BP AND ARCO AT ODDS OVER RIGHTS TO RECOVER OIL FROM ALASKAN FIELD

BP AND ARCO AT ODDS OVER RIGHTS TO RECOVER OIL FROM ALASKAN FIELD

An oil field where British Petroleum unit BP Exploration (Alaska) Inc. plans to start production in April is the subject of an equity dispute, oil company and Alaska state officials said.

At issue is BP's Niakuk field, located about a mile offshore north of Prudhoe Bay, and holding an estimated 54 million recoverable barrels of oil.BP has asserted that it owns all of the field. But Atlantic Richfield Co.'s Arco Alaska Inc. unit says part of the Niakuk structure overlaps its property.

"We recently determined that the Niakuk structure goes onto our leases, to two of our leases," said Ronnie Chappell, an Arco spokesman.

Arco this week argued in a hearing to the Alaska Oil and Gas Conservation

Commission for inclusion of part of Niakuk in a multi-owner "pool."

"Expansion of the pool rules is needed to ensure ultimate recovery from the field and to protect our interests," Mr. Chappell said.

BP disagrees, saying its information about Niakuk was gleaned from three- dimensional seismic tests and actual drilling and is better than Arco's less sophisticated seismic tests.

"We just don't buy Arco's argument," said Paul Laird, a BP spokesman.

The Conservation Commission, charged with ensuring that Alaska's oil is used efficiently, is expected to make a decision on Arco's application by the end of the year, Mr. Laird said.

At stake may be Niakuk's April start-up.

"If the decision is in our favor, no, it will not have any effect at all on our development timetable," Mr. Laird said.

But Arco believes pool rules can be expanded onto Niakuk without delaying its start-up, Mr. Chappell said.