Alaska receiving tangled views over Oil Investment

The oil presence benefitting the 49th state makes it more difficult to perceive Alaska as a site for lucrative oil investment. Already a battle is going on over this perception. This statement has led to a civil discussion which focuses at proving that Alaska doesn’t stand in the way of competition on a world stage.

A spokesperson for local industry giant Repsol, remarked in a recent press conference, “Our Company has always received benefits from the north slope of Alaska due to the negligible amount of introductory risk, as well as the vast quantity of oil found there.” They followed their statement by releasing a plan for an investing about $768 million in the upcoming winters. The tax credits belonging to Alaskan businesses lower the cost of exploring for more oil. The chairman of Repsol confirmed in his speech that he is confident enough to stay with a deal that will provide the company immense value with low risk. He confirmed the fact that the company haas been finding better oil opportunities onshore in recent years. Repsol, being the largest company producing oil in Libya, shares its partnership with two private companies named “GMT” and “70.”

The tax situation in Alaska is not portrayed as complicated – though it is. One common issue centers on the fact that one company cannot invest in the same climate that another is pursuing due to the difference in their locations. Repsol is viewing the world with its own eyes rather than with the eyes of Exxon. It is significant to understand the difference when the state is unable to form a coherent policy regarding the oil tax. The situation could easily be compared to shooting darts in a dark room when you don’t even know on which wall the target is.

Recently, a small oil company named Miller Energy Resources made an allegation that the state has owed them a so-called maiden tax credit payment of nearly $2 million for recovering their drilling and exploration costs. The CEO of the company, Scott M. Boruff, added that such renuneration marks Alaska as one of the most amicable environments for developing energy resources. He also remarked that the expenditures his company has made, amounting to “several million dollars” last year, should be recovered after the new oil development rules are imposed. Another company named Great Bear Petroleum hopes to generate oil on the northern slope from shale rocks. Such projects are only financially viable when the new rule goes into effect.

Now, considering the deal made by Repsol, they aim to allocate “safe” money to be invested in the Alaska project, and are looking forward to the project as the exploration risk seems to be relatively low on the northern slope. They hope that this planned oil investment will be beneficial for them.

- Chris Termeer

Chris Termeer

Chris Termeer is an oil and gas consultant, industry commentator and analyst. His book, Fundamentals of Investing in Oil and Gas provides a comprehensive overview of all aspects of the oil and gas industry, including exploration, drilling, production, storage, transportation and refining, to name but a few.

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