A primer on the importance of oil for Alaska’s economy

 

 

ALASKA RUNS ON OIL DOLLARS

• In FY 2015 and FY 2016, oil revenue is expected to contribute about 75 percent of all unrestricted revenue. Petroleum revenue is projected to provide at least 83
  percent of forecasted unrestricted general funds through FY 2024.
• Since Statehood in 1959, some 88 percent of all state revenue from natural resource development – including seafood, mining and timber – came from oil and gas.
  Source: Spring 2015 Revenue Forecast
• 77 percent of state funding for education comes from oil and gas.
  Source: “The Role of the Oil and Gas Industry in Alaska’s Economy,” May 2014, McDowell Group

 

THE OIL AND GAS INDUSTRY ACCOUNTS FOR ONE-THIRD OF ALL ALASKA JOBS

• Primary oil and gas companies generated 5,335 jobs in 2013. Of those jobs, 88 percent were held by
  Alaskans.
• For each primary company job, 20 additional jobs are generated in the Alaska economy.
• For each dollar earned by employees of the primary companies, a total of $8 in additional wages are
  generated in Alaska.
• In 2013, the oil and gas industry accounted for 33 percent of all wage and salary employment in
  Alaska (111,000 out of a total of 335,000) and 38 percent of all wages ($6.45 billion in wages out of
  total of $17.1 billion).
  Source: “The Role of the Oil and Gas Industry in Alaska’s Economy,” May 2014, McDowell Group.
• The oil & gas industry has 70% Alaska hire – an average that is similar to other industries in the state.
  Source: Alaska Department of Labor and Workforce Development; McDowell Report

PAYING DIVIDENDS FOR ALASKANS

• Alaskans voted to set aside a portion of oil revenues for future generations in 1976. The Alaska
  Permanent Fund, now worth more than $54 billion, distributes an annual dividend. Since the dividend started in 1980, a family of four has received $148,109. This includes the 2014 dividend of $1,884 for every eligible Alaskan.
• Oil and gas investments contribute to the fund’s success. The fund holds stock in 277 oil, gas and
  service companies, valued at $1.3 billion.
  Source: Alaska Permanent Fund Corp

SB 21 IS WORKING AS DESIGNED

• At current prices under SB 21, producers will pay almost $1 billion more in taxes over two years
  than they would have under the old tax system.
  Source: Enalytica presentation to House Finance Committee
• Economist Scott Goldsmith also concludes that Alaska is better off under SB 21.
  Source: University of Alaska Anchorage Institute of Social and Economic Research

HOW TAX CREDITS WORK

• The State of Alaska offers tax credits to the oil industry to incentivize investment and well activity in the Cook Inlet and North Slope legacy fields. Credits are
  also used to increase investments among new industry players who may have otherwise been deterred from Alaska by presumptions of increased risk and
  higher-than-average costs. To receive a tax credit in Alaska’s tax system, a company is required to spend significant money on exploration and development
  work.
  Source: Alaska DNR Division of Oil & Gas
• Roger Marks, former state petroleum economist, explains that our tax credits are working as they should at low prices.
  Source: Alaska Dispatch News
• Juneau Empire
• Since the Cook Inlet Recovery Act passed, Cook Inlet oil production has increased 80%.
  Source: Fall 2014 Revenue Forecast
• Anchorage mayor says tax credits kept Southcentral Alaska from running out of natural gas.
  Source: Alaska Dispatch News

 

SB 21 Encourages Investment

Alaska Legislature passes SB 21, oil tax reform

March 2013

SB 21 signed into law

ConocoPhillips announced plans to add four rigs to Kuparuk

May 21, 2013

SB 21 repeal certified for August 2014 primary election

September 2013

TAPS’ throughput levels off for the first time in decades

Summer 2014

SB 21 repeal effort rejected by voters

August 19, 2014

Cook Inlet oil production increases by 80 percent since Cook Inlet Recovery Act passed

ConocoPhillips approves new Kuparuk drill site

Fall 2014

North Slope drilling reaches record levels

Winter 2014

Third-largest North Slope lease sale in Alaska history

November 2014

State Department of Revenue predicts increased oil production in the near-term

December 2014

Hilcorp expands operations to the North Slope, files new Liberty development plan

Late 2014

Alaska’s Department of Revenue states SB 21 brings in more revenue than ACES at low oil prices

BLM approves ConocoPhillips’ Greater Mooses Tooth #1

Early 2015

Apache applies for 5-year offshore seismic project

Hilcorp files for permit for Liberty survey

Spring 2015

Caelus sanctions its $1.5-billion Nuna project

ConocoPhillips approves West Sac ficouse oil project

March 2015

Repsol confirms “significant” discovery on North Slope

Linc expands Umiat development plans

Summer 2015

Repsol drills three wells on the North Slope

BP completes $78 million, 190-square mile, 3D seismic shoot in Prudhoe Bay

Winter 2015

Production expected from Point Thomson

BP expects to take delivery of new rig at Prudhoe Bay

2016

Production expected from Nuna

2017