresholds,'' legislative auditor Pat Davidson said Tuesday.

The audit found that from January 1997 through October 2000, BP spent about $400 million on contracts, goods and transportation for the Northstar project, with almost 70 percent of the money going to Alaska firms.

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