Alaska predicts higher oil price but lower output

ANCHORAGE, Alaska, April 10 (Reuters) - Prices for crude oil produced on Alaska’s North Slope will remain high but output from the aging basin will continue to slump, according to a semi-annual forecast released late on Friday by the state Department of Revenue.

The department’s spring forecast predicts that North Slope crude prices will average $75.32 per barrel in fiscal 2010, which ends June 30, and rise to an average $77.65 per barrel in fiscal 2011.

But fiscal 2010 production will be 6.9 percent lower than that achieved in the previous fiscal year, averaging 650,000 barrels per day, according to the forecast. Production in fiscal 2011 will drop another 4.8 percent to 619,000 barrels per day, according to the forecast.

The department’s forecasts are made twice a year to allow the state legislature to set budgets. Oil and gas royalties, taxes and fees provide nearly 90 percent of the state’s operating revenues and are expected to do so for almost another decade, according to the department.

Alaska has no personal income tax or statewide sales tax and is heavily dependent on oil revenue to fund its government.

North Slope crude was priced at $81.67 per barrel on Friday. Year-to-date flow through the Trans Alaska Pipeline System, the conduit for all North Slope production, has averaged 674,519 barrels per day, according to Alyeska Pipeline Service Co., the consortium that operates the 800-mile (1,287 km) line and its Valdez marine terminal.

North Slope oil production peaked in 1988 at slightly over 2 million barrels per day. The main North Slope fields, Prudhoe Bay and Kuparuk, are the two largest in the nation, but they are mature and producing far less than they did two decades ago.

Friday’s Department of Revenue forecast predicts higher prices and lower production levels than those predicted in the department’s last forecast, issued in December.

That December forecast predicted that prices would average $66.93 per barrel in fiscal 2010 and $76.35 per barrel in fiscal 2011, while production would average 659,000 barrels per day in fiscal 2010 and 623,000 in fiscal 2011. (Editing by Bill Rigby and Eric Walsh)