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Industry Profiles :: Oil & Gas Industry Oil & Gas Industry Alaska has two commercially active oil and gas regions: Cook Inlet in Southcentral Alaska, and Alaska's North Slope. The Prudhoe Bay Unit (PBU), on the Alaska Arctic coast, is the largest operating oil field in the United States, having produced 12.8 billion barrels of oil since production began in the late 1970s, with an estimated 6.4 billion barrels of oil still in the ground. A number of other North Slope oil units have come online to supplement PBU's production that has declined significantly over the last 15 years. Total North Slope oil production is expected to level out at about one million barrels per day through 2010. There are enormous amounts of natural gas in the North Slope reserves. Some of this gas is used to power oilfield operations and is re-injected to improve production. Construction of a natural gas pipeline from the North Slope is under active consideration. Oil and gas production from Cook Inlet is refined for domestic and international markets and natural gas is distributed for residential and commercial use in the upper Kenai Peninsula, Anchorage and the Mat-Su Valley. A gas pipeline is planned for construction from the City of Kenai to the community of Ninilchik. Several smaller, independent oil companies have shown increased interest in Cook Inlet oil and gas exploration and production since the mid 1990's, leading to renewed drilling and production following years of decline. The state's new shallow gas leasing program, together with coalbed methane studies and exploration, could lead to gas production and the development of local energy sources in rural areas of the state, offsetting the need to import costly diesel fuel. According to a 2001 study by the McDowell Group, the oil and gas industry generates approximately 33,500 jobs and a $1.4 billion payroll annually in the state. Most of these figures reflect activity related to Prudhoe Bay. Oil and gas generated almost $1.9 billion in revenues for the State of Alaska during FY2001, representing more than half of all General Fund unrestricted revenues. Additionally $344 million in royalties went into the Alaska Permanent Fund. Petroleum revenue has provided over 70% of the state's General Fund unrestricted revenue since 1978. Industry Issues and Outlook The most significant trend in oil and gas is declining production from Prudhoe Bay, which sends ripples throughout the state economy. Several smaller, independent operators have succeeded to produce in Cook Inlet from leases formerly held by major oil and gas companies. Using new exploratory and drilling techniques, these operators have re-invigorated interest in the region. The Trans-Alaska Pipeline System (TAPS) and oil field infrastructure at Prudhoe Bay is aging and will require continued attention. The State of Alaska is planning to explore for the availability of coalbed methane gas at three locations around the state. The State initiated the shallow gas lease program in 1999 to locate local sources of gas that can be delivered to rural and remote communities at less cost than alternatives, particularly costly, imported diesel fuel. Developing oil and gas resources other than Prudhoe Bay has become a major focus in the oil & gas industry. Recent lease sales and exploration in the National Petroleum Reserve-Alaska (NPR-A), for example, have been very positive for oil development. Over $64 million in oil and gas leases were sold in June of 2002 in the NPR-A. Oil exploration and development in the Arctic National Wildlife Refuge (ANWR) has been very controversial and will require congressional approval before activity can occur. Exploration is taking place in interior basins and is planned near Cordova. Gas or oil discoveries in interior basins, if economic, could provide for local energy needs; however, much work is needed to determine whether commercial quantities of gas can be developed. There is considerable interest in the construction of a natural gas pipeline to bring Prudhoe Bay gas to market, in fact Congress is currently considering incentives for the project. The U.S. Department of Interior has approved the federal Minerals Management Service's 2002 – 2007 Outer Continental Shelf leasing program. Eight lease sales are planned. Key Contacts Alaska Oil & Gas Association Judy Brady, Executive Director 121 W. Fireweed Ln., Ste. 207 Anchorage, AK 99503 Tel: (907) 272-1481 Fax: (907) 279-8114 Alaska Support Industry Alliance Larry Houle, General Manager 4220 B St., Ste. 200 Anchorage, AK 99501 Tel: (907) 563-2226 Fax:(907) 561-8870 Arctic Power Resource Development Council Tadd Owens, Executive Director 121 W. Fireweed Ln., Ste. 250 Anchorage, AK 99503 Tel: (907) 276-0700 Fax: (907) 276-3887 www.akrdc.org Alaska Department of Natural Resources Division of Oil and Gas 550 W. 7th Ave., Suite 800 Anchorage, AK 99501 Tel: (907) 269-8800 Fax: (907) 269-8802 www.dog.dnr.state.ak.us/oil Top of Page Juneau Headquarters: 217 Second Street, Suite 201, Juneau, AK 99801 Phone: 907.586.2323, Fax: 907.463.5515, Email: info@alaskachamber.com Anchorage Office: 601 W. 5th Avenue, Suite 700, Anchorage, AK 99501 Phone: 907.278.2722, Fax: 907.278.6643 Copyright © 2003 - Present. The Alaska State Chamber of Commerce, all rights reserved. Designed by WebWeavers Technology Group LLC™ |
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