Regulatory and fiscal stability are key
to vibrant resource industry
It’s a new day on the North Slope despite the challenges that come with operating in the Arctic – high costs, harsh weather, supply chain issues, legal hurdles and struggles to find adequate financing.
For the first time in a long time North Slope production is projected to remain stable in the near term and increase in the late 2020s. This is excellent news for Alaska. Resource industries, particularly oil and gas, form the backbone of our economy. They are labor intensive, pay some of the best wages in the state and require continued capital investment to maintain or expand production levels. Production is key to jobs and revenue for Alaska.
We cannot control many of the challenges Arctic operations bring, but we can maintain stable tax policies that attract the capital needed to keep our resource industries healthy so they can produce jobs and revenues for Alaskans.
What’s at stake
$3.1B
State & Local Revenue
FY19
77,600
Alaskan Jobs Supported
Direct/Indirect
$549M
Grow the Permanent Fund
FY22 Dedicated Revenues to Corpus
$4.4B
Spending with Local Businesses
Annual
Source: “The Role of the Oil and Gas Industry in Alaska’s Economy,” January 2020, McKinley Research
Letter from the co-chairs
Dear KEEP Alaska Competitive Coalition Supporter,
Alaskans have good cause for celebration. The recently approved Willow project can reverse the last 10 years of population decline and outmigration, provide hundreds of jobs, dramatically increase Alaska’s oil production, fund state services for the next 40 years, provide permanence to the PFD and the Permanent Fund and revitalize Alaska’s economy. At peak production, this major oil project on the North Slope will increase oil production in Alaska by up to 180,000 barrels per day.
Last fall, Santos sanctioned over $2.6 billion to start phase one of the Pikka project, which will produce up to 80,000 barrels per day, giving us another reason to celebrate. This, combined with the Willow project, could mean up to 50% more oil flowing through the pipeline.
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Despite wicked winter weather – including several Phase 3 conditions, which are the worst of the worst – ConocoPhillips is making progress at Willow.
Field activities include opening the Willow mine site, gravel road construction and pipeline installation, said spokesperson Rebecca Boys.
Modules are being fabricated across the country.
“Willow will be built using materials primarily made and sourced in the U.S., and has the potential to create over 2,500 construction jobs and approximately 300 long-term jobs,” Boys said.
Located in the National Petroleum Reserve–Alaska, Willow consists of three drill sites, roads, pipelines and utilities and a processing plant.
Photo courtesy ConocoPhillips Alaska
Work is rapidly moving forward at Pikka.
In its first quarter report, Santos said Pikka is now 47% complete, compared to 37.4% as of Dec. 31. Rig operations were completed on seven wells in the quarter. Four wells have been stimulated with three successfully flowed back. “Flow back results compare favorably with pre-drill expectations,” the company reported.
More than 65% of the vertical support members for the pipeline are installed, and pipelaying was more than 61% complete. The seawater treatment plant stood at 62% completion.
"The Pikka project has made excellent progress over the winter months in Alaska and is on track for first production in 2026," said Santos Managing Director and Chief Executive Officer Kevin Gallagher.
Pikka is located to the west of Kuparuk.
It all started with Pikka. Then came Willow Stirrup, Mitquq and Coyote, fields currently in the early stages of development. They all found riches in what is called the Brookian sequence, a broad range of clastic rocks shed from the ancestral Brooks Range. In aggregate, these discoveries have projected resources in excess of 5 billion barrels.
Now, 70-90 miles to the east, Armstrong Oil & Gas, through its affiliate company Lagniappe, drilled three prospects this winter in its search for new Brookian oil. The three wells (King Street #1, Voodoo #1, Sockeye #1) each targeted large 3D-defined opportunities in an area south of Badami.
“The King Street #1 well was drilled to a total depth of 10,241 feet,” reports Petroleum News. “Hydrocarbons were found in two separate hydrocarbon zones at depths of 8,130 feet and 9,850 feet. Wireline evaluation, sidewall cores and MDT data from the well indicate pay in both lower and upper zones in high-quality late Cretaceous clastic reservoirs.” MDT stands for "modular formation dynamics tester" which analyzes the downhole fluids.
The Sockeye #1 well and the Voodoo #1 did not reach their targeted depths due to operational and weather-related challenges. Both wells were plugged as it was determined there would not be sufficient time to drill and evaluate prior to the end of the drilling season.
"Wildcatting is a challenging endeavor. The wells we drilled this year were located 70-90 miles east of older Brookian topset discoveries. Only two wells had ever been drilled on our 275,000-acre land position (one well/215 square miles)," Bill Armstrong, president of Armstrong Oil & Gas, said.
"Despite the lack of well control, our regional geologic studies indicated evidence for connectivity to a working petroleum system, and our objectives have potential for very favorable (porous and permeable) rock properties," he said. "Additionally, the seismic geometries of our prospects looked similar to older Brookian topset discoveries.”
Exploration partners APA Alaska LLC, an APA (Apache) Corp. affiliate company, and Oil Search (Alaska) LLC, a Santos affiliate company.
The mission of KEEP Alaska Competitive is to promote and preserve competitive, fair and stable taxes on Alaska’s resource industries to enhance investment, jobs and production to secure Alaska’s long term economic future.