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Alternatively, in the year the oil field equipment and
facilities were constructed and installed, Exxon claims that
estimated Prudhoe Bay DRR costs should be accruable under
section 162 as ordinary and necessary business expense
deductions.
Exxon’s Estimates of Future PBU DRR Costs
Exxon’s experts have made elaborate and detailed
projections with regard to future DRR activity that may be
undertaken in the Prudhoe Bay field and to estimated DRR costs
that may be incurred with respect thereto. In doing so, they
claim that all facilities in Prudhoe Bay other than the
Seawater Treatment Plant will be dismantled beginning in the
year 2031 and that it will take 6 years to dismantle and
remove the facilities and equipment from the North Slope of
Alaska.
Exxon estimates that a total of $928 million in DRR costs
relating to the Prudhoe Bay oil-producing facilities will be
incurred by the PBU partnership, and Exxon calculates that its
share thereof will be approximately $204 million.
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