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When John Kurz left Alaska\u2019s North Slope in 2009, he was staring at a grim future for what had once been the country\u2019s premiere oil field.\u00a0<\/p>\n
Crude production had\u00a0plummeted\u00a0to 567,000 barrels per day, barely more than a quarter of the roughly 2 million barrels pumped daily at the field\u2019s peak two decades earlier. The decline stoked concerns that the Trans Alaska Pipeline System, built to carry the state\u2019s oil bounty to the continental US, might stop operating.\u00a0<\/p>\n
Engineers even worried that slow-moving crude would congeal inside the pipeline, creating waxy buildup that could turn TAPS into the world\u2019s biggest tube of ChapStick.<\/p>\n
\u201cThe industry was dying,\u201d said Kurz, who at the time was BP Plc\u2019s senior operations manager for Greater Prudhoe Bay. \u201cWe could see the end of TAPS coming.\u201d<\/p>\n
Kurz fled Alaska for more promising opportunities overseas, but he was beckoned back in 2023 to run Alyeska Pipeline Service Co., overseeing the same pipeline whose future had looked so bleak 14 years before.\u00a0<\/p>\n
He\u2019s not the only one. Alaska has seen a resurgence of oil industry interest \u2014 and investment \u2014 driven by discoveries suggesting the state\u2019s crude potential is far greater than previously expected and helped by more accommodating policies from the Trump administration.<\/p>\n
President Donald Trump has sought to accelerate oil production in Alaska, making the state a cornerstone of his energy-dominance agenda. Hours after his inauguration, Trump\u00a0signed an order directing a suite of changes aimed at unlocking more of Alaska\u2019s oil, gas and mineral riches. His Interior Department has\u00a0lifted\u00a0Biden-era restrictions barring drilling across much of the National Petroleum Reserve-Alaska and is now drawing up plans to streamline permitting for oil projects in the territory.<\/p>\n
The efforts risk overturning decades of opposition from environmentalists who\u2019ve fought to prevent industrial oil development in the territory, which spans roughly 23 million acres in northwest Alaska. They\u2019ve argued that Arctic oil development prolongs the world\u2019s reliance on planet-warming fossil fuels and threatens untouched stretches of land that are rich in wildlife.<\/p>\n
\u201cWhat we\u2019re now looking at is a gold rush mentality,\u201d rather than the \u201cmeasured approach\u201d needed in America\u2019s largest intact ecosystem, said\u00a0Bobby McEnaney, director of land conservation for the Natural Resources Defense Council.<\/p>\n
The region is a globally significant ecosystem that supports migratory birds from every continent and plays a critical role in the planet\u2019s environmental balance, making preservation essential even as oil and gas drilling expands, he said.<\/p>\n
New geological research and test wells bored into the tundra are feeding a swell of enthusiasm that stretches from processing plants in snow-covered Prudhoe Bay to oak-paneled boardrooms in Houston. Industry executives say growing confidence in the region also reflects that the regulatory changes are expected to endure beyond Trump\u2019s presidency.<\/p>\n
\u201cIt feels like a bit of the Alaska renaissance,\u201d said ConocoPhillips Chief Executive Officer Ryan Lance. \u201cWhen you think about the strategic importance of where are we going to find the conventional oil to satisfy the growing demand around the world, people are coming back to places like Alaska. So it does very much feel like back to the future.\u201d<\/p>\n
Read More:\u00a0Trump Administration Aims to Speed Oil Permitting in Alaska<\/p>\n
In March, ConocoPhillips, Shell Plc, ExxonMobil Corp., Santos Ltd. and seven other companies set records by\u00a0bidding\u00a0almost $164 million in a federal auction for oil and gas leases inside the NPRA.\u00a0<\/p>\n
\u201cWhat surprised us in the lease sale wasn\u2019t only the dollar levels, but the new or returning entrants, like Shell and Exxon,\u201d said Bruce Dingeman, an executive vice president at Santos who leads the Australian company\u2019s Alaska operations. \u201cThat was a vote of confidence for the geology and the play, but it was also a vote of confidence that the regulatory reform is going to allow for responsible development to continue.\u201d<\/p>\n
ExxonMobil \u2014 then Exxon \u2014 drilled its last exploratory well in Alaska in the early 1990s. In the March auction, the company submitted winning bids for 23 tracts in the NPRA. Shell also once\u00a0swore off oil development\u00a0in the state, saying in 2015 that it was leaving for the \u201cforeseeable future\u201d following a\u00a0failed search\u00a0for crude in Arctic waters north of Alaska. But in March, Shell partnered with Repsol SA to secure about 42 leases.\u00a0<\/p>\n
The federally managed NPRA was originally set aside a century ago to support the Navy\u2019s energy needs. Though the region remains relatively underexplored, recent finds have benefited from companies\u2019 access to oil infrastructure and expertise built over decades at nearby Prudhoe Bay, the Alaska oil field that began pumping crude into TAPS in 1977.<\/p>\n
