Borough sees jump in oil property values

The values of some oil and gas properties in the Kenai Peninsula Borough jumped in the most recent state assessment, producing about $1.1 million more for the borough in property taxes.

Much of that increase comes from the Nikiski area, where the tax values for the year increased by approximately $559,991, according to the borough’s fiscal year 2017 budget.

The increase allowed for a mill rate decrease for residents of Nikiski from 2.90 to 2.80 for the next year. The borough assembly approved the new mill rate at its June 7 meeting.

Another portion of the increase comes from the Anchor Point Fire and Emergency Medical Service Area, which surrounds the unincorporated community of Anchor Point and reaches into Cook Inlet to include the Cosmopolitan development, where BlueCrest Energy is drilling for oil. The projected tax collection for oil and gas in the area is expected to increase by about $129,852, according to the budget.

The state taxes oil and gas properties at a flat 20 mills. When the property’s value increases, so does the amount paid. The state Department of Revenue assesses the properties annually, said State Petroleum Property Assessor Jim Greeley.

The increase comes from additional investment in the area, stemming from Furie Operating Alaska’s Kitchen Lights Unit northwest of Nikiski and BlueCrest’s Cosmopolitan development. The Kenai Peninsula has seen about a decade of increases in oil and gas property value, he said.

“There’s been about a 10-year trend of increase in (oil and gas property) values on the Kenai,” Greeley said. “Statewide, I would characterize them as stable.”

The state collected more than $125 million in oil and gas property taxes in fiscal year 2015, according to the Department of Revenue’s annual Oil and Gas Property Tax report. That is slightly less than in fiscal year 2014, when the state collected a little more than $128 million, but more than the approximately $99.2 million it collected in fiscal year 2013.

The infrastructure investments by Furie and BlueCrest are the main driving forces in the increase, Greeley said. Oilfield service companies’ properties are included in the oil and gas assessments, he said.

Though the Alaska LNG Project has been in the process of purchasing about 600 acres of land in the Nikiski area, it would not have an effect on the property tax values. The land is not being used for oil and gas purposes at present, said Larry Persily, the special assistant on oil and gas to Borough Mayor Mike Navarre.

“Right now, it’s just undeveloped land that happens to be owned by an oil and gas venture, but it’s not oil and gas property,” Persily said. “It’s only oil and gas property if it’s used in production, exploration or pipeline.”

The Alaska LNG Project will likely not materialize for a number of years — the project team is still completing its resource reports and preparing its Environmental Impact Statement to submit to the Federal Energy Regulatory Commission, which will then take some time to review the application. Workers will be conducting water tests, borehole drilling and marine work in the Nikiski area this summer, and the project will contract with demolition crews to remove 20 structures on the land the project has acquired so far, according to an emailed update from Josselyn O’Connor, the community stakeholder advisor for the project.

Though the project managers are also looking at moving the Kenai Spur Highway to allow for the approximately 800-acre facility to be built, there is no planned work on the highway relocation for the summer, according to the email.

 

Reach Elizabeth Earl at elizabeth.earl@peninsulaclarion.com.

More in News

From left, Rep. Andi Story, D-Juneau, hugs Rep. Stanley Wright, R-Anchorage, after House passage of sweeping education legislation while Rep. Maxine Dibert, D-Fairbanks, watches on Thursday, Feb. 22, 2024, in Juneau, Alaska. (Ashlyn O’Hara/Peninsula Clarion)
House passes BSA increase, with other education provisions

The bill now goes back to the Senate, where lawmakers must approve the bill as-is before it can head to the governor’s desk

Rep. Justin Ruffridge speaks about
House considers, rejects multiple school funding amendments during Wednesday floor debate

Over several hours, lawmakers considered six different increases in the Base Student Allocation to public schools

U.S. Sen. Dan Sullivan addresses members of the Alaska Legislature in the House chambers on Wednesday, Feb. 21, 2024, in Juneau, Alaska. (Mark Sabbatini/Juneau Empire)
Dismissing critics, Sullivan touts LNG project

During his annual address to the Alaska Legislature on Wednesday, the U.S. senator said state leaders should be doing everything they can to make the project successful

From left, Sen. Jesse Bjorkman, R-Nikiski, east side setnetter Ken Coleman and Konrad Jackson present information about a bill establishing a voluntary buyback program for east side setnet fishery permits during a Senate Finance Committee meeting on Monday, Feb. 19, 2024, in Juneau, Alaska. (Ashlyn O’Hara/Peninsula Clarion)
Senate committee hears setnet buyback bill

The East Side of Cook Inlet Set Net Fleet Reduction Act is sponsored by Nikiski Sen. Jesse Bjorkman

Rep. Justin Ruffridge, R-Soldotna, speaks in support of debating an omnibus education bill in the Alaska House Chambers on Monday, Feb. 19, 2024 in Juneau, Alaska. (Ashlyn O’Hara/Peninsula Clarion)
Tie vote kills early House debate on education funding

Lawmakers went into an hourslong recess that ended with adjournment until Tuesday morning

Mock-up illustration of in-development Kahtnu Area Transit Bus (Image courtesy Kenaitze Indian Tribe)
Kenaitze purchase Kenai’s former Kendall Ford building for transportation hub

Hetl Qenq’a will also serve as a hub for the upcoming Kahtnu Area Transit, a fixed route public bus service

Peninsula Clarion government and education reporter Ashlyn O’Hara stands in the hallways of the Alaska State Capitol in Juneau on Monday. (Ashlyn O’Hara/Peninsula Clarion)
Clarion reporter working in Juneau for legislative exchange

Reporter Ashlyn O’Hara will be covering statewide issues with a local lens

Voters fill out their ballots at the Challenger Learning Center in Kenai, Alaska on Election Day, Nov. 8, 2022. (Jake Dye/Peninsula Clarion)
Bjorkman leads local campaign finance pack, reports show

The reports, due Feb. 15 for candidates running for state office in 2024, offer a glimpse at the position from which candidates will start this election year

Most Read