Oil prices put Alaska projects on ice

30 December 2014, News Wires – Low oil prices will force the US state of Alaska to suspend spending on several high-profile infrastructure projects, including a small-diameter gas pipeline from the North Slope, according to reports.

Alaska Governor Bill Walker said at the weekend that a variety of projects – including the pipeline, a couple of access roads, a bridge and a hydroelectric dam – would be put on hold pending a review, the Alaska Dispatch News reported. The Kodiak rocket launch complex was also put on ice.

Walker cited the hydrocarbon-rich state’s $3.5 billion budget deficit, exacerbated by recent declines in oil prices.

“The state’s fiscal situation demands a critical look and people should be prepared for several of these projects to be delayed and/or stopped,” Walker’s budget director Pat Pitney told the newspaper.

WTI oil was trading below $54 on Monday afternoon, flirting with a five-year low. Global crude has fallen by nearly 50% since July.

Walker’s administration will decide on project priorities sometime next month. The state’s legal budgeting deadline is 18 February.

The order directs each agency working on the projects to stop hiring new employees, signing new contracts and committing any new funding from other sources, including the federal government.

Oil taxes and royalties were expected to represent nearly 90% of Alaska’s unrestricted general fund revenue in 2014.

Proponents of the North Slope gas pipeline say the project will help advance development of a larger pipeline that the state is pursuing with big oil companies. Critics say the project is too expensive.

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