Anchorage (Platts)--20Dec2007
Alaska Governor Sarah Palin Wednesday signed into law new state oil and
natural gas production tax legislation intended to boost such revenues by $1.6
billion this year.
Palin pushed the new tax legislation because she felt the state wasn't
getting enough income from oil production at current high prices.
"With the signing of this bill we can turn the page and look forward to a
new era of stability and investment opportunities developing Alaska's
resources," Palin said at the signing ceremony.
With the additional tax revenues Alaska is expected to have a $4.5
billion revenue surplus over the next two years, according to the state
Revenue Department.
The new law establishes a base tax rate of 25% of producers' net revenues
from oil and gas production. When crude oil prices exceed $52/barrel an
escalator formula kicks in that raises the tax rate.
With oil prices at about $90/b, the effective tax rate on production from
the large North Slope fields is about 40% of net revenues, according to
estimates by Chuck Logsdon, an independent oil and gas consultant and a
Retired state chief petroleum economist.
Legislators approved the tax in November after a 30-day special session
called by Palin.
The oil and gas industry has warned legislators that higher taxes would
cause some investments to be canceled or delayed. Following legislative
passage of the tax, ConocoPhillips canceled a $300 million North Slope plant
that would have produced ultra-low sulfur diesel for use there.
--Tim Bradner, newsdesk@platts.com
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