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’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.
Sometime around 1 a.m. on September 17, the 19 billionth barrel of oil entered the Trans Alaska Pipeline System headed to Valdez.
“An often-referenced quote from the TAPS construction era goes, ‘They didn’t know it couldn’t be done.’ In that spirit, this once-implausible milestone for TAPS was made reality by the proud pipeline people at Alyeska Pipeline and our contractors who operate TAPS safely and reliably,” said John Kurz, Alyeska’s President & CEO.
“This moment also honors countless individuals and organizations that continue adding to the iconic infrastructure’s legacy, as well as Alaska’s residents and leaders and the state’s hardworking oil and gas industry.”
It took three years and two months to construct the 48” diameter, 800-mile-long pipeline and all its pump stations, roads and terminal. At peak construction, there were more than 28,000 contractors and employees working on the project – designing and building the pipeline over mountain ranges, rivers, permafrost and major earthquake fault lines.
TAPS cost approximately $8 billion for the entire system, including Valdez Marine Terminal and pump stations. That’s about $42.8 billion in today’s dollars.
Learn more about TAPS historic throughput at alyeska-pipe.com/historic-throughput/ and TAPS history at alyeska-pipe.com/taps-facts/.
Photo from Alyeska Pipeline Service 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.
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