A giant oil development project just greenlit by the Biden administration and celebrated by Alaska state leaders is expected to cost the state treasury more than it would raise in the early years. Via AlaskaBeacon
by Alaska state leaders is expected to cost the state treasury more than it would raise in the early years.
Willow would be the westernmost producing North Slope oil field if developed and is located on federal territory: the National Petroleum Reserve-Alaska. That has profound implications for expected state revenues. While oil production on state land generates royalty revenues that go into the state’s general fund, royalties from oil production within NPR-A are effectively split between the federal government and the local communities on the North Slope.
The 2018 report used some different parameters and assumptions. In addition to anticipated effects on state revenue of Willow development, it factored in the effects of two smaller oil projects — Greater Mooses Tooth 1, which started production that year, and Greater Mooses Tooth 2, whichin late 2021. It assumed an oil price of $75 a barrel, though it considered some other prices. And it assumed that Willow production would start in 2024, much earlier than is now expected.
Still, there will be jobs for the workers building and operating Willow, he said. And more oil into the Trans Alaska Pipeline System means that the 800-mile system’s life “will be extended for a certain period of time,” he said. That could make other oil development more likely, arresting or even reversing the North Slope’s long-term production decline, he said. “The hope is that we continue to find plays, we continue to develop those plays.
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