Alaska Oil Production Needs More Than Tax Reform

Alaska's oil industry has been suffering a long, slow decline. Once the premier state for oil production in the U.S., it has now fallen to fourth place, and there doesn't appear to be any change in that trend anytime soon. Alaskan legislators think otherwise, though. They are looking to finalize a bill that would ease taxes on the oil industry by $750 million a year. They hope that by lowering the tax burden on oil producers in the region, it will spur more investment.

While this will certainly help oil production in Alaska, there are several other factors that are holding back the oil industry there. From high-risk exploration to cheaper options in the Lower 48, it will require a lot for Alaskan oil to be competitive again. In this video, Fool.con contributor Tyler Crowe looks at some of the factors keeping Alaska back and at the plans for some of the major players in the state. 

If oil majors ever expect to see improved production in the Arctic, it will need to rely on advanced offshore drilling rigs to get it done, much like the rigs from Seadrill. To help you size up this stock, one of The Motley Fool's top Stock Advisor analysts have authored a premium research report on the company, covering everything from its strengths and weaknesses to what to expect going forward. Simply click here now to claim your copy and determine whether Seadrill deserves a place in your portfolio.


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  • Report this Comment On May 05, 2013, at 1:59 PM, jmmnlsc wrote:

    Good report -- a couple of clarifications:

    Conoco never left -- they may add a rig after the tax change. There is already a citizens' initiative to repeal.

    The Chukchi Sea is federal not state so it will not be affected by state taxes -- it is still high risk.

    The State of Alaska raised the government take in 2006 from 63 to approx 75% depending on oil price when they went to a profits tax -- the recent tax change has left the government take higher than it was before 2006. Not likely to do anything.

    www.thelastalaskanbarrel.com for the investment history of the North Slope.

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