| ANCHORAGE, Alaska, April 10
ANCHORAGE, Alaska, April 10 Alaska North Slope
oil output is expected to drop 5 percent in the coming fiscal
year as its oilfields age, and average prices of its crude oil
are expected to fall, causing a dip in income for the state,
its Department of Revenue forecast on Friday.
Despite that, the state sees increased spending in the
state by oil producers such as Exxon Mobil Corp (XOM.N) and BP
(BP.L)(BP.N) in the coming year, as they drill new wells and
look at other new projects.
Alaska forecast oil output will fall to an average 654,823
barrels a day in the coming fiscal year 2010, which starts
July 1, with that projection representing a 5 percent decline
from the current year's production rate, largely due to its
aging oil fields.
Prices are expected to average $58.29 a barrel over the
coming period, down from the average of $65.70 for the current
fiscal year, which ends June 30. Production is expected to
average 689,150 barrels a day this fiscal year, a 3.8 percent
decline from fiscal 2008.
Despite the decline in North Slope crude oil prices since
they hit a high last July at $144 a barrel, the state's
Department of Revenue projects industry spending on its oil
and gas leases will jump substantially, with companies
investing more than $5 billion in fiscal 2010, compared to
$4.24 billion in the current fiscal year and $3.98 billion in
The cut in production and drop in oil prices will hit the
state's treasury. General unrestricted revenues will be only
$3.21 billion in fiscal 2010, compared with a record high of
$10.7 billion in fiscal 2008, according to the forecast.
Oil royalties, taxes and fees make up about 80 percent of
Alaska's general government revenues. There is no personal
income tax and no state sales tax in Alaska.
Alaska Governor Sarah Palin, speaking at a news conference
in Juneau on Friday, said she planned to cope with the revenue
declines by substituting federal stimulus money for about $250
million in state operations spending.
Palin, last year's defeated Republican vice presidential
candidate, said she continues to oppose the federal economic
stimulus package championed by U.S. President Barack Obama and
approved by Congress.
Last month, Palin announced she was rejecting nearly half
the more than $900 million in stimulus funding that was
offered to Alaska; later she revised that figure to declare
she was rejecting about a third of the federal dollars.
(Editing by Bill Rigby and Jan Paschal)