Alaska's Oil and Gas Industry Sees Bright Future with 11 Million Acres to Lease

Strategic Insights -

Despite concerns over declining oil production, Alaska's top oil producers are optimistic about the future of the industry, thanks to new technology, revised taxes, and a new leasing strategy. According to executives from companies like Arco Alaska Inc. and BP Exploration (Alaska) Inc., the industry is now competitive on a worldwide basis. With 11 million acres to lease over the next two years, including the National Petroleum Reserve-Alaska and Cook Inlet, the industry is poised for growth.

Key Takeaways:

  • The state Supreme Court decision on the Northstar oil field has cleared the way for BP to develop the field, with plans to start producing in a couple of years.
  • BP plans to spend over $700 million in capital projects this year, despite low oil prices, and expects to increase its daily production by 100,000 barrels a day in the next few years.
  • Arco Alaska Inc. also sees a bright future, with plans to increase production by 30,000 barrels a day in the next few years, not including a potential purchase of Union Texas Petroleum.
  • The state's oil and gas industry accounts for 75 percent of the state's general fund revenue.
  • The industry is working with the state government to develop new fields and technologies, and is also investing in Alaska-based companies.
  • The Russian province of Sakhalin Island is looking to Alaska as a model for its own massive offshore oil and gas development project.

Statistics:

  • 11 million acres to be made available in lease sales over the next two years.
  • BP plans to increase its daily production by 100,000 barrels a day in the next few years.
  • Arco Alaska Inc. plans to increase production by 30,000 barrels a day in the next few years.
  • $700 million: BP's expected capital spending this year.
  • 75 percent: the percentage of state general fund revenue contributed by the oil and gas industry.

Sources:

  • U.S. Geological Study report (released Sunday)
  • BP Exploration (Alaska) Inc. press release
  • Arco Alaska Inc. press release
  • Alaska Department of Revenue press release
  • Sakhalin Island Governor Igor Farkhutdinov's statement to the press