UK-based multinational oil and gas company BP plans to invest $1bn in the development of North Slope fields in the US state of Alaska and also add two new drilling rigs over the next five years.

The announcement from the company follows the new oil tax policy that was signed into a law by the state in May.

Alaska’s new oil tax policy is expected to increase drilling activities in the Prudhoe Bay area, create new jobs and boost the economy.

BP said to address the surge in drilling and well-work activity, an upgrade in the existing facilities is required.

BP Alaska Region president Janet Weiss said the new tax law will improve 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," Weiss added.

BP Exploration is also planning to submit a request for proposals for the two additional rigs in Prudhoe Bay.

The first drilling rig is expected to be in place by 2015 and the second in 2016, thereby increasing BP’s rig fleet in Alaska to nine.

BP is expecting to increase well work as soon as the final quarter of 2013 to improve the performance of existing wells at the Prudhoe Bay and Milne Point fields.