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JUNEAU, Alaska -- Alaska's Governor Frank Murkowski instituted a state hiring freeze this week, as he said BP's Prudhoe Bay oil field shutdown is costing the state millions of dollars in revenue, The Sacramento Bee reported.
He also announced that he would support hearings into the company's maintenance operations. "I fully expect hearings to occur," he told a joint session of the Legislature.
Murkowski asked the state's Attorney General to lead an investigation for the purpose of holding BP fully accountable for the losses, the newspaper reported. Energy officials still do not know exactly how long repairs will take, but estimate that it will most likely be months, causing production to be diminished into next year.
If the entire oil field was to be shut down, U.S. oil production would lose 400,000 barrels per day, causing a $6.4 million loss in royalties and taxes for Alaska, revenue commissioner Bill Corbus told The Sacramento Bee.
Eighty-nine percent of the state's income comes from oil, the report stated. Alaska also has no sales or personal income tax, making the impact greater. The shutdown will decrease Alaska's total oil production by 50 percent, and in turn, cut revenue in half as well. U.S. domestic output would also be decreased by 8 percent.
It will only take two months before the state will go into the red, according to Corbus.
"BP must get the entire Prudhoe Bay back up and running as soon as it is safely possible," Murkowski said. "I would ask all of you to please pull together with our administration and the producers, so we can work as Alaskans through the challenge ahead," he added. "We simply have to get it done."
A London-based analyst told MarketWatch that the recent shutdown of Prudhoe Bay adds to the string of bad luck BP has been enduring lately, including a delayed restart of the company's Texas City refinery following the death of 15 workers there, and continued problems with the Gulf of Mexico-based Thunder Horse platform after Hurricane Katrina hit the area last year.
As a result, Royal Dutch Shell PLC's share price on Wednesday was valued at GBP126.775 billion, while BP PLC's share was valued at GBP121.575 billion, making Shell the largest listed oil company in Europe, reported MarketWatch. According to Dow Jones Newswire calculations, Shell has been outperforming BP by 4 percent.
The analyst said he isn't surprised by the switch. "Shell looks cheap in terms of multiples and people are willing to accept that oil prices are going to stay high for a while."
BP's buyback of shares and dividend payouts were also shrinking equity, the analyst continued, also resulting in the drop in value.