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
There are no small numbers on the North Slope where it can cost billions to produce that first barrel of oil.
Alaska state forecasters are predicting lower oil production in the state’s current budget year but an in-
crease next year following the start of the new Pikka oil field in early 2026, according to a long-range production forecast included in the state’s annual revenue forecast released in December.
Pikka is expected to see a buildup to its expected peak of 80,000 barrels per day in its first phase of output by mid- 2026. Additional increases will come when Pikka moves into a second phase of development and after ConocoPhillips starts up its Willow field, now under construction, in 2029.
“From FY 2027 through FY 2034, oil production is expected to increase each year as production from new fields under development and from new drilling on existing fields significantly exceeds projected declines from existing wells,” Tim Bradner writes in the winter edition of “The Link.”
State forecasters also pay close attention to trends in industry spending and transportation costs as these affect revenues. “That’s because Alaska’s income is partly under its net-profits type state production tax, where many expenses are allowed as deductions, as well as royalty income, where pipeline and tanker transportation costs from the North Slope can be deducted,” he said.
As expected, the development of new fields is resulting in rising capital expenditures by companies on the North Slope and these are expected to remain.
“In FY 2025, allowable oil and gas lease expenditures (which can be deducted) amounted to an estimated $9.2 billion statewide, including $8.7 billion of spending on the North Slope. Allowable lease expenditures are expected to decrease in FY 2026 to $8.8 billion statewide, including $8.2 billion of spending on the North Slope,” forecasters noted.
However, industry spending is expected, both statewide and for the North Slope, to remain above $7 billion per year for the remainder of the forecast period,” or through FY 2027, forecasters said.
“These high lease expenditures reflect continued high levels of activity on the North Slope led by major
investments in new developments,” forecasters noted. “Additionally, oil field costs continue to see significant inflation globally, while high levels of North Slope activity have further increased competition for service providers and Alaska remains a remote, high-cost jurisdiction.”
Transportation costs, which include oil transit costs on the Trans Alaska Pipeline System and in tanker sailing from the Valdez Marine Terminal in south Alaska mainly to refineries in the U.S. Pacific Northwest, are expected to remain generally stable. “In FY 2025, transportation costs for North Slope oil averaged $10.55 per barrel; they are expected to average $10.58 in FY 2026 and $10.07 in FY 2027,” forecasters said.
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There’s a whirlwind of activity underway on the North Slope.
The Alaska Department of Natural Resources’ Division recently released a new map showing active projects that stretch from Umiat to Narwhal, Willow to Point Thomson.
Here’s a summary of the major projects:
- ConocoPhillips Alaska proposes to construct new 15-acre drill-site CD8 that targets the Narwhal (Nanushuk) reservoir. Supporting infrastructure will be built and tied to the existing facilities at CD4 and the Alpine Central Facility. The U.S. Corps of Engineers is preparing an EIS for the project, with a draft EIS expected to be published in fall 2026.
- Oil Search Alaska (Santos company) planning to drill the Quokka-1 appraisal well, completion by Q2 2026.
- ConocoPhillips Alaska continues development of the Torok and Coyote participating areas at Kuparuk from the 3S and 3T pads.
- Hilcorp Alaska plans to lay down gravel for O pad, a potential new drill site in the PBU Western Satellites Participating Area in 2026. Final investment decision is targeted for 2026.
- Harvest Alaska LNG began plant operations last Oct. 9, producing LNG for delivery by road tanker to Fairbanks-based Interior Gas Utility.
- Lagniappe Alaska plans to drill appraisal wells and wildcats around Sockeye-2 in early 2027.
- Great Bear Pantheon completed fracture stimulation operations at the Dubhe-1 exploration well horizontally through 5,200 feet of SMD-B target reservoir. Flow testing is paused and scheduled to resume in Spring 2026.
- Hilcorp Alaska is drilling a gas and condensate production well at a new Point Thomson drill site in 2026. This well is expected to increase Point Thomson production to near 10,000 BPD.
- Santos/Oil Search has finished construction of 120 miles of pipeline, secured processing modules and the seawater treatment plant to the site and completed more than 20 wells as part of Pikka Phase 1. First oil is scheduled for Q1 2026.
And, there’s more. You can download the map here:
dog.dnr.alaska.gov/Document/Download/D13A72E9B6D941D3ACAC3FF0F4F12CA3/North%20Slope%20Activity%20....
There were plenty of smiles Wednesday when the Interior Department’s Bureau of Land Management finished its largest lease sale to date in the National Petroleum Reserve-Alaska (NPR-A).
Kevin Pendergast, state director for the Bureau of Land Management in Alaska, called the sale “historic” after receiving 430 bids on 1,334,967 acres. The sale raised a record $163 million in revenue, 50% of which will go to the state.
“This is the strongest sale we have ever had in the National Petroleum Reserve-Alaska by nearly every measure,” he said. “It makes clear that for the NPR-A, despite all the successes to date, the best days are still ahead.”
More than 10 companies participated, including ConocoPhillips Alaska, a team that included Repsol and Shell Frontier Oil and Gas (a subsidiary of Shell), ExxonMobil Alaska and Oil Search (Santos). One of the most active bidders was North Slope Exploration LLC, a company associated with Colorado-based independent oilman Bill Armstrong of Armstrong Energy LLC., considered one of the world’s most successful wildcatters who discovered the Pikka field.
Here are some highlights of the day:
- BLM called it historic — the best day yet for NPR-A
- Repsol/Shell Frontier spent the most — $62.5 million
- ConocoPhillips Alaska very active bidder, picked up 30 new tracts
- Most active bidder was North Slope Exploration
- Most surprising bidder Hex Cook Inlet
- ExxonMobil Alaska also bid often and won 20 tracts
- High bid of the day was $3,649,920 and won 20 tracts
- High bid of the day was $3,649,920
You can read more here: www.adn.com/businesseconomy/energy/2026/03/18/national-petroleum-reserve-alaska-oil-lease-sale-ra....
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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