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
“Hilcorp is doing what it does best on the North Slope, investing aggressively and applying new technologies in mature oil and gas fields to boost production, in this case 48-year-old Prudhoe Bay,” writes veteran reporter Tim Bradner in the latest issue of Alaska Resource Review.
Hilcorp is taking lessons learned from Milne Point and applying them to the west end of Prudhoe, said Daniel Donovan, Hilcorp’s Western North Slope Asset Team Leader. Hilcorp calls the project “Taiga”, and it includes the development of two new pads targeted to develop the area’s huge viscous oil deposits, Donovan said.
Phase one — projected to deliver peak production of 25,000 barrels per day — centers on construction of the new “Omega Pad” drill site and 51 development wells, with first oil expected in 2028, Donovan said. A second phase would add “I-Pad,” at a nearby site, potentially bringing on an additional 15,000 barrels per day in the early 2030s.
“A substantial part of the reservoir to be tapped in the Prudhoe west end project is viscous oil similar to that in the Schrader Bluff viscous oil at Milne Point. Viscous oil is cooler than conventional crude oil mainly because it is typically found at shallower depths than the large conventional oil reservoirs on the North Slope, which are deeper and at warmer temperatures so that the oil flows more easily,” Bradner writes.
Since Hilcorp took over Milne, it has invested $2.5 billion over the past five years, built two new pads – Moose and Raven – and introduced a new polymer flood. The results have been phenomenal: production jumped from 17,000 barrels/day to more than 50,000, with the potential of 60,000 in the next few years. May the same approach work as well at Prudhoe.
Here’s the rest of the story. online.flippingbook.com/view/696133712/16-17/
“Oil has long been the backbone of Alaska’s economy, providing substantial revenue, jobs and energy security,“ writes Scott Habberstad, Resource Development Council President, in the latest issue of Alaska Resource Review.
“The sector continues to innovate, with companies exploring innovative technologies and strategies to maximize efficiency and reduce environmental impact. …The current administration has articulated a sharp vision for responsible resource development — one that prioritizes economic opportunity and equitable benefit sharing. Across all five pillars – oil and gas, timber, mining, fishing and tourism – policies are being shaped to encourage innovation, support local communities and uphold the highest standards of safety. This approach recognizes that Alaska’s resources must be managed to benefit Alaskan’s today, and in perpetuity.”
In the case of oil, that future begins right now with Pikka and tomorrow with Willow.
Pikka phase 1 is almost here. In its Jan. 21 first quarter report, Santos says its North Slope Pikka phase 1 is “98% complete and nearing mechanical completion, with commissioning progressing,” according to a bulletin from Petroleum News.
“Twenty-four wells were drilled and completed at the end of the fourth quarter. The 23rd well achieved the highest productivity to date, producing at an initial rate of approximately 8,000 barrels of oil per day. The 24th well was the second combination well, developing two reservoir sections from the one well,” the publication said.
Capital expenditure for phase 1 has increased by approximately $200 million, primarily due to “inflationary pressure on labor and materials across the North Slope, tariffs on production modules for the sea water treatment plant and logistics costs relating to the MacKenzie River transit.”
The project remains on track for first oil late in the first quarter of 2026, with ramp up to a plateau of 80,000 bopd expected around the middle of the year.
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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