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. 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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Veteran reporter Tim Bradner reports on two independents, Narwhal LLC and EE Partners, gearing up for a 2026 drilling project to test the promising Nanushuk and possibly Torok formations. With $6.8 million invested so far, they hold 77,848 acres of state leases near the productive Pikka project and believe untapped potential lies offshore.
According to an application to the Alaska Department of Natural Resources, “Narwhal confirmed that the Narwhal Leases and EE Partners Leases collectively contain sufficient potential reserves to justify the high estimated development and infrastructure costs of more than $8 billion for the success case of a commercial discovery…”
The project highlights Alaska’s growing appeal for energy investments. Planned for 2025 are rig evaluations, equipment procurement and seismic data reprocessing.
Pantheon Resources is making strides in Alaska. The company is pushing forward with its Megrez 1 exploration well near the Dalton Highway.
According to Tim Bradner’s Alaska Economic Report, “Pantheon has contracted a Nabors Alaska drill rig for the work. Pantheon built a gravel pad in October near the Dalton to support the drilling. The pad can be used year-round.”
Pantheon Resources says Alaska’s North Slope is “regarded as a ‘Super Basin,’ which is experiencing an exploration and development revival. Pantheon and its wholly owned subsidiary, Great Bear Petroleum, has been operating in Alaska for over a decade where over $350 million has been invested in building and appraising its portfolio and in 3D seismic.”
With innovative drilling techniques and careful resource evaluations, Pantheon is growing the energy potential in Alaska’s North Slope. Stay tuned for updates as they move closer to development decisions.
The ink was barely dry on the U.S. Interior Department’s signature last summer on restrictive new rules for the National Petroleum Reserve-Alaska when the department began planning for expanded “protective areas,” according to the new issue of Alaska Resource Review.
These potentially more restrictive rules impose real costs on Alaskans and the petroleum industry.
“ConocoPhillips, for example, would like to explore potential new Willow discoveries on leases it holds in the NPR-A. Santos Ltd. is concerned that its exploration of leases it holds could cover an extension of the new Horseshoe discovery from state-owned land into the petroleum reserve. Explorer Bill Armstrong, who heads Armstrong Oil and Gas, would like to drill on leases his company holds in the NPR-A, and where he believes a new Pikka or Willow discovery might be made,” the story says.
“Armstrong must be taken seriously because his company led the exploration that led to the Pikka find along with other North Slope discoveries.”
Alaskans were quick to react and jump into the fray.
“This undermines the intent of Congress, which has long designated the NPR-A as a critical area for oil and gas production to support Alaska’s economy and the nation’s energy security,” AOGA CEO Kara Moriarty wrote in a letter to the BLM.
“BLM’s actions are simply not a reasonable interpretation of federal law, let alone the best interpretation of federal law,” wrote Alaska’s Congressional delegation.
More on this developing story here. rdc.memberclicks.net/assets/Resource-Reviews/2024RRFall/Resource%20Review%20Fall%202024%20final%2...
Photo from Bureau of Land Management
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.