About two weeks ago, something noteworthy happened in Alaska that flew under the radar for most Alaskans: Willow, a major, new North Slope development project, took another important step toward reality. Though the federal hearing on Willow did not garner headlines or huge crowds, it remains one of the most promising oil field prospects in Alaska today whose positive impacts will be felt for decades to come. Once developed, the Willow project would add an estimated 130,000 barrels per day into the trans-Alaska oil pipeline and bring billions of investment dollars to the state.
No one could have predicted the sudden and dramatic oil price plunge that began in 2014 and the unquestionable toll it took on Alaska over the past few years; thousands of jobs were lost, including more than 5,000 in Alaska’s oil and gas industry.
The miraculous thing? Alaska’s energy future still made measurable progress during this incredibly challenging period, and there’s been a wave of good economic news in Alaska recently, so we appreciate a chance to highlight something positive.
For the first time in decades, the amount of oil moving through the Alyeska pipeline stabilized. This is significant. Prior to 2014, production had been declining from 5% to 7% per year, a trend that was expected to continue. In response, Alaska overhauled its oil tax laws, voters upheld it, and, despite a few major changes to the law since then, companies got to work. Oil that had previously been too costly to pursue became more appealing, and producers squeezed more production out of old and new fields alike. Of course, more oil also means more tax revenues to the government, more cash deposits into the Alaska Permanent Fund and more economic activity.
More production is also important because of significant global demand. According to the American Petroleum Institute, worldwide consumption of oil has reached nearly 100 million barrels per day. With growing populations and billions in need of energy to raise living standards, demand is only expected to grow. Even under optimistic scenarios for renewable energy, data shows natural gas and oil will remain the largest energy sources for the next decades and beyond. With the North Slope recently reclassified as a “super basin” because of its massive oil reserves, Alaska can continue to play a vital role in helping provide a sustainable supply of energy to the world.
Fortunately, investors are getting the message. This past winter, the Alaska Department of Natural Resources said the exploration season on the North Slope was the busiest in 15 years. This is no surprise considering the billions of dollars being spent on new Alaska oil projects in the past few years. We now have a real chance to significantly grow Alaska’s oil production, a longtime goal of Alaska leaders and policymakers.
What else inspires optimism about Alaska’s oil future? ConocoPhillips Alaska has focused its exploration and investment efforts on the west side of the North Slope, with fields like Greater Moose’s Tooth 1 and 2, as well as the Willow discovery. ConocoPhillips has also acquired the Nuna acreage, a field with potential to produce an estimated 20,000 barrels of oil per day. Oil Search, an Australian company relatively new to Alaska, continues working to develop its massive new find at Pikka. Hilcorp recently added 7,000 barrels per day into the trans-Alaska oil pipeline by bringing online its new Moose Pad project, with plans for more development in the area, including continuing the permitting process at Liberty, a potential 60,000 barrel a day field. And with the prospect of Hilcorp focused on expanding the life of Prudhoe Bay, Alaska truly is on the verge of a renaissance.
Independent engineers and geologists from across the country are also taking a fresh look at the Slope, deploying new technology to identify new formations and reevaluating old ones. It’s an exciting time as we look to Alaska’s future, with the promise of expansion and growth in our oil and gas economy.
And all of this is before we even get to developing the Arctic National Wildlife Refuge, Alaska’s 40-year dream come true.
Even with all the recent good news, we need to be vigilant in keeping Alaska’s oil and gas business moving in a positive direction. Right now, Alaska ranks sixth in the nation in oil production — a sharp drop from 10 years ago when we were third behind Texas and North Dakota. Alaska’s oil patch is on a path that offers growth and prosperity in the future.
We understand the challenges facing the state; as neighbors, colleagues and friends, we feel them, too. But rest assured that Alaska’s thousands of oil and gas employees are rolling up their sleeves every day to keep fueling Alaska’s economy, just as they have for more than 60 years.
Kara Moriarty is president and CEO of the Alaska Oil and Gas Association