Increased oil and gas production, exploration and an influx of new infrastructure to Cook Inlet and the Kenai Peninsula is starting to register on local tax rolls.
According to a letter from Jim Greeley, Alaska State Petroleum Property Assessor, the total assessed value of all oil and gas property in the borough increased to $810 million for the 2012 tax year from $698 million in tax year 2011.
The borough's fiscal year 2013 budget indicates that assessed value will mean a total of $7.785 million in taxes, $3.65 million of which will go to the borough's general fund. That's up from a total of $6.69 million in fiscal year 2012 and $7 million in 2011.
The jump in assessed value is the first significant jump in at least a decade. Previous assessed values of local oil and gas consistently ranged between $558 million to $703 million from fiscal years 2001 to 2010.
According to Greeley, the following items totaling $45.2 million in assessed value were not on the borough's tax roll last year:
* $17.8 million -- Orion Offshore, Spartan 151 jack-up rig.
* $14 million -- Cook Inlet Energy, drilling rig 35 on the Osprey Platform and rig 34.
* $9.4 million -- Buccaneer, Kenai Loop onshore gas infrastructure.
* $4 million -- Furie Operating, gas exploration property such as tubulars, drilling equipment and inventory.
"The total value can increase because new stuff is moving in but that doesn't mean the value of the existing stuff is increasing," said Greeley in an interview with the Clarion. "But, the reality is that it is a little of both -- there are existing values that have increased, but there are also values that have decreased. Over the last five years or so, Cook Inlet has generally been seeing slight value increases overall. Before that timeframe it was generally dwindling in value over time."
Assessment values incorporate three state provisions -- exploration, pipeline and production -- and are affected by new investment, improved existing infrastructure, increases in production, and new reserves found through exploration, Greeley said.
"You will certainly see an increase (in value) for an existing piece of infrastructure ... if reserves are increasing or if production is increasing," Greeley said.
According to the Alaska Department of Natural Resources, Cook Inlet oil production has been on a steady slide since it peaked in 1971 at 214,624 barrels of oil per day. The area dropped to 7,512 barrels of oil a day in 2009, but jumped to 10,235 in 2010.
April has been the most productive month so far for oil production in the Inlet with a monthly average of 13,095 barrels being produced a day. March was lowest this year with 8,042 barrels a day.
Kenai Peninsula Borough Mayor Mike Navarre said he was optimistic about the increases in Cook Inlet values and expected them to continue to rise.
"I think it's the biggest part of the increase in assessed value to the borough is obviously the oil and gas properties and I think it reflects a couple of things," he said. "It reflects the price of oil and increased activity in Cook Inlet and that's something that's good in the short term and more importantly it should be good for the long term."
Brian Smith can be reached at firstname.lastname@example.org.