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Spring forecast drops oil prices further ANS production forecast also down for 2015-16, but up slightly for 2017-18, 2019-24; non-North Slope numbers up slightly this year Kristen Nelson Petroleum News
The Alaska Department of Revenue’s spring forecast, released April 3, reflects lower oil prices than the department forecast in its fall forecast, released in December.
“The spring revenue forecast highlights the revenue uncertainties that are being created by the fall in oil prices and its impact on revenue over the next several years,” Revenue Commissioner Randall Hoffbeck said in a statement.
General fund unrestricted revenue for fiscal year 2015 is now estimated at $2.2 billion, some $400 million less than the $2.6 million from the fall forecast; fiscal year 2016 general fund unrestricted revenue is also projected at $2.2 billion, the department said.
Hoffbeck said the spring “forecast is driven by an expectation of an average price of oil in the mid-$60s for the next 15 months. The assumption is that oil production is expected to be at least 500 thousand barrels per day the next two fiscal years.
“Compared to the fall 2014 forecast, the revenue forecast for spring 2015 projects lower revenue from FY 2017 through the end of the ten-year period to reflect a lower price path,” he said.
Price differences In the fall forecast the department projected ANS West Coast prices of $76.31 per barrel for FY 2015, $66.03 in FY 2016, $93.18 in FY 2017 and prices breaking the $100-mark through the end of the forecast period, peaking at $134.39 in FY 24.
The spring forecast, by contract, forecasts $67.49 per barrel for FY 2016, the same $66.03 in FY 2016, but then lower prices through the end of the forecast period, peaking at only $124.34 in FY 24, and not breaking the $100-per-barrel mark until FY 2020, two years later than the fall forecast.
Compared to the fall forecast, ANS West Coast is down $8.82 in FY 15, the same in FY 16, and down by amounts from $6.52 to $14.49 per barrel through FY 2024.
Hoffbeck said oil prices in the spring forecast have been reduced “for the next nine years, relative to the last forecast period, although we believe the price will be back over $80 by FY 2017.”
Production differences The spring Alaska North Slope production forecast varies from the fall forecast in both directions, with percent changes ranging from down 0.7 percent to up 1.8 percent and volume changes in the range of 1,400 barrels per day to 6,200 bpd.
In the fall forecast, FY 2015 production was projected at 526,100 bpd, 509,500 of that from the North Slope. In the spring forecast Alaska production is estimated at 524,900 bpd, 508,000 of that from the North Slope.
Non-North Slope production for FY 2015 was estimated at 16,600 bpd in the fall forecast, and was increased to 16,900 bpd in the spring forecast. Non-North Slope production otherwise remains the same between the forecasts, dropping gradually through the forecast period to 7,000 bpd in 2024.
The North Slope production estimate between the two forecasts is down for FY 2015 and FY 2016 by 1,500 bpd 4,600 bpd respectively. The spring forecast ups the North Slope forecast by 1,400 bpd in FY 2017 and by 3,100 bpd in FY 2018, drops it by 3,300 bpd in FY 2018, and then shows increases each fiscal year, ranging from 6,200 bpd in FY 2021 to 4,300 bpd in FY 2020.
The North Slope production forecast drops below 500,000 bpd in FY 2019, and hits 320,300 bpd in FY 2024.
Over the next two fiscal years, Hoffbeck said, petroleum revenues - considering “price, production, and the minimum tax rate” - will be more than $1.6 billion per year, with about another half billion coming to the state’s general fund unrestricted revenue from non-petroleum taxes and fees.
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