NEWS BULLETIN

December 05, 2012 --- Vol. 18, No. 91December 2012

Furie permitting Kitchen Lights development

Furie Operating Alaska LLC is permitting an offshore platform at its Kitchen Lights unit, according to a public notice published yesterday by the U.S. Army Corps of Engineers.

KLU Platform A would underpin long-term production of natural gas from the offshore unit in the upper Cook Inlet, the company said. In its filings, Furie described a development plan including a platform, two subsea gathering lines and a new onshore production facility near Nikiski tying into the regional natural gas distribution grid.

The Army Corps is taking comments through Jan. 4.

—Eric Lidji

Revenue projects lower unrestricted general fund revenues

The Alaska Department of Revenue’s rolled out its fall 2012 forecast yesterday, projecting lower unrestricted general fund revenues compared to the spring forecast. The department cited a lower oil price ($108.67 per barrel for fiscal year 2013 compared to $110.44 in the spring forecast) and lower production levels, 553,000 barrels per day compared to 563,000 bpd forecast in the spring.

The department also described changes in how it does its long-term production forecasts, which as Revenue Commissioner Bryan Butcher said, have consistently been too high compared to actual data.

The drop in unrestricted general fund revenues for fy13, the current fiscal year, is 11 percent, from $8.44 billion forecast in the spring to $7.51 billion in the current forecast, a drop of $928.4 million.

On production forecasting, Butcher said this year Revenue worked more closely with the Department of Natural Resources’ Division of Oil and Gas to improve the state’s longer-term production forecast.

Bruce Tangeman, Revenue’s deputy commissioner for tax, said that in looking at how the production forecast had been done, the department realized the technical information was good, but budget issues were not included in the analysis. He said that while forecasts out one and two years were relatively accurate, longer-term forecasts, out six to 10 years, averaged an error rate of 40 to 60 percent.

Division of Oil and Gas Director Bill Barron said that production is broken out into three categories: Confidence is high for current production, Barron said, but less so for timing and production in under development projects, and even less in projects which are under evaluation.

He said the division worked with Revenue’s economists to develop confidence levels in those second and third tranches — under development and under evaluation — and when that process was applied looking back over data from previous years, the error rate in forecasting was reduced by more than 50 percent.

—Kristen Nelson

See stories in Dec. 9 issue, available online at 11 a.m., Friday, Dec. 7, at www.PetroleumNews.com


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