Anchorage Daily News

Alaska has not been immune to cutbacks due to tight credit markets and low oil prices, but the state has mostly avoided reductions to long-term oil exploration programs.

Between November and the end of January, typically the first three months of the North Slope's drilling season, the Alaska Oil and Gas Conservation Commission issued nine permits for exploration wells and 39 permits for development wells across the state.

Those numbers roughly track with recent years. For those same three months during the previous three winters, the state commission issued on average permits for 10 exploration wells and 36 development wells. Drilling permits don't always lead to drilling, but they indicate intent.

The biggest cutback to planned exploration work in Alaska is only indirectly tied to weak global economics. A four-company joint venture led by Brooks Range Petroleum Corp. has postponed its drilling while the companies resolve a lawsuit. Their drilling permit won't be used this year.

BIGGER INVESTMENTS

Cherie Nienhuis, acting chief economist with the state Tax Division, told the Senate Finance Committee this month that the state expects to spend less on tax credits this fiscal year than originally estimated, but only because of a lag in when credits get paid.

The state gives credits only to explorers not currently earning revenue in the state through oil or gas production. Producers use the credits to lower their taxes.

Companies typically file for credits quarterly, Nienhuis said. She told Petroleum News that the next batch should arrive in late March, when companies release annual reports.

North Slope investment has increased every year since 2004, tracking an increase in oil prices and several expansions of the state tax-credit program for capital expenses.

Using company estimates, the state is projecting $3 billion in capital investment in fiscal year 2010, which begins in July. That's up from the $2.4 billion projected for this year.

Some doubt that estimate.

"I don't believe the $3 billion number is going to come out to be a realistic number in this marketplace," said state Sen. Bert Stedman, R-Sitka, co-chair of the Finance Committee.

EVEN MORE DRILLING

Since the end of January, the state oil and gas commission has approved two more drilling permits.

One is for Unocal and its partner Total to explore its White Hills prospect south of the big Kuparuk River field. The other is for a Conoco Phillips and Anadarko well at its Greater Mooses Tooth prospect in the National Petroleum Reserve-Alaska.

The commission also OK'd an onshore well for Aurora Gas in the Cook Inlet area.

ADVERTISEMENT