Oil and Gas Industry in Alaska

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Alaska Oilfield: Prudhoe Bay

More than 18 billion barrels of oil have been produced in Alaska’s North Slope since the discovery of the Prudhoe Bay oil field. Prudhoe Bay Oil Field is the largest oil field in North America, covering 213,543 acres. Originally it contained approximately 25 billion barrels of oil. 

The amount of oil recovered in the Alaska oil field is more than double the amount of oil recovered in the next largest oil field in the United States, the East Texas oil field.

Oil production is one of the key factors for economic growth in the Alaska region. It has accounted for more than $180 billion in total revenue, funding up to 90 percent of the state’s unrestricted General Fund revenues for most of the years. In FY 2019 more than $3.1 billion was paid in state and local taxes and royalties by the Alaska oil and gas industry.

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Alaska Oil:
A Brief History

In the early 1960’s, under the Alaska Statehood Act, the federal government allotted the area on Alaska’s North Slope and identified it as a potential oil field for the new state of Alaska as a form of economic support.

During 1960’s, Alaska saw commercial oil exploration activities starting in Prudhoe Bay. After several years of exploration, in December of 1967, a rig was discovered that produced a natural gas flare. On March 12, 1968, the oil field was confirmed and renowned geologist Marvin Mangus staked the drilling sites for the discovery and confirmation.

Initially, the Alaska oil field was operated by two entities, BP and ARCO, as two separate developments which were the BP Western Operating Area and the ARCO Eastern Operating Area. In 2000, ARCO was acquired by BP and the two operating areas were consolidated which BP became the sole operator of the field.

Alaska Oil and Gas: Facts and Figures

  • Over 18 billion barrels of oil and six billion cubic feet of natural gas have been produced by Alaska’s oil and gas industry. It accounts for approximately 20 percent of the whole country’s domestic oil and gas production from 1980 to 2000.
  • The oil industry generated $2.7 billion in revenue in FY 2019 accounting for almost 90 percent of Alaska’s total tax revenue from businesses.
  • In 2019, the average annual wage earnings of the Alaska oil and gas industry were more than 2.5 times higher than the average statewide wage earnings.
  • For each job in Alaska’s oil and gas industry, 15 more jobs in the economy are connected to the industry.
  • 25% of jobs in Alaska and around 50% of the overall economy, considering the spending of state revenues from oil production, is attributed to Alaska’s oil and gas industry.
  • The Alaska OCS (Outer Continental Shelf) is one of the largest unexploited oil and gas basins in the world. Around 54,700 new jobs are expected to be created and sustained by 2057.
  • Oil production in the Arctic OCS is expected to generate more than $193 billion in government revenue by 2057.
  • More than $55 billion has been invested by the Alaska oil and gas industry in the North Slope and Cook Inlet infrastructure since the 1950’s.
  • The potential of the Alaska natural gas pipeline, running from the North Slope to tidewater in south-central Alaska, is assessed to cost $45 billion.
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Production and Processing of Oil and Gas in Alaska

Out of the top ten oil fields in the country, four are located on the North Slope in Alaska. With regards to daily oil production, Alaska ranks sixth in the country behind Texas, North Dakota, New Mexico, California, and Oklahoma. The average production of the North Slope was 496,906 barrels per day (bpd) in FY 2019.

Investment commitments of at least $11 billion by oil and gas producers in new fields is expected to increase production in the 2020’s.

It is currently estimated by the state that the Prudhoe Bay Oil Field contains 2.5 billion barrels of recoverable oil and an additional 426 million in reserves from satellite development. New investments and improved technologies are expected to increase the reserve estimates for the future. Developments in drilling technology and the overall oil economy, such as the area of Deadhorse, which is located within the CDP of Prudhoe Bay in North Slope Borough, and consists mainly of facilities for the workers and companies that operate in the oil industry, have helped in boosting the oil economy, reducing the surface footprint, and expanding the drillable area in the subsurface.

The areas of Kenai Peninsula and offshore Cook Inlet have 28 oil and gas fields that produce more than 1.3 billion barrels of oil and 7.75 trillion cubic feet of natural gas. Kenai field is the largest gas field and is expected to produce 2.427 trillion cubic feet of natural gas.

McArthur River field is the largest Alaska oil field and is projected to recover more than 639,000 barrels of oil. 

There are three refineries located in Alaska that produce gasoline, diesel, and jet fuel. They are located in Nikiski, Valdez, and the North Pole.

It is important to note that as a state, Alaska does not directly consume the majority of the oil and gas extracted from the North Slope. As per US Energy Information Administration, around 80% of the oil produced in Alaska is shipped to refineries in Washington and California. Only around 20% of the oil produced in the state is refined in Alaska. Then the oil is either shipped to Hawaii or exported to international destinations. Alaska may not use most of the oil produced but it earns revenue from taxes and royalties on the oil.

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Oil Country Tubular Goods Solutions for Alaska

Baker Tubulars is an Alaska pipe supplier that provides many types of OCTG solutions for Alaska’s oil and gas industry. As a supplier of new and used casing and tubing, Baker Tubulars can provide competitive pricing and expedited service for your Alaska project requirements.

Through OCTG vendor and mill locations located in Anchorage, Alaska, Baker Tubulars can provide different OCTG solutions including new and used casing, tubing, line pipe, drill pipe, macaroni tubing, structural pipe, and more.

If your jobsite or oil rig is located anywhere in Alaska or North America and you require casing, tubing, drill pipe, line pipe, poly pipe, macaroni tubing, or structural pipes, contact Baker Tubulars with your pipe specifications and location requirements and we will be happy to serve you.

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