Alaskans have been heartened by discovery of more oil on the North Slope but new projects now planned in the National Petroleum Reserve-Alaska will wind up costing the state about $250 million a year for the first eight years projects are producing and $1.8 billion over the first 10 years. This is according to an analysis by the state Departments of Revenue and Natural Resources given to state legislative committees Dec. 2.

The loss occurs because of the structure of the state’s net profits oil production tax and because the state’s 50 percent share of NPR-A royalties go to a special regional “impact” fund that is not available as state General Fund revenues. The state production tax allows capital costs incurred by developers to be taken as a deduction against other Alaska tax liability.

This loss is offset by a share of royalties from NPR-A production that the state would receive. However, the 1976 federal law that authorized the state’s royalty share also required that the money go into a special impact fund to offset effects of development in communities on the North Slope. The money is not available for the state budget, in other words.

The  DOR/DNR analysis assumes three projects in production and a $70 per barrel oil price.