Competitive Framework for Alaska: 2012
Old and New Production
HB 110 does not determine how to distinguish between new oil
and existing oil. It is proposed to use the following methods:
Decline curve method.
With the decline curve method Alaska would establish the
average production for each company in 2011. An exponential
decline curve would be established per company. For instance one
could use 6% per year for all companies for light production. Any
production over the decline curve per company would qualify as
"new".
The main advantage of the method is that is goes to the essence of
the problem in Alaska. It also strongly stimulates investment by
new companies. It is easy to administer. The main disadvantage is
that existing companies may be rather differently affected.
Therefore, this method needs to be complemented with other
options.
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