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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Pikka has moved ever closer to the finish line.
Pikka’s phase 1 is more than 95% complete, according to Bradner’s Economic Report. Twenty-two development wells had been drilled and completed at the end of the third quarter, including the longest well in the project to date. At nearly 27,000 feet, much of it horizontal, the well is not only a company record for Santos, it is one of the longest wells drilled on the North Slope in terms of total length, combining vertical and horizontal sections, Bradner said.
All 120 miles of Pikka’s pipelines are “cleaned, gauged, tested and ready for service.” The seawater treatment plant and remaining processing modules, moved by barge from the Hay River Marine Terminal in Canada, arrived in August.
“Pikka remains on track to meet its accelerated production oil in the first quarter of 2026, ramping up to a plateau of 80,000 barrels per day expected in mid-2026. This will provide a nice bump of production, and state revenue, in the final quarter of the state Fiscal Year 2026. Phase one full production of 80,000 b/d will substantially increase FY 2027 production revenues to the state,” Bradner writes.
An exploration well in Santos’ and Repsol’s Quokka unit south of Pikka is planned for this winter using the Nordic 2 rig. Quokka is seen as a possible second Pikka field.
📷 : Santos' Pikka project
There is a renaissance underway on the North Slope, driven primarily by two huge projects – Santos’ and Repsol’s Pikka development and ConocoPhillips’ Willow. Together, these two new oil fields will increase production to levels not seen in two decades.
Despite the challenges that come with operating in the Arctic – high costs, harsh weather, supply chain issues, legal hurdles and fluctuating oil prices – 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.
“By 2034, more than 60% of North Slope production will come from fields that, today, have yet to put a single drop into the Trans Alaska Pipeline System,” the study found.
We cannot control many of the challenges Arctic operations bring, but we can maintain fair and stable tax policies that attract the capital needed to keep our resource industries healthy so they can produce jobs and revenues for Alaskans. Together, we can keep Alaska competitive!
📷 : Alyeska Pipeline Service Company
Fifty-two years ago, President Richard Nixon signed the Trans Alaska Pipeline Authorization Act, a pen stroke that left an indelible mark on a state just 14 years old.
The act authorized the building of an oil pipeline connecting the North Slope to Port Valdez, and specifically halted all legal challenges, including ones filed by environmental activists. And, as the President had requested, federal and state agencies were not allowed to regulate the pipeline’s construction.
The act was supported by Alaska's congressional delegation – Don Young, Ted Stevens and Mike Gravel – but it was Washington Senator Henry M. Jackson who actually introduced it because the Alaska legislators were all too junior.
The first pipe was laid on March 27, 1975, at the Tonsina River, marking the second significant milestone in the pipeline's construction, which had officially begun the previous year with the construction of a road from Prudhoe Bay to the Yukon River.
Since TAPS startup on June 20, 1977, the pipeline has delivered 19 billion barrels of oil to Valdez and generated an estimated $180 billion in revenue to the State of 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