The state of Alaska will receive $3.43 billion in additional revenues due to the recent run-up in crude oil prices, Gov. Sean Parnell announced April 6.
Parnell made the announcement as the state Department of Revenue prepares to release its spring updated revenue forecast for the state's current fiscal year, which ends June 30, and for fiscal 2012, which begins July 1.
Alaska receives about 90 percent of its revenues from oil and gas royalties and taxes.
Production continues to decline, however. The spring update will estimate average North Slope production this year at 605,000 barrels per day, down from an estimate of 616,000 barrels in the previous revenue and production forecast made last November.
Production in the current year is down about 6 percent from last year. Next year the decline is estimated at 5 percent due to an expansion of production from the new Nikaitchuq oil field operated by Eni Oil and Gas and an expansion of production from the Oooguruk field operated by Pioneer Natural Resources.
The revenue estimates are based on an assumed price for North Slope oil of $91 per barrel for the current state fiscal year and $95 per barrel for next year, Revenue Commissioner Bryan Butcher said.
North Slope oil is currently selling for about $120 per barrel, he said.
The $3.43 billion in additional oil revenues now expected are a combination of $1.897 billion in additional revenue in the current state fiscal year, and an additional $1.556 billion for fiscal 2012.
The state already has about $12 billion in cash reserves not including the state's permanent fund, an endowment of saved oil income that is worth about $30 billion.
Parnell said he will push legislators to save $2.5 billion of the surpluses, which could increase state cash reserves to $14 billion or $15 billion.
The new estimates come as the Legislature finishes work on a state budget for fiscal 2012. Legislators will be tempted to add funds to the state capital, or construction, budget, but Parnell will urge that construction spending be held to levels in the current year of about $2.5 billion, which includes federal funds administered by the state.
"Our forecast assumes that demand for petroleum products continues to rise as the global economic recovery continues," Commissioner Butcher said. "We also expect that as turmoil in the Middle East and North Africa persists, there will be concerns about supply disruptions and therefore higher and more volatile prices in the short term."
Spending on the North Slope is expected to continue at slightly higher than current levels, but less than previously forecast in the fall forecast, Butcher said. Total expenditures are seen increasing in fiscal 2011, with forecasted lease expenditures of $5 billion and $5.3 billion in 2011 and 2012, respectively. This represents a slight decrease in expected spending compared to the fall 2010 forecast amounts of $5.1 billion and $5.5 billion, respectively.
Unrestricted non-oil revenues are forecasted to total $479 million in fiscal 2011 and $482 million in 2012, Butcher said. These estimates are up from $416 million collected in fiscal 2010.
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