Pumping up the volume: in Alaska
Alaska sees oil at $100 in 2011
Alaska’s top state revenue department official Pat Galvin expects oil prices for its crude to stabilise around the $70 mark over the next two years before surging past $100 in 2011.
The department forecasts that West Coast prices for Alaska North Slope crude will average $66.93 a barrel in the current fiscal year, which ends on 30 June, rising to $76.35 a barrel in fiscal 2011. After that, the department projects that prices will continue to rise, to $101.49 a barrel by fiscal 2019.
Production, however, will continue the long-term slide that started after peak North Slope output of over 2 million barrels per day was reached in 1988.
Production for the current fiscal year is expected to average 659,000 barrels per day, a 4.8% decline from the average posted in fiscal 2009, Galvin said.
In fiscal 2011, which starts July 1, the department is expecting average daily production to be 623,000 barrels, he said.
The department expects North Slope output to rise in fiscal 2013 and 2014, thanks to new production from fields that are being developed or expanding, Galvin said. He listed Pioneer Natural Resource's Oooguruk field, Eni's Nikaaitchug field and the ExxonMobil's Point Thomson field and some satellites to ConocoPhillips' Alpine field, as projects that would temporarily boost output.
After that, production will drop, ultimately to an expected 524,000 barrels a day in fiscal 2019, according to the forecast.
State oil revenues have risen sharply under the current tax system, a levy on net-profits that was passed by the legislature in 2007 and supported by then-Gov. Sarah Palin.
Oil companies have complained that Alaska's new tax system is especially burdensome and eliminates economic rewards when prices are high, thereby making Alaska investments less attractive.
Galvin said the state is reviewing its tax system to see whether it is discouraging investment. But so far, he said, the department is not seeing any such discouragement.
The department forecasts investments by oil and gas leaseholders to total $4.5 billion in this fiscal year and $5 billion in fiscal 2010. Those projections are based on individual companies' reports to the department, Galvin said, and include both capital and direct operating investments.
The governor has ordered a formal review of state oil taxes and their effects.
Oil taxes, royalties and fees will make up over 87% of the state's general revenues through fiscal 2019, the department's forecast said. Alaska has no personal income tax and no statewide sales tax, Reuters reported.