BP (BP)

Alaska

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BP owns a 46.9% interest in TAPS, with the balance owned by four other companies. TAPS transported production from Alaska North Slope fields averaged 927 mb/d during 2004.



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The TAPS owners are implementing a project to upgrade and modernize four pump stations beginning in 2005. This project will install electrically driven pumps at four critical pump stations, combined with increased automation and upgraded control systems.



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There are a number of unresolved protests regarding intrastate tariffs charged for shipping oil through TAPS. These protests were filed between 1986 and 2003 with the Regulatory Commission of Alaska (RCA). In 2002 and 2004, the RCA issued Orders requiring refunds to be made to TAPS shippers of intrastate crude oil for the period from January 1, 1997 through June 30, 2003. BP has appealed these RCA Orders to the Alaska Superior Court. Pending the resolution of these matters the RCA has imposed intrastate rates (consistent with its 2002 Order) effective July 1, 2003. The appeal process continues.



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Tariffs for interstate and intrastate transportation on TAPS are calculated utilizing the Federal Energy Regulatory Commission (FERC) endorsed TAPS Settlement Methodology (TSM) entered into with the State of Alaska in 1985. In December 2004, the State and Anadarko filed protests at FERC of the 2005 rates on a variety of grounds. We are confident that the rates are in accordance with the TSM but are evaluating the protests.



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The use of US-built and US-flagged ships is required when transporting Alaskan oil to markets in the USA. BP has begun replacing its US-flagged fleet as existing ships are retired in accordance with the Oil Pollution Act of 1990. For discussion of the Oil Pollution Act of 1990, see Environmental Protection—Maritime Oil Spill Regulations in this Item on page 75. BP has contracted for the delivery of four 1.3 million-barrel-capacity, double-hull tankers for use in transporting North Slope oil to West Coast refineries. The ships are being constructed by the National Steel and Shipbuilding Company in San Diego, CA. BP took delivery of the first of the four state-of-the-art double-hull tankers, the Alaskan Frontier, in August, 2004 and the second, the Alaskan Explorer, in March 2005. The third is expected to be delivered in the fourth quarter of 2005 and the fourth in 2006. In addition to the Alaskan Frontier and Explorer, BP America Inc. has a chartered fleet of seven US-flagged tankers to transport Alaskan crude oil to markets.

Alaska

—

BP owns a 46.9% interest in TAPS, with the balance owned by four other companies. TAPS transported production from Alaska North Slope fields averaged 927 mb/d during 2004.



—

The TAPS owners are implementing a project to upgrade and modernize four pump stations beginning in 2005. This project will install electrically driven pumps at four critical pump stations, combined with increased automation and upgraded control systems.



—

There are a number of unresolved protests regarding intrastate tariffs charged for shipping oil through TAPS. These protests were filed between 1986 and 2003 with the Regulatory Commission of Alaska (RCA). In 2002 and 2004, the RCA issued Orders requiring refunds to be made to TAPS shippers of intrastate crude oil for the period from January 1, 1997 through June 30, 2003. BP has appealed these RCA Orders to the Alaska Superior Court. Pending the resolution of these matters the RCA has imposed intrastate rates (consistent with its 2002 Order) effective July 1, 2003. The appeal process continues.



—

Tariffs for interstate and intrastate transportation on TAPS are calculated utilizing the Federal Energy Regulatory Commission (FERC) endorsed TAPS Settlement Methodology (TSM) entered into with the State of Alaska in 1985. In December 2004, the State and Anadarko filed protests at FERC of the 2005 rates on a variety of grounds. We are confident that the rates are in accordance with the TSM but are evaluating the protests.



—

The use of US-built and US-flagged ships is required when transporting Alaskan oil to markets in the USA. BP has begun replacing its US-flagged fleet as existing ships are retired in accordance with the Oil Pollution Act of 1990. For discussion of the Oil Pollution Act of 1990, see Environmental Protection—Maritime Oil Spill Regulations in this Item on page 69. BP has contracted for the delivery of four 1.3 million-barrel-capacity, double-hull tankers for use in transporting North Slope oil to West Coast refineries. The ships are being constructed by the National Steel and Shipbuilding Company in San Diego, CA. BP took delivery of the first of the four state-of-the-art double-hull tankers, the Alaskan Frontier, in August, 2004 and the second, the Alaskan Explorer, in March 2005. The third is expected to be delivered in the fourth quarter of 2005 and the fourth in 2006. In addition to the Alaskan Frontier and Explorer, BP America Inc. has a chartered fleet of seven US-flagged tankers to transport Alaskan crude oil to markets.