Alaska’s fiscal year ends tomorrow, June 30th. While official numbers won’t be posted for several months, preliminary data is already available. Here’s what it looks like.
Alaska North Slope Crude oil ended up being a year of upward trending prices.
While the price of oil ended the fiscal year just shy of $80 per barrel, the early part of the year drags down the annual average to $63.62. This is $7.62 higher than the DOR forecast provided last Fall and $2.62 higher than the updated number they provided in the Spring.
The current DOR forecast for FY19 is $63. We expect that number to increase in the Fall forecast, unless there is a sudden shift in the oil market before then. Our current forecast for FY19 is an average oil price closer to $80 per barrel. There are also offsetting opportunities for that number to go higher or lower depending on market events.
FY18 oil production was down 1.4% versus FY17. The monthly production data from DOR is illustrated here:
While the first half of the fiscal year showed higher production levels than the previous year, that increase was not maintained in the second half of the year. The net result was a production rate of 519,014 barrels of oil per day. This means that the projected increase of production for the third straight year did not come to pass.
DOR’s most current forecast projects a production rate of 526,600 barrels per day in FY19. We suspect this number will be revised downward in the Fall (although we expect later years to be revised upward).
Combining the price and production numbers, DOR had forecast a gross oil revenue number of $10.9 billion from the North Slope in their Fall 2017 RSB. In their Spring update, they revised the number to an implied $11.6 billion.
Now that the numbers are in, the actual gross value was $12.1 billion.
DOR’s Fall 2017 forecast predicted unrestricted revenue payments from petroleum activities at $1.56 billion. As a result of increasing oil prices, that number was revised upward to $1.80 billion in the Spring.
Given the higher price and lower production rates that come to be, it appears that the State likely collected closer to $1.9 billion in FY18.
The most recent forecast for FY19 sits at $1.6 billion. We expect that number to be revised upward in the Fall.