Letter from the co-chairs

Alaska faces unprecedented challenges
at state and federal level

Dear KEEP Supporter,

Alaskans voted firmly for fairness when they soundly defeated Ballot Measure 1 by a vote of 57.9% no to 42.1% yes last November.

Yet, adherence to KEEP’s mission “to promote and preserve competitive, fair and stable taxes on Alaska’s resource industries to enhance investment, jobs and production to secure Alaska’s long term economic future” has never been more important.

Alaska faces unprecedented challenges both in Alaska and in Washington, D.C. At home, we find ourselves at a critical juncture where Alaska must get its fiscal house in order or face an uncertain and grim future for our children and grandchildren. That means increasing production from our resource industries by keeping these industries competitive.

Alaskans know a healthy oil and gas industry and a sustainable fiscal plan are critical to our economic future. When the Anchorage Economic Development Corporation recently asked Anchorage businesses to rate the importance of various issues to the Anchorage economy, the sustainability of the State of Alaska operating budget and ending the spread of COVID-19 received the most “very important” ratings at 79%, followed by North Slope oil production (71%).

There are encouraging signs on the horizon. Oil prices have leveled at a point where the economics could allow several major projects (which could potentially add up to 300,000 barrels/day to the pipeline) to move forward. In spite of record low oil prices, the production decline was held at ~1% last year, primarily due to Hilcorp’s optimization efforts at Prudhoe Bay and Milne Point. That alone was an incredible accomplishment, particularly given the restrictions of Covid-19. But increasing production and bringing new oil to the pipeline requires huge capital investments. Excessive, unstable taxes, coupled with low oil prices, creates a very risky situation for investment.

KEEP Alaska Competitive will continue to advocate for stable, competitive tax policies that are fair to all industries and all Alaskans and do not single out any one industry, particularly oil and gas. We hope you will join us once again as we work together to secure a brighter future for Alaska.

From our Facebook Feed

Hilcorp dramatically slows Prudhoe decline

There’s some very good news buried in the gloom that dominated the North Slope last year. The production decline was held at ~1%, primarily due to Hilcorp’s optimization efforts at Prudhoe Bay and Milne Point. That compares to declines of 5% and more just a few years ago.

But more exciting are the production increases from five new developments projected to come online over the next four to five years. The state estimates 352,000 new barrels/day through the pipeline, including 130,000 bbs/day from Willow, 80,000 from Pikka, 70,000 from Liberty, 40,000 from GMT2, 22,000 from Milne’s Moose Pad and 10,000 from CD5’s second expansion.

It’s all in the state’s Fall 2020 Production Forecast.

New players explore North Slope

A bevy of new players are exploring the North Slope, including Pantheon Resources, which acquired the assets of Great Bear Petroleum in 2019. Pantheon is drilling Talitha-A, a new appraisal well at Great Bear’s Talitha discovery, 20 miles south of Prudhoe Bay near the Dalton Highway and TAPS. Pantheon is testing a 1988 legacy discovery by ARCO, which exceeded their expectations. “This was an excellent result for Pantheon, with positive implications for Pantheon’s other Brookian prospects.” Great Bear held 143,000 acres immediately south of Prudhoe Bay and Kuparuk. Read more here.

It’s a long way from Yakataga Beach to Point Thomson

Today ExxonMobil is the largest working interest owner at Prudhoe Bay, a co-venturer in Endicott and TAPS, an owner of Kuparuk and the operator and owner of Point Thomson. But its beginnings in Alaska were much smaller, dating back to 1925 when General Petroleum, now part of ExxonMobil, drilled its first well at Yakataga Beach about halfway between Cordova and Icy Bay. Just getting to the drill site was dangerous work, as recounted by one of the expedition’s original members.

“Under a chilly moon and a freezing wind, the party left Yakutat headed for Icy Bay, a very appropriate name for the place. After a night of bad weather and every man willing to contribute his part to the feeding of the fish, morning found us heading into a bay completely covered with icebergs, little ones and others bigger than skyscrapers.

Days later they finally straggled to shore where they spent two years drilling their exploratory well. The 2,005-foot Sullivan No. 1 well was a dry hole.

There’s much more of the ExxonMobil story in Alaska here.

Oil Search targets first oil in ‘25

Oil Search is moving closer to sanctioning Pikka phase 1 construction later this year. The company expects to start FEED work in the next few weeks. “Strong alignment has been achieved with our partner, Repsol, for the phased development program which is now targeting first oil in 2025 at 80,000 barrels of oil per day from a single well pad,” Oil Search Managing Director Keiran Wulff told Petroleum News. “Initial development costs have more than halved and the breakeven cost of supply under US$40 a barrel makes the project resilient to lower oil prices.” North Slope crude started the week at $55.09/barrel.

Isaacson takes over helm at ConocoPhillips

A hearty welcome to Erec Isaacson, the new president of ConocoPhillips Alaska. Isaacson has been with ConocoPhillips for 35 years, including a four-year stint in Alaska, first as manager of Alaska exploration and later as vice president, commercial assets. His bio is here. And thank you ConocoPhillips for keeping faith in Alaska. The company has slated almost $400 million for Alaska major capital projects in 2021, in addition to its operating budget.

Day without oil is a night of nightmares

A day without oil is a night full of nightmares, writes BP retiree Frank Baker, in this tongue-in-cheek account of how different the world would be if there weren’t any petroleum products. No computers, no phones, no cars, no toothbrushes, no varnish, no latex paint. Read about Frank’s trip through a non-oil world.

click to enlarge

What you can do

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If you have any questions or comments, please contact us at (907) 569-7070 or send an email to info@keepalaskacompetitive.com

KEEP Alaska Competitive, P.O. Box 220884, Anchorage, AK 99522
907.569.7070 | keepalaskacompetitive.com
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