JUNEAU, Alaska (AP) — The Willow oil project on Alaska’s petroleum-rich North Slope is part of a “new era” of large-scale development in the region, but it’s not a sure thing, with litigation and costs among the factors for the state A U.S. official told lawmakers on Thursday that it stands as a potential roadblock.
John Crowther, deputy commissioner of the Alaska Department of Natural Resources, said the scale of projects like Willow, which is on federal land in the National Petroleum Reserve-Alaska and was approved by the Biden administration last week, is “tremendous” and will benefit Alaska. . He also noted as important the Pikka oil project, which is on state land east of the petroleum reserve.
But he also said that multibillion-dollar, multi-year projects are complex and that the ConocoPhillips Alaska-backed Willow project has “significant runway” to reach the development and production phases. Australia-based Santos is working with Repsol to further develop Pikka. Project.
State tax officials provided lawmakers on Thursday with an analysis of the potential revenue impacts and benefits from Willow for state coffers, but noted uncertainty surrounding estimates of when the project could eventually begin, oil price fluctuations And the cost of the industry is included.
North Slope oil prices, which were around $115 a barrel this time during Russia’s invasion of Ukraine last year, are currently in the $70 a barrel range.
Dan Stickell, chief economist for the Tax Division of the State Department of Revenue, told the Senate Finance Committee that the oil and gas industry is a high-risk industry that requires considerable capital. He added that the ability for companies to recover costs is an important consideration when they decide to invest, and that Alaska’s tax structure has elements that support cost recovery. For example, the tax system allows for deductions related to investment and incentives for new production areas.
Tax Division analyst Owen Stephens said modeling from the State Tax Division indicates that Willow could lead to billions of dollars in revenue for the state, North Slope communities, the federal government and the company.
Oil has long been the economic lifeblood of the state. Alaska political leaders – Republican Gov. Mike Dunleavy, the state’s bipartisan congressional delegation and the Legislature – have pushed for Willow, partly seeing it as a way to boost the flow of oil through the Trans-Alaska Pipeline. Many leaders on the Far North Slope or from the region have described the project as economically important to their communities. Unions have also spoken in support.
However, environmentalists have argued that the project is at odds with President Joe Biden’s climate pledges and worry that it could lead to further development in the area.
Environmental organizations and an Alaska Native group have filed lawsuits challenging Willow’s approval, arguing that the US Bureau of Land Management failed to adequately consider alternatives. A federal judge is expected to decide in early April whether to halt construction activities related to the project pending resolution of cases some groups are requesting.
The approved project is smaller than what ConocoPhillips Alaska had previously sought, but the company said it welcomed the decision.
Rebecca Boyes, a company spokeswoman, said earlier this week that the company was building snow roads for construction work, but agreed to delay gravel quarry activities until April 4. Judge Willow does not issue a ruling before denying the injunction requests filed by opponents.
ConocoPhillips is intervening in the litigation in support of federal agencies being sued over the Alaska approval. Arctic Slope Regional Corporation, Alaska Native Regional Corporation; North Slope Borough; Kuukpik Corp., an Alaska Native village corporation, and the state have also intervened in support of the approval.
According to the company, Wilo can produce up to 180,000 barrels of oil a day and more than 600 million barrels over its 30-year life.
Source: www.bing.com
