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The U.K. supermajor BP plc (BP - Analyst Report) has planned to invest $1 billion over five years in its Alaskan operations to add two new drilling rigs for its North Slope exploration. This proposal comes in the wake of the state’s recent oil production tax reform.

BP’s new plan will increase drilling and well-work activity as well as upgrade the existing facilities at its Alaskan fields. The activity ramp-up, expected to commence from the fourth quarter of 2013, will create employment for about 200 personnel in the state and boost the performance of existing wells at the Prudhoe Bay and Milne Point fields.

The British explorer will issue a request for proposals (RFPs) starting this summer for the two additional rigs in Prudhoe Bay. It expects the first rig to be in place by 2015 and the second in 2016. These two rigs will augment BP’s rig fleet in Alaska to nine.

BP has also received the support from other partners at Prudhoe Bay – ExxonMobil Corporation (XOM - Analyst Report), ConocoPhillips (COP - Analyst Report) and Chevron Corporation (CVX - Analyst Report) – to begin appraisal of new development projects valued at $3 billion. The project would continue production for 10 years.

Located in the western end of the Greater Prudhoe Bay Area, these projects would witness growth and acceleration of existing facilities, building of a new drilling pad and the expansion of existing pads. BP has a goal of drilling over 110 wells in the region, the appraisal of which would take two to three years, per the plan. Not only is the plan aimed at enhancing BP’s operations, it also promises to improve the state’s economy.

The amendment to the Alaskan oil tax policy was signed into law this month. This removed a progressive tax set up by the former governor Sarah Palin in 2007. This alteration facilitates BP’s investments in other companies and the state of Alaska to commercialize natural gas in the Alaska North Slope. This forms part of a joint concept selection group that focuses on a South Central Alaska LNG project.

Currently, BP carries a Zacks #3 (Hold).

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