The law, which was ushered in by Governor Sean Parnell, is worth as much as $1 billion a year cumulatively to producers like ConocoPhillips, BP and ExxonMobil, Reuters reported.
Should voters repeal the law, the state would revert to the system implemented by Parnell’s old boss Sarah Palin, whose signature legislation as governor in 2007 raised taxes on oil producers.
Political analysts say the vote could be the most significant policy decision in Alaska since the northern US territory became a state.
The current tax regime levies a consisten 35% tax rate on production profits. The old regime, championed by then-governor Palin, levies a progressive tax rate of between 25% and 75%, depending on net per-barrel profits.
Supporters of the tax break say it will help reverse a long-term slide in oil output from Alaska, which trails production from Texas and North Dakota.
Ads and editorials about the issue are flooding the airwaves, websites and newspapers daily. And industry-backed groups are reportedly outspending the repeal group by 100-to-1, according to campaign records.
The law removes a surcharge on production levied when market prices climb.
Those who support the existing tax system say it will spur investment and that it has already started to encourage new drilling.
Repeal supporters call the More Alaska Production Act a “giveaway”. They say oil companies will harvest profits made in Alaska and invest in other parts of the world.
They insist Parnell’s legislation will not address the decline. The state’s own forecasts preditc a drop from 536,000 barrels per day in fiscal year 2014 to 321,000 bpd in 2023.
“Are we really going to be suckered again by Big Oil and some of the crony capitalists with their hands in all this?” Palin said in a video on her website.
The debate aligns Palin, a tea-party darling who has been removed from state politics since she resigned as governor in 2009, with many state Democrats who support the repeal. Meanwhile, Democratic senator Mark Begich has declined to take a position on the matter, angering many in his party.
In their recent quarterly earnings review with analysts, ConocoPhillips and BP addressed the upcoming vote and their take on the law Parnell signed last year, which took effect 1 January.
“We believe it’s important for continued oil and gas development in Alaska, where we have identified and are actively developing opportunities for growth,” ConocoPhillips’ Matt Fox, executive vice president for exploration and production, told analysts on 31 July.
In a separate call with analysts, Bob Dudley, BP’s chief executive, mentioned the new oil legislation, saying: “We’re investing more and speeding up some of the work that we have been doing in Prudhoe Bay.”
Any repeal might not last long. Lawmakers said they expect a repeal would simply force them back to the drawing board for another revision.