• 4 hours OPEC, Russia Said To Announce Oil Pact Extension On Nov 30
  • 7 hours Wintershall And LetterOne In Talks For $12B Oil, Gas Merger
  • 9 hours India Exempts State Oil Firms Mergers From Competition Approval
  • 11 hours Turkey Targets $5B Investment In Wind Energy By End-2017
  • 13 hours Weatherford Looks To Sell Assets To Ease Some Of $8B Debt
  • 14 hours OPEC Set To Move Fast On Cut Extension Decision
  • 16 hours Nigeria Makes First Step Away From Oil
  • 1 day Russia Approves Profit-Based Oil Tax For 2019
  • 1 day French Strike Disrupts Exxon And Total’s Oil Product Shipments
  • 1 day Kurdistan’s Oil Exports Still Below Pre-Conflict Levels
  • 1 day Oil Production Cuts Taking A Toll On Russia’s Economy
  • 2 days Aramco In Talks With Chinese Petrochemical Producers
  • 2 days Federal Judge Grants Go-Ahead On Keystone XL Lawsuit
  • 2 days Maduro Names Chavez’ Cousin As Citgo Boss
  • 2 days Bidding Action Heats Up In UK’s Continental Shelf
  • 2 days Keystone Pipeline Restart Still Unknown
  • 2 days UK Offers North Sea Oil Producers Tax Relief To Boost Investment
  • 2 days Iraq Wants To Build Gas Pipeline To Kuwait In Blow To Shell
  • 2 days Trader Trafigura Raises Share Of Oil Purchases From State Firms
  • 3 days German Energy Group Uniper Rejects $9B Finnish Takeover Bid
  • 3 days Total Could Lose Big If It Pulls Out Of South Pars Deal
  • 3 days Dakota Watchdog Warns It Could Revoke Keystone XL Approval
  • 3 days Oil Prices Rise After API Reports Major Crude Draw
  • 3 days Citgo President And 5 VPs Arrested On Embezzlement Charges
  • 3 days Gazprom Speaks Out Against OPEC Production Cut Extension
  • 3 days Statoil Looks To Lighter Oil To Boost Profitability
  • 4 days Oil Billionaire Becomes Wind Energy’s Top Influencer
  • 4 days Transneft Warns Urals Oil Quality Reaching Critical Levels
  • 4 days Whitefish Energy Suspends Work In Puerto Rico
  • 4 days U.S. Authorities Arrest Two On Major Energy Corruption Scheme
  • 4 days Thanksgiving Gas Prices At 3-Year High
  • 4 days Iraq’s Giant Majnoon Oilfield Attracts Attention Of Supermajors
  • 4 days South Iraq Oil Exports Close To Record High To Offset Kirkuk Drop
  • 5 days Iraqi Forces Find Mass Graves In Oil Wells Near Kirkuk
  • 5 days Chevron Joint Venture Signs $1.7B Oil, Gas Deal In Nigeria
  • 5 days Iraq Steps In To Offset Falling Venezuela Oil Production
  • 5 days ConocoPhillips Sets Price Ceiling For New Projects
  • 7 days Shell Oil Trading Head Steps Down After 29 Years
  • 7 days Higher Oil Prices Reduce North American Oil Bankruptcies
  • 7 days Statoil To Boost Exploration Drilling Offshore Norway In 2018
Alt Text

Keystone XL Is Far From Certain

Today’s vote in favor of…

Alt Text

When Will Oil Demand Begin To Taper Off?

As energy analysts begin announcing…

Alt Text

OPEC Concedes That U.S. Shale Won’t Die

OPEC has significantly adjusted its…

Alaska Mulls Oil Industry Tax Break to Boost Production

Alaska Mulls Oil Industry Tax Break to Boost Production

Everyone likes a good tax break, and Alaska’s governor is courting the oil and gas, timber and mining industries with a legislative proposal designed to make the state as attractive as North Dakota.

On 29 January, Alaska Governor Sean Parnell proposed tax cuts at a legislative hearing.

So would tax breaks be enough to turn Alaska into North Dakota—to ensure an Alaskan Bakken?

Alaska’s economy is in trouble and oil and gas production are declining and explorers and developers complaining of too much red tape and prohibitive taxes.  

According to the Senator in a commentary published in Alaskan media, “The volume of oil transported through the Trans-Alaska Pipeline System (TAPS) has steadily declined over the past few decades. Whereas 2,100,000 barrels per day were being transported in 1988, fiscal year 2012 saw a mere 579,100 bpd. That's a 71-percent decrease. Moreover, that volume is expected to further reduce to 552,800 and 538,400 in fiscal years 2013 and 2014, respectively. If current policies remain in place, the Department of Revenue expects the decline in oil production to continue at a rate of 5.5 percent per year through the next decade.”

Related article: Big Taxes, Big Oil

At the same time, Alaska's revenue commissioner has said there he has seen no evidence that existing tax credits to oil companies have led to increased production. However, he told the Associated Press that while he hasn’t seen such evidence that does not mean it doesn’t exist. Still, a direct connection has not been made.

Alaska used to be the darling of American oil production, but now even North Dakota has surpassed it. One problem is that companies have not been very interested in exploring for conventional crude oil reserves, with the focus more on unconventional shale. And while tax credits have helped somewhat to attract more exploration, it has only gone so far and legislators have yet to come up with a plan that would really focus on boosting oil production.

And this is where the proposed change to the tax rate comes in. If we can judge by the response of the industry to these proposals—they are making a very public show of support for the Senator’s efforts—then a tax rate that is more competitive could be the engine that helps ramp up production.

Related article: Alaska: Gas Rich, but No Longer Relevant

Alaska has fallen on hard times overall, especially since the natural gas boom has rendered its bountiful reserves less relevant. The state is hoping to cash in on US gas exports. It needs a new market for its gas—for which it is first and foremost eyeing Japan—but for now this issue remains controversial.

For now, export licenses are considered separately by the Department of Energy, which determines on a case-by-case basis whether it is in the country’s interest. The oil industry is out in full force lobbying for unlimited gas exports, while other industries, like chemical manufacturers, want to keep gas supplies at home to boost manufacturing.  

Natural gas exports, though, would require massive investment in infrastructure, and this ties back to Alaska’s investment climate: the state’s tax environment isn’t attractive enough to lure the necessary infrastructure investment.

By. Jen Alic of Oilprice.com




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News