Despite news about expected downgrades in local resource production, the Kenai Peninsula Borough's preliminary oil and gas assessments climbed from 2009 to 2010.
The total taxable property value of the borough's oil and gas industry rose from approximately $703 million in 2009 to nearly $715 million in 2010. That amounts to a tax revenue increase of more than $53,000, from $3.163 million in 2009 to $3.217 million in 2010. The tax revenue increase assumes a 4.5 mill rate.
The assessments include oil and gas facilities, pipelines, rigs and miscellaneous service companies. Appeals may still be filed, and the 2010 numbers will not be finalized until June 1.
Though oil and gas producers presented grim local production news at January's Industry Outlook Forum in the Challenger Learning Center, James Greeley, the state's petroleum property tax assessor, said it's not surprising to see the values increase.
"If production decreases but capital spent increases then, yes, it does make sense for the assessment value to go up," Greeley said Wednesday.
Kenai Peninsula Borough Mayor Dave Carey said he had been expecting the numbers to decline.
"We were real pleased because we had been anticipating a decrease," Carey said. "We bit the bullet for one more year."
Overall, oil and gas facility assessments bumped up from approximately $503 million in 2009 to more than $504 million in 2010. Pipelines spiked from more than $88.3 million last year to $99.5 million in 2010. Rigs stayed fairly level, increasing by about $500,000 - from $33.354 million to $33.895 million. Miscellaneous services dropped from $78.4 million to $77.1 million.
Greeley said production companies's assessments varied based on activity.
ConocoPhillips Alaska's preliminary tax roll increased by about $7 million, from $109 million in 2009 to $116 million in 2010. Cook Inlet Energy dropped from $15 million to more than $12 million. While Aurora Gas remained fairly steady, $7.2 million in 2009 compared to $7.3 million in 2010, XTO Energy climbed from $47.5 million to $51.8 million. Marathon Oil Company dipped from $128 million to $123 million. Chevron dropped from $194 million to $191 million.
At January's economic outlook forum, oil and gas producers did not speak optimistically about future resource production in the region.
"Do I think there are going to be 10 or 15 wells in Cook Inlet in the near future? I don't think so because the market doesn't demand that," Marathon's Carri Lockhart said. "The local utility market is too small to enable growth across the inlet."
However, Marathon has an exploration well in the works. Pioneer Natural Resources also has drilled an appraisal well in the Cook Inlet. As a result, Pioneer's preliminary tax roll increased from $740,000 in 2009 to $857,000 in 2010.
Chevron was less optimistic at the forum.
"In terms of exploring gas around the peninsula, we have not had a great deal of success," said Chevron operations manager Dale Haines. "We don't have any additional exploration work."
Chevron has abandoned the Baker and Dillon platforms in Cook Inlet.
In addition, BP closed its gas to liquid facility in Nikiski last year. ConocoPhillips' license to export Liquefied Natural Gas (LNG) expires in March of 2011, and the company is non-committal on its decision to renew.
Though the long-term future could be bleak, the immediate news as a result of the assessments is promising for the borough.
"Minimally, it means $53,000 more in income," Carey said. "It allows us to know that the value of the things that are going to continue out into the future."
Andrew Waite can be reached at firstname.lastname@example.org.
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