The US Geological Survey\u00a0estimates\u00a0NPRA contains 8.7 billion barrels of recoverable oil. Some of those barrels might never have been tapped were it not for a 2013 discovery by Bill Armstrong, a wildcatter who, alongside Repsol, struck a jackpot after drilling into what\u2019s known as the Nanushuk formation. Earlier oil production had focused on a relatively modest pool within the formation. But the 2013 find and\u00a0a series of wells\u00a0drilled between 2015 and 2017 revealed the Nanushuk\u2019s vast overlooked potential.\u00a0<\/p>\n
Earlier this month, Santos and Repsol began producing the first commercial oil barrels from that discovery now known as Pikka. It\u2019s expected to pump about 80,000 barrels a day.\u00a0<\/p>\n
Read More:\u00a0Santos, Repsol Begin Commercial Oil Flows in Alaska Arctic<\/p>\n
\u201cThe last few years really changed the whole dynamic on the North Slope,\u201d said\u00a0Walter Hufford, head of US government affairs at Repsol. Companies \u201crecognize this is a safe place to invest.\u201d<\/p>\n
Standing beside a towering rig boring a new well at Pikka earlier this month, Hufford, a 68-year-old geologist, got wistful. \u201cThe future here is fantastic,\u201d he said. \u201cI wish I was 30 again.\u201d<\/p>\n
About 30 miles away, ConocoPhillips is constructing its roughly 600-million-barrel Willow\u00a0oil project, with commercial production expected to begin in early 2029. The Willow discovery, made in 2016, also illustrates the broad reach of Nanushuk.<\/p>\n
Newly drilled exploration wells suggest the project can \u201cgrow and be a little bigger\u201d to sustain production for longer, even as ConocoPhillips invests about $1 billion annually to extend output from its existing Alaska assets, said Lance, the company\u2019s CEO.<\/p>\n
Additional discoveries are reinforcing the industry\u2019s optimism. Santos announced\u00a0successful resultslast month from an appraisal well at the Quokka site it owns with Repsol. And Armstrong boasts there could be at least 700 million barrels at last year\u2019s\u00a0Sockeye discovery\u00a0owned by his company, Armstrong Oil & Gas Inc., along with Santos and lead developer APA Corp.<\/p>\n
Armstrong said the same underground geological features that make Willow, Pikka and Quokka successes appear to be replicated moving west across the reserve.<\/p>\n
\u201cThere are, conservatively, at least a dozen undrilled big anomalies in the NPRA,\u201d Armstrong told Bloomberg. \u201cThe Nanushuk play has big-time running room.\u201d<\/p>\n
Developing oil in Alaska\u2019s Arctic is a forbidding challenge, requiring complex logistics and specialized equipment. Many critical operations are limited to short seasonal windows when crews can work from man-made ice roads and pads, even as temperatures fall to -30F.<\/p>\n
Still, the payoff can be huge. Unlike many oil wells in the continental US, which can be drilled quickly but also decline rapidly, Alaska\u2019s conventional crude reservoirs tend to be larger and longer-lived.<\/p>\n
\u201cThe reward is pretty unique and pretty compelling,\u201d said\u00a0Mark Oberstoetter, head of upstream Americas research for Wood Mackenzie. \u201cThere\u2019s not many concession regimes in the world that have kind of the known oil resource as well as the resource potential that this basin offers.\u201d<\/p>\n
The prospect of more drilling divides some Alaskans. Some see new oil activity as critical to generating revenue that can pave roads and improve living standards in remote communities. Others warn it creates an oil dependency that leaves villages reliant on resource income while discouraging alternative paths to prosperity.<\/p>\n
Some indigenous Alaskans who rely on local wildlife for subsistence are also wary of what increased exploration could mean for communities deeply connected to the land and sea, including the caribou that migrate across the tundra and the whales that pass along the Arctic coast.<\/p>\n
Even so, Republicans representing Alaska on Capitol Hill have advanced a measure nullifying a restrictive 2022 management plan for the reserve that environmentalists had championed as protecting caribou, birds and other wildlife. Lawmakers have used a process designed to tie the hands of future administrations seeking to bar development in the NPRA.<\/p>\n
The move is boosting industry confidence in the durability of policies supporting development there, said Senator Dan Sullivan, an Alaska Republican. \u201cAll of a sudden you have serious stability legally,\u201d he said in an interview.<\/p>\n
It\u2019s all a little surreal to Kurz, the Alyeska CEO who has lived through the wild swings of Alaska\u2019s oil industry. In 2008, he recalls having his first conversation about how declining production would make it increasingly difficult to keep TAPS operating.\u00a0<\/p>\n
\u201cI didn\u2019t think I\u2019d ever come back and work here,\u201d Kurz said. But now, \u201cthe production trend up the North Slope and in TAPS is going up.\u201d<\/p>\n
#Alaskas #oil #revival #sparks #energy #rush #Arctic<\/p>\n","protected":false},"excerpt":{"rendered":"
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