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
Fair and Competitive oil taxes are working
There is a resurgence in oil production and jobs in Alaska that is directly related to our current oil tax policy. SB 21, a fair and competitive tax policy, replaced the antiquated ACES tax structure that drove down petroleum investment for more than a decade. Thanks to SB 21, Alaskans have the greatest opportunity of our generation on the North Slope today.
Some present and former legislators argue that SB 21 was a mistake, but the facts speak for themselves.
The Willow and Pikka projects, years in the making, are in active development, with Pikka now expecting first production by the end of the year. These and other robust investments in Alaska’s future would not have occurred under the previous punitive tax regime. Between the Willow and Pikka projects alone, the oil and gas industry is spending over $10 billion in Alaska in the next few years, with each project generating 2,500 construction jobs and hundreds of operating jobs.
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It was a gray, overcast day at Prudhoe Bay as scores of field workers, dignitaries and journalists waited outside Pump Station 1, listening for the “clanker pig” that would signal Prudhoe Bay’s first crude oil was moving through the 48-inch, Trans Alaska Pipeline System on its 800-mile journey to Valdez.
It was June 20, 1977, 10 years after the discovery well at Prudhoe Bay, 48 years ago today.
It would take the oil more than a month to reach the Valdez Terminal, a journey plagued by an over-pressured relief valve that blew a hole through the roof of Gathering Station 1, excessive vibrations that caused temporary shutdowns and an explosion and fire at Pump Station 8 that killed one worker. The ARCO Juneau delivered that first oil to market.
An estimated 70,000 people worked on some aspect of what is still called an engineering marvel. The project took three years and two months to complete at a cost of $8 billion. It crosses three mountain ranges and 30 major rivers and streams, including a half-mile bridge over the Yukon.
Pipeline throughput peaked in 1988, averaging an astonishing 2,032,928 bpd. Today that number averages 482,495 bpd.
Prudhoe Bay and the Trans Alaska Pipeline System transformed Alaska. As legendary Anchorage Times publisher Bob Atwood wrote, “Prudhoe Bay created wealth so great that it would convert the State of Alaska from, perhaps, the nation’s poorest state in income, into a state not only rich but filthy rich.”
Happy anniversary, Trans Alaska Pipeline System!
A small joint venture plans to drill up to five exploration wells in a frontier area that once had Shell geologists “salivating over” it.
In a joint venture with EE Partners, Narwhale wants to explore an area offshore the National Petroleum Reserve-Alaska on acreage it acquired last year when Shell relinquished its last majority-owned properties in the state. Narwhal owns more than a dozen of its own leases in the bay that surround the area formerly leased by Shell. The leases are on a trend with the onshore Nanushuk formation that has proven to be a very successful oil exploration target, resulting in the development of the Pikka and Willow oil fields.
Petroleum News reports that Narwhal commits to several non-drilling initiatives in 2024 and 2025, including completing and filing critical path permits, evaluating drilling rig options, continuing the comprehensive geological and geophysical technical assessment for selecting a drilling location, conducting marine and shallow hazard surveys, reprocessing 3D seismic data for higher resolution imaging of shallow sediments, contract for field equipment and services, and commence mobilization of equipment and personnel related to winter 2025-26 drilling.
“In 2026, EE Partners commits to drilling two exploration wells to evaluate the Nanushuk formation. Pending ongoing analysis of geophysical data, one of the exploration wells may be drilled deeper to evaluate the Torok.
“Based on the results of these initial wells, EE Partners plans to complete two additional exploration wells in 2027, continuing the evaluation of the Nanushuk and possibly the Torok formation, acquiring additional 3D seismic as needed,” the publication said.
The deposit is north of ConocoPhillips’ Willow project and just to the west of Santos’ Pikka development. Shell, in correspondence with the Alaska Department of Natural Resources in 2020, said it had identified several potential oil and gas accumulations and prospects.
The National Marine Fisheries Service is currently taking comments on an incidental harassment authorization for the drilling program. The authorization would allow the minor disturbance of wildlife from exploration activities anticipated between August 2025 and July 2026.
Narwhal is a small, privately owned oil company whose majority stakeholder is a Texas-based family partnership. Its leaders include a former Shell employee who worked on the company’s West Harrison Bay development plans.
While job growth is flat across much of Alaska, the North Slope is booming.
Thanks to the Willow and Pikka projects, the oil and gas industry is fueling real economic momentum in the Arctic. These projects are creating thousands of jobs, supporting local contractors and strengthening Alaska’s long-term future.
That’s the conclusion of a new report from the Alaska Department of Labor and Workforce Development that shows job growth is up about 7% in the North Slope and Northwest Arctic region, while most other areas of the state are in the ballpark of 2% to -2%.
“Some of those jobs are in construction, some of them are in transportation,” says Dan Robinson, a researcher with the department. “So we can see the specific oil and gas jobs, but those projects are also driving some job growth in related industries.”
Robinson said that means contractors and other nearby businesses are getting a lift, too.
The Willow project is the largest of its kind to be developed on the North Slope in more than 20 years and is projected to produce 120,000 barrels of oil/day once it’s online in 2029. Santos is expected to begin production of its 80,000/bpd Pikka project late this year or early 2026.
Both ConocoPhillips and Santos prioritize hiring locally. According to Santos, about 80% of the workforce for the Pikka project was hired from within the state.
📸 : Oil Search Alaska
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.
Keep Alaska Competitive Coalition Board of Directors:
- Jim Jansen, Lynden, Inc.
- Joe Schierhorn, Northrim Bank
- Bill Corbus
- Aaron Schutt, Doyon, Lmtd.
- Dave Karp, Saltchuk
- Gary Dixon, Alaska Teamsters Union
- Vic Angoco, Matson
- Harry McDonald
- Jon Cook
- Elizabeth Stevens, Executive Director