In sum, payments to settle litigation have increased Alaska's oil revenues by more than ten per cent since the Prudhoe Bay field entered production in 1977. Nor do these figures include amounts the government of the United States has secured for underpayment of federal income taxes. One example of the kind of accounting problems that need to be considered is the calculation of the costs for abandonment and removal of oil rigs. Those charges are legitimately included in investment costs, which investors are legitimately allowed to recover. But unlike drilling expenses or most other operating costs, actual outlays for abandonment will not occur until a future date.
Accounting is therefore tricky.
On one hand, full allowance for abandonment costs is necessary for environmental protection. According to that report, Russian abandonment costs were the highest in the world. If major onshore facilities are built, Sakhalin and the Russian Federation will need to pay careful attention to the accounting for pipeline costs. The State of Alaska has had to invest millions of dollars to litigate pipeline disputes. When the Sakhalin II is viewed from a global perspective, it becomes clear that development beyond the relatively modest oil production scheduled from Molikpaq is uncertain - and that Molikpaq alone is unlikely to produce great oil riches.