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 Hilcorp does best - busy breathing new life into old fields.
It more than doubled production at Milne Point, growing it from 19,000 barrels of per day to 51,000 in January - and now has its eye on 60,000.
State Oil and Gas Director Derek Nottingham told a legislative committee that it is "highly unusual to see an operator completely restoring production," in a mature field.
To the east, Hilcorp is drilling the first new well at Point Thomson since 2016.
The company plans to spend $175 million at Nikaitchuq , which Hilcorp calls its Oliktok Point project, to drill 13 new wells and install a polymer injection facility. It is expected to add 9,000 barrels per day of new production in first quarter 2026, writes Tim Bradner in The Link.
At Prudhoe Bay, the company has significantly slowed the decline and now has a new project underway there.
"The new Prudhoe Bay west end development, which Hilcorp calls its Project Taiga, involves two new production pads, O-Pad and I-pad, with front-end engineering currently underway. One pad will be in production in 2028 and the other in 2040, adding 40,000 barrels per day of new production. The expected investment by the Prudhoe Bay field owners is $2 billion. As at Oliktok, the west end development will target Schrader Bluff viscous oil resources," Bradner writes.
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As Alyeska Pipeline Service Co. gets ready to celebrate the 50th year of operation for the Trans Alaska Pipeline System, the company shares some thoughts on how TAPS has transformed Alaska.
"It's hard to imagine Alaska without TAPS. For more than 50 years, the pipeline has provided jobs, revenue, growth and stability for Alaska communities, as well as opportunities for Alaskans.
"The absence of TAPS and Alaska's oil and gas industry would create gaps that no single industry, or frankly numerous industries, could ever fill. Without it, Alaska would face a far leaner economy, fewer opportunities and greater uncertainty about its future.
"Our vision is for TAPS 100 - another 50 years of operations. There's real momentum on the North Slope right now that will increase throughput for TAPS, signaling an optimistic future for our state. With healthy infrastructure and supportive policies and economic conditions, the opportunities for current and future jobs, investment and state revenues continue.
"This is such an exciting time to be a part of Alyeska and TAPS' legacy. With the 50th anniversary of TAPS operations on the horizon, it's the perfect time to celebrate Alaska's iconic pipeline and the proud people who built it and maintain it. We're also focused on our shared TAPS 100 vision and the next 50 years of TAPS operations.
"Activity on the North Slope is trending upward, signaling increased TAPS throughput and renewed investment across Alaska. That growth creates jobs, strengthens local economies and supports the contractors and businesses that are part of the broader TAPS business system.
"Technology, upgraded systems and ongoing reinvestment are improving safety, reliability and environmental performance across the line. These advancements not only extend the life of the pipeline but ensure we continue operating in a way that reflects Alaskans' expectations for safety and stewardship.
"Looking ahead, the combination of new development, modern infrastructure and a highly skilled workforce positions TAPS to remain a strong and stabilizing force for Alaska's economy.
"With continued industry activity and a commitment to long-term operations, TAPS will keep delivering opportunity in jobs, revenue and community resilience well into the next 50 years."
Now that it’s 50% complete, Willow is turning into a hub for new development in the northeast part of the National Petroleum Reserve–Alaska (NPR-A).
ConocoPhillips Alaska is pursuing an aggressive winter exploration program on top of its $8 billion of work underway at Willow, it recently told legislators. Four exploration wells are planned this winter on a large leasehold position the company has in the NPR-A, according to Barry Romberg, the company’s Alaska commercial and midstream vice president, and Colin Wolfe, finance vice president for ConocoPhillips Alaska. A lawsuit opposing the exploration activities was recently dropped.
If new oil is discovered, which the pair say is likely, it will feed into the Willow processing facility.
Romberg said tax stability in Alaska over the last decade has encouraged ConocoPhillips to keep investing in drilling and development, which led to the discovery of Willow and the new projects in existing fields. Additionally, as oil throughput in TAPS increases, the per barrel TAPS tariff is reduced, which in turn increases state revenue. As writer Tim Bradner points out in the spring edition of The Link, “Alaska had a difficult state production tax structure that discouraged companies.” That changed in 2013 when, “the Legislature passed a major reform of the state’s oil tax policy, which has been unchanged since.”
A stable and competitive fiscal regime is essential for long-term investments of the size needed for new development on the North Slope, legislators were told. Texas, a major oil producing state, has kept its state taxes on oil stable since 1951. The “government take” of production revenues is the same now as it was in 1951, Romberg said. “Projects like Willow take years for exploration and development planning, 25 years in the case of Willow.”
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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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