BP is set to add $1 billion (£0.65bn) in new investment and two drilling rigs to its Alaska North Slope fields over the next five years following a new oil tax policy.

Alaska Governor Sean Parnell championed a tax cut in an effort to increase oil production and investment in the industry and lowered oil tax rates, which was signed into law this month.

BP plans to increase its drilling and well-work activity and upgrade existing facilities, which is expected to create up to 200 new jobs. The first drilling rig is expected to be in place by 2015 and the second in 2016, which will increase BP’s rig fleet in Alaska to nine.

Janet Weiss, BP Alaska Region President said: “With this new tax law, the Alaska legislature and Governor Parnell have taken an important step toward improving Alaska’s long-term economic future. Our announcement today should make abundantly clear that BP is committed to being a part of that future and to continuing to extend the life of North America’s largest oil field.”

According to BP, its operated fields account for two-thirds of Alaska’s production and include Prudhoe Bay, the largest oilfield in North America. The company has also secured support from other companies for an additional $3 billion (£1.95bn) worth of new development projects, which could continue for nearly 10 years.