Alaska's New Oil Tax Faces Repeal Vote During State Primary

JUNEAU, Aug 12 (Reuters) - Alaskans will vote on Aug. 19 to repeal or uphold a new law that cut taxes on oil production and is worth as much as $1 billion annually to North Slope producers Conoco Phillips, BP Plc and Exxon Mobil Corp , depending on oil prices.

Should voters repeal the eight-month old law ushered in by Gov. Sean Parnell, the state would revert to the system implemented by Parnell's old boss Sarah Palin, whose signature legislation in 2007 raised taxes.

The debate is highly charged. 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 outspending the repeal group by a large margin, according to campaign records.

Those who support the new tax system, which removes a surcharge levied when market prices climb, say it will spur investment and that it has already started to encourage new drilling.

Repeal supporters call Parnell's More Alaska Production Act a "giveaway," fearing the oil companies will harvest profits made in Alaska and invest in other parts of the world. They insist Parnell's legislation won't address the decline, citing the state's own forecasts, which call for a drop from 536,000 barrels per day in fiscal year 2014 to 321,000 per day in fiscal year 2023.

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 Jan. 1.

"We believe it's important for continued oil and gas development in Alaska, where we have identified and are actively developing opportunities for growth," Conoco's Matt Fox, executive vice president for exploration and production, told analysts on July 31.

In a separate call with analysts, Bob Dudley, BP's Group Chief Executive, mentioned the new oil legislation during his July 29 review of the company's Alaska operations.

"We're investing more and speeding up some of the work that we have been doing in Prudhoe Bay," he said.

Any repeal might not last long. Lawmakers said they expect a repeal would simply force them back to the drawing board for another revision.

(Editing By Terry Wade and Jonathan Oatis)