During the course of my 11 years representing the Alaska Oil and Gas Association, I have been asked many times by media, elected officials and policy makers, as well as everyday Alaskans what my predictions are for the oil and gas industry in Alaska.
My standard answer, other than to say I wish I had a crystal ball, is that only one thing is for certain: oil prices will go up, and then go back down. It is, unfortunately, the one constant in this cyclical business with which Alaskans are so familiar.
In spite of that reality, the last 50 years have created some unique opportunities in this state we call home. Who would have thought the once struggling territory of Alaska would finally be welcomed as the 49th state largely because of the discovery of the Swanson River field on the Kenai Peninsula? Or that an economy once fueled almost solely by commercial fishing and timber would come to rely on oil and gas as its largest economic driver?
Regardless, since the time that the Alaska Oil and Gas Association has been in existence, we have experienced the glory days of huge new discoveries, first oil from the Trans-Alaska Pipeline, 2 million barrels of throughput per day, and the booming economy that came with it.
Of course, we have seen the downside, too, with price plunges that put Alaskans out of work, and what some would say is too much dependence on one industry to prop up the state economy.
Regardless, in the end, most Alaskans have come to appreciate and enjoy the positive impacts the oil and gas industry has brought to Alaska over the last 50 years, and most of us want to see that legacy continue for the next 50 years.
What is the vision for the industry, and, by extension, the state, for the next 50 years? In tough times like this, it is easy to get mired down in the bad news. And there has been bad news in 2016, no doubt about it.
An industry battered by unprecedented low oil prices has responded in ways that while expected, are no less difficult: rigs idled, projects on hold, jobs lost. Hard choices, and, yet, we still have reasons to be optimistic.
One thing low oil prices cannot change is the fact that Alaska has great geology. The State’s Department of Natural Resources confirms that plenty of oil and gas remains on Alaska’s North Slope, as well as in Cook Inlet, and places like “Middle Earth”, where Native corporations like Ahtna and Doyon are exploring.
One colorful oil and gas insider has even described the North Slope as “the oiliest place on earth.” With estimates for billions more barrels of oil, and massive reserves of natural gas, Alaska’s oil and gas industry can remain viable for years to come under the right conditions.
What do the right conditions look like? In our opinion, we feel strongly that state leaders must better articulate their vision of what they want the industry to look like in the next five, 10, and 20-plus years. Too often over the course of the last 50 years, state leaders have lost sight of ensuring the state’s dominant industry was healthy and growing in the long run, usually in order to make some kind of immediate financial gain.
When the state is strapped for cash, as it is now at low oil prices, it is always easy for leaders to look to industry for more. The problem with that approach is that a quick money grab has long-term consequences that hurt just as much if not worse: less oil production, less long-term revenues for state government, and fewer new projects and Alaskans working. It’s not a new problem for the industry in Alaska, but one that continually reappears.
Our advice to those in charge is to think strategically about where they want Alaska to be in 20 years, and what kind of industry they want to see here. Is more oil moving through the Trans-Alaska Pipeline the goal? Maybe it’s a focus on more companies coming to Alaska to explore for and develop oil. Or perhaps the focus is now on the long-awaited of goal of commercializing Alaska’s vast stores of natural gas.
Whatever the policy, it is wise to make clear what the objective is, and to pass laws and write regulations that support the goal. If the aim is simply to collect more revenue, then leaders should be transparent about it, and enter into such a policy with eyes wide open about what potential long-term consequences could look like.
Regardless of what policies and laws the State of Alaska enacts, one long-time truth cannot be disputed: Alaskans have for years, and still do, profess a deep and profound pride in our oil and gas industry. Those of us who have lived here for years know that no one does safe resource development better than Alaska.
Truly, we all seem to understand that Alaska has been blessed not only with incredible beauty, but natural resources that are the envy of the world. Our economy will continue to evolve, but our focus on safely and responsibly developing these resources for the benefit of all Alaskans remains, and will so for the next 50 years.