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Oil Production Tied to Spill Prevention Division's Declining Revenue

Published On: Feb 13 2014 04:05:00 PM AKST   Updated On: Feb 14 2014 04:00:00 PM AKST
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The director of the state's Division of Spill Prevention and Response says a non-emergency account for cleanup of contaminated sites and other activities will soon need state funding to get by.

Kristin Ryan told a House subcommittee current projections indicate the prevention account won't have enough money to keep up with costs starting in fiscal year 2016.

“It's all tied to our surcharge of 4 cents which we receive per barrel of oil and with the production of oil down to around 500 thousand barrels," Ryan said in an interview with Channel 2 News. "It's not enough to generate the revenue we need to sustain our work."

Money from fines, penalties and settlements also go into the fund. Annual general fund appropriations ranging from $6.6 million to $8.3 million are projected to be needed from 2016 to 2022. Ryan says the surcharge has not kept up with inflation over the years and a possible surcharge on refined products would generate more revenue.

“The administration believes oil production will increase in the future, and this is probably a temporary problem," Ryan said. "So the focus has been on from our perspective having to use general funds to offset that decline until it increases.”

The Department of Environmental Conservation said oil production would have to top 1 million barrels a day for the current surcharge to generate enough money to cover continuing costs.

The Division of Spill Prevention and Response says it responds to 2,000 spills every year.

Channel 2 reporter Dan Carpenter contributed to this story.