Big oil profits prompt talk of revised tax structure in state

Dems in Legislature call for more revenue when oil prices are high

Posted: Monday, July 18, 2005

ANCHORAGE - Oil company profits on Alaska operations are heating up discussions that the state should be getting a bigger share.

BP made more than $1.8 billion in profit on its Alaska oil production in 2004, on top of nearly $1.1 billion the company made the year before.

Some state lawmakers, generally minority Democrats, have called for legislation allowing the state to collect more when oil prices are running high. Some Republicans, including Gov. Frank Murkowski, have said state tax policy might need adjusting.

"The state is giving away a huge amount of money and then pretending it's broke," said state Rep. Les Gara, D-Anchorage.

Houston-based Conoco reported Alaska profits of $1.8 billion last year. Exxon, based in Irving, Texas, does not report separate profit figures for Alaska.

Richard Fineberg, a Fairbanks consultant, pegged total industry profits for 2004 at nearly $5.5 billion and estimated the state's take in oil taxes and royalties at about half that much, or $2.8 billion.

Most North Slope crude is produced on state land by oil companies holding leases. The main field is Prudhoe Bay, the nation's most prolific.

BP reported 2004 results for its Alaska subsidiary, Anchorage-based BP Exploration (Alaska) Inc., to the U.S. Securities and Exchange Commission on June 30.

Alaska is one of the richest pieces of BP's portfolio, accounting for nearly 11 percent of the company's worldwide profit last year of $17.1 billion. BP runs the Prudhoe Bay field and owns a piece of it plus other North Slope fields.

Record oil prices in recent months are powering the big profits. North Slope oil for delivery to West Coast refineries closed Friday at $56.04 a barrel. That's far above the 1995-2004 average of $23.13 and more than enough, if sustained, to balance Alaska's oil-dependent state budget.

High profits are nothing to be ashamed of, said Daren Beaudo, BP's Anchorage spokesman.

"Success by our company is great news for Alaska," he said. "Alaskans benefit when we're successful."



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