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ISER: New Alaska oil tax slams construction spending growth
The oil industry will spend nearly $3 billion on construction projects in Alaska this year, according to a new forecast compiled by economists with the University of Alaska’s Institute of Social and Economic Research.
The $2.89 billion to be spent on oil and gas projects represents 41 percent of all construction dollars to be spent in Alaska in 2008, and a 5 percent increase over 2007 spending figures for the industry.
The forecast attributes the slight rise in spending this year to both higher construction costs and an increase in exploration and development activities by both major and independent companies.
However, the forecast also notes construction projects for the oil industry in 2007 jumped 30 percent over 2006 figures, and attributes the 2008 slowdown in growth to budget cuts associated with the recent increase to the state production tax.
ISER economists Scott Goldsmith and Mary Killorin put the forecast together for the Construction Industry Progress Fund and the Associated General Contractors of Alaska, who have published the forecast for the past five years.
The figures cover a broad range of spending activity related to construction. For the oil industry, all capital budget items are included except for certain easily distinguishable expenses like new oil tankers.
Major companies plan $1.9 billion Excluding work on the trans-Alaska oil pipeline, the major companies BP, ConocoPhillips and ExxonMobil will spend an estimated $1.9 billion on Alaska operations in 2008, according to the forecast. The work will focus on “existing assets” over new exploration.
Meanwhile, ISER predicts other companies will spend $690 million on North Slope activities, down from last year as Pioneer Natural Resources completes its Oooguruk Island in the Beaufort Sea, but bolstered by several ambitious exploration programs from smaller independent companies.
Companies in Southcentral Alaska’s Cook Inlet basin will spend an estimated $300 million on construction activities led by Marathon Oil, Chevron and ConocoPhillips. The forecast attributes the Cook Inlet increase in activity to higher oil prices and to a recent state decision to support an extension of the export license for liquefied natural gas, a matter still pending approval from the federal government.
The forecast does not anticipate any “significant” new construction on refineries or “petroleum-manufacturing facilities” this year.
The forecast aligns with recent figures released by the Anchorage Economic Development Corp. forecasting a 4.2 percent increase in Anchorage oil industry employment in 2008, up to 2,500 jobs.
—Eric Lidji
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