Regulatory and fiscal stability herald bright future for investment in Alaska
There is a renaissance underway on the North Slope driven primarily by two huge projects – Santos’ and Eni’s Pikka development and ConocoPhillips’ Willow. Together, these two, new oil fields will increase production to levels not seen in 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.
Let’s keep Alaska competitive!
What’s at stake
$4B
State & Local Revenue
FY25
70,425
Alaskan Jobs Supported
Direct/Indirect
$0.5B
Grow the Permanent Fund
FY22 Dedicated Revenues to Corpus
$5.8B
Spending with Local Businesses
Annual
Source: McKinley Research for AOGA
Stable tax policy leads to resource renaissance on the North Slope
Producing more oil is one part of keeping Alaska competitive. Finding ways to do it more efficiently matters, too.
Santos says its drilling program at Pikka is consistently beating established technical limits, reducing both the time and cost required to drill new wells.
That’s significant as Pikka ramps toward approximately 80,000 barrels per day.
Every improvement in drilling performance helps strengthen the economics of operating on Alaska’s North Slope, where projects must compete for investment against energy opportunities around the world.
Better technology, experienced crews and continually improving performance can help make Alaska resources more competitive while supporting continued production, jobs and throughput for TAPS.
Pikka is delivering new barrels today while its operators continue working to make tomorrow’s barrels more efficient to produce.
A single well. A $180 million investment. And the potential to roughly double production at Point Thomson.
Hilcorp Alaska is advancing the first new production well drilled at Point Thomson in roughly a decade, part of a major effort to increase output from the remote eastern North Slope field.
The new gas and condensate production well is expected to help increase Point Thomson’s liquid condensate production from roughly 4,000 barrels per day toward approximately 10,000 barrels per day.
Getting there is no simple task.
Doyon Drilling’s Rig 15 had to be barged to Point Thomson from the Nikaitchuq field. The remote field can be reached by air year-round, by sea during the summer and by a seasonal ice road — infrastructure and logistics that demonstrate the scale of investment required to produce energy on the North Slope.
Point Thomson is also one of Alaska’s largest known natural gas resources. Because there is no North Slope gas pipeline today, produced gas is reinjected underground while liquid condensate is transported to market.
Major investment in existing fields can unlock new production, extend the value of Alaska’s infrastructure and put additional barrels into TAPS.
PHOTO CREDIT: Exxon Mobil
A piece of TAPS history is coming down.
Nearly 50 years after the Trans Alaska Pipeline System began carrying North Slope oil, Alyeska Pipeline Service Company is dismantling much of the original Pump Station 8 complex south of Fairbanks.
Pump Station 8 received its first oil on July 7, 1977. The next day, tragedy struck when an explosion and fire destroyed the pump building and killed one worker.
The station was rebuilt and returned to service in March 1978. By the time its main pumping operations ended in June 1996, TAPS had transported its 11 billionth barrel of oil and more than 14,000 tankers had been loaded in Valdez.
Parts of Pump Station 8 continued serving TAPS in the decades that followed, and some essential infrastructure will remain even as much of the original complex is removed.
It’s a reminder of how much Alaska’s energy infrastructure has changed since 1977, and of the generations of people who built, operated, maintained and continually improved the 800-mile pipeline that connects the North Slope to the world.
Nearly five decades later, TAPS remains one of the most important pieces of infrastructure in Alaska.
READ MORE: alyeska-pipe.com/retiring-taps-history-at-pump-station-8/
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 any day now. 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, with each project generating thousands of construction jobs and hundreds of operating jobs.
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