BP suspends construction work on Alaska Liberty rig

ANCHORAGE, Alaska Nov 30 (Reuters) - Wary of safety issues after the Gulf of Mexico oil spill, BP's (BP.L) Alaska unit has suspended construction of a massive drill rig at its offshore Liberty prospect, a spokesman said on Tuesday.

Construction has stopped so that the company can review the huge rig's safety systems, including power and mud-handling systems, said Steve Rinehart, spokesman for BP Exploration (Alaska) Inc.

"We've just decided that it's a better approach to stop the construction and identify and resolve any and all issues that we find," Rinehart said.

BP had originally hoped to start drilling at Liberty, a prospect in the Beaufort Sea, late this year and for production to start in late 2011.

But in the aftermath of the Deepwater Horizon blowout in the Gulf of Mexico this year, which led to the biggest oil spill in U.S. history, BP's plans at Liberty came under new scrutiny. Federal and state regulators announced additional reviews, and BP announced plans to slow down development.

BP remains committed to Liberty, though no new target dates for drilling or production start-up have been announced, Rinehart said. The company has already expanded the existing island that will be used as the drill site, and the rig arrived last year. Engineering and seismic work will continue even as rig construction is delayed, Rinehart said.

Liberty holds about 100 million barrels of recoverable oil. It is located about five to six miles (eight to ten kms) offshore and east of BP's Endicott field. It is slated to be the first producing oil field located entirely in federal waters off Alaska.

BP's plans to drill the prospect from land using ultra-extended-reach wells have not changed, Rinehart said.

The construction halt will mean the loss of about 100 project jobs, he said.

A spokesman with the Bureau of Ocean Energy Management, Regulation and Enforcement, the federal agency that oversees oil drilling in U.S. waters, was not immediately available for comment. (Editing by Bill Rigby and Alden Bentley)