Alaska to see lower revenue, weaker output on oil price slump: report

[ANCHORAGE, Alaska] The slump in oil prices and slowing production are expected to cost Alaska more than US$1 billion in state revenues and cause further declines in an already dwindling North Slope output, the revenue department of the US state said in a report on Monday.

Oil rates have been hit by the Russia-Saudi Arabia price war that has flooded the markets with excess supply at a time when the coronavirus pandemic has caused a slide in demand.

West Coast price for Alaska North Slope crude will average US$30 a barrel for the fiscal year ending June 30, according to Monday's semi-annual forecast released by the Alaska Department of Revenue, making the expected annual average price about US$51.65 a barrel, about 19 per cent lower than earlier forecast in December.

West Coast prices in the coming fiscal year will average US$37 a barrel, the forecast predicts.

The sharp price drop is responsible for most of the expected reduction in state revenues, the forecast said. The state will now receive about US$1.15 billion less in petroleum revenues over the two fiscal years than what was predicted by the department merely four months ago.

Alaska House Speaker Bryce Edgmon called the forecast bleak.

"Alaska has tough days ahead. It will require Alaskans of all stripes to pull together to get us through the tough days ahead," Edgmon said in a Facebook post.

North Slope production is expected to wind up averaging 486,400 barrels per day in the state's current fiscal year, which ends on June 30, and average a near-identical 486,500 barrels per day in the coming fiscal year, the report said.

The expected output is a drop from what the department had forecasted just a few months ago. Last December, the department estimated that the current year's production would come in at an average of 492,100 barrels per day and drop to 490,500 barrels in fiscal 2021.

North Slope oil production peaked in 1988 at a little over 2 million barrels per day. However, output averaged 502,250 barrels per day in March, according to the department's data.

REUTERS