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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Scale and innovation are essential to staying competitive in the oil and gas industry, particularly in unconventional plays, according to ConocoPhillips CEO Ryan Lance.
In a wide-ranging interview with "Energy Intelligence", which named him Energy Executive of the year, Lance said unconventional plays have revolutionized the industry, including Alaska. “You watch what technology has done,” he said, and now “we’re going back to build a big project in the Arctic after being there for 50 years, discovering Prudhoe Bay back in 1968."
Lance said ConocoPhillips has more than “20 billion barrels of captured resource that has a cost of supply of less than $40 WTI (West Texas Intermediate, a U.S. oil benchmark),” much of it in Alaska.
“Specific to Alaska, it's no secret that we've gone out to the Department of Interior, to the BLM (Bureau of Land Management) to try and permit exploration wells this year out in the NPR-A (National Petroleum Reserve-Alaska) because we'd like to go back to work — something we weren't allowed pretty much to go do over the previous administration's term. So, we're excited about the opportunity, and we're working hand in glove with the regulators to make it so that we can continue to explore and eventually develop, if we have success.
“There's a lot going on around Prudhoe Bay, around Kuparuk and around what we call our western North Slope area, Alpine. We're continuing to find great opportunities: They're called Coyote, Nuna, Narwhal, Minke. We've seen a new exploration system develop on the North Slope — and again, here's a 50-year-old basin where we're finding new deposits of crude oil that's a different petroleum system than what charged Prudhoe Bay and Kuparak. So that's what's exciting about it, and that's why we're leaning into some of those opportunities, because we have a current administration that is supportive rather than the last administration that was trying to shut it down.”
You can read the entire interview here. www.energyintel.com/00000199-5e31-d2c3-a1fd-7f33c3e80000
It’s a Golden Anniversary year for the Resource Development Council.
One of Alaska’s premier industry advocates, the Resource Development Council for Alaska (RDC) was founded in 1975 as the Organization for Management of Alaska’s Resources (OMAR). Its first major goal: to rally support for securing the right-of-way for the Trans-Alaska Pipeline System (TAPS).
After the pipeline’s successful completion, the organization rebranded as RDC and broadened its mission to champion education and advocacy for all of Alaska’s resource industries. Over the past five decades, RDC has played a pivotal role in advocating for responsible resource development in Alaska, ensuring that the state’s natural resources are utilized to foster economic growth, create jobs and improve the quality of life for all Alaskans.
RDC has been a steadfast champion for Alaska’s diverse industries, including oil and gas, mining, forestry, fisheries and tourism, working to ensure that resource development occurs in a manner that is environmentally sustainable and socially responsible. Through its collaboration with local, state and federal governments, as well as private industry, RDC has helped educate policymakers on resource and economic development issues to position Alaska as a leader in responsible resource management, environmental stewardship and economic development.
Happy Anniversary RDC – and may your next 50 be just as golden!
The oil industry’s investment in the North Slope is reaching for a new record, according to a recently released report.
Alaska can expect $22 billion in planned oil and gas industry investment between 2025 and 2030, according to a petroleum economics study by Anchorage-based McKinley Research. The work was commissioned by the Alaska Oil and Gas Association and presented at the association’s annual conference held recently.
“The total includes the new oil fields now under construction by Santos, Ltd. and Repsol, the Pikka field, and ConocoPhillips at Willow. It includes new projects in producing fields on the North Slope owned and operated by Hilcorp Energy, and new projects in the Kuparuk River and Alpine fields by ConocoPhillips,” Tim Bradner writes in his latest issue of the Alaska Economic Report. “The McKinley Research analysis doesn’t break down planned investments by companies or fields but it does indicate a fairly steady pace of new investment of approximately $4 billion a year from 2025 to 2030.”
Not included in the McKinley Research work are annual capital spending, including $750 million Hilcorp told state legislators earlier this year and about $1 billion ConocoPhillips has said it will spend in projects in addition to its large investment in Willow.
Here are some more numbers from the McKinley report.
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