Anchorage Daily News

Sharply lower oil prices since last year's record highs are forcing Italian oil company Eni to curtail development of its Nikaitchuq oil field on the North Slope, a state official said Monday. Company managers met with state Division of Oil and Gas officials last week and said work to build the field will be delayed, though the project isn't being canceled, said Kurt Gibson, the division's deputy director.

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"When you see an 80 percent drop in the barrel price of oil, people start adjusting their short-term plans," Gibson said.

Based on what the Eni managers said, the decision might push back development of Nikaitchuq by six months or a year, he said.

Prices for North Slope crude delivered to West Coast ports crested above $140 a barrel last year, then plunged to below $26 and on Monday closed at $43.50.

David Moles, an Alaska manager for Eni, declined to comment Monday.

The Nikaitchuq field is located in the shallow waters of the Beaufort Sea north of the giant Kuparuk oil field.

According to the trade journal Petroleum News, Eni planned to spend $1.45 billion to tap Nikaitchuq's estimated 180 million barrels of oil. Drilling and construction has begun, and Eni was aiming to produce its first oil later this year.

To encourage the project, state officials last year agreed to reduce the royalty rate -- the state's cut of the production -- when oil prices are low.

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