Friday Fact Check: The 1-million-barrel goal clarified for legislators who ask.

In News by wp_sysadmin

A frequent question in house finance this session has been “why hasn’t SB 21 resulted in 1 million barrels in TAPS?”   The questions have been asked repeatedly, since 2014, and answered as many times.

We provide the background and the answer for our readers and legislators. 

 During the Parnell administration, the TAPS throughput decline was the most urgent and critical issue facing our state. The Governor chose to address this issue by laying out the vision and goal of increasing TAPS throughput to one million barrels per day within 10 years. The “Secure Alaska’s Future–Oil” strategy was designed to support this goal.

 This strategy consisted of the following main components.

1. Enhance Alaska’s global competitiveness and investment climate (the cornerstone being meaningful tax reform)

2. Ensure the permitting process is structured and efficient.

3. Facilitate and incentivize the next phases of North Slope resource development.

4. Unlock Alaska’s full resource development potential through partnerships with key stakeholders.

5. Promote Alaska’s resources and positive investment climate to world markets.

The Governor’s goal of one million barrels, at the time, required tens of billions of dollars of additional private sector capital investment in Alaska. Improved cooperation between industry, state and federal policy makers was also necessary. The administration believed, as did many Alaskans, that there would be a general sequencing of development opportunities on the North Slope that could lead to one million barrels within a decade. There were many scenarios, but one example was the following, where each preceding development builds upon earlier developments:

In 2-5 years:

  • Increased infield production from legacy fields
  • Development of smaller pools of conventional oil (Oooguruk, Nikaitchuq, and others); the North Slope is estimated to have “dozens” of such untapped fields ranging from 25 million to 350 million barrels.
  • Production from the eastern North Slope, including Point Thomson, which will create economies of scale to explore and develop the eastern North Slope.

In 4-7 years:

  • Production from shale, viscous and heavy oil plays coming online in substantial quantities (Alaska is endowed with billions of barrels of unconventional resources)
  • Development of northeast NPR-A (CD-5 and other satellite fields)
  • Umiat area exploration, development, and production
  • Development of near offshore (Liberty, etc.)

In 7-10 years:

  • Exploration and production from ANWR and other eastern North Slope state and federal lands

In 10 years and beyond:

  • Development of OCS (Chukchi and Beaufort)
  • Commercialization of North Slope gas, which will lead to additional oil discoveries.

Getting to one million barrels of oil per day within a decade was an ambitious goal.  It is a goal that garnered broad-based public support.  Alaskans overwhelming defeated attempts to repeal or change the legislation enacted to support the goal in 2014 and in 2020.   It is still a goal   worth striving for. Whether or not the state can achieve this goal will depend on several factors, some of which we as a state have more control over than others.