Alaska's North Slope oil production is forecast to decline 1.8 percent for the fiscal year ending June 30 instead of falling 3 percent as predicted in December, according to a report released this week.
The Alaska Department of Revenue predicts production of 521,800 barrels a day (bpd) versus its December forecast of 508,200 bpd. By 2023, North Slope production will fall to 315,000 bpd.
The annual spring report comes four months after the state began cutting oil production taxes with hopes of spurring new investment and stemming the decline. Alaska gets more than 80 percent of its state tax revenue from oil production.
North Slope production comes largely from leaseholders BP Plc, ConocoPhillips and Exxon Mobil Corp, and has been in a steady decline. More than 20 years ago, nearly 2 million barrels a day flowed through the 800-mile (1,300-km)trans-Alaska pipeline system.
Last fiscal year, production fell 8.2 percent, according to another state report.
"That is a significant shallowing of the production decline if you ask me," said State House Representative Eric Feige, a Republican who supported the tax cut. "I expect as we start to drill more wells, bring in more drill rigs, and advance some of these new techniques, we are going to continue to exceed forecasts."
Democrats had fought against reducing taxes on oil production and this summer voters will decide at the polls whether to repeal the tax break.
"I don't see how you can call this anything but a success," said Deputy Revenue Commissioner Bruce Tangeman. "This is just the beginning."
Democratic State Senator Bill Wielechowski said no one should be swayed by the near-term outlook.
"The governor has been saying his goal was to get 1 million barrels through the pipeline, and it's vital that we give tax breaks to the oil industry," he said. "Well, now we're heading to 315,000 barrels. That's a total failure."
North Slope oil prices have been tracking about $5 a barrel more than West Texas Intermediate. So far this year, North Slope oil prices have ranged between $100 to $110 a barrel, never dropping below $100.
By Steve Quinn