Alaska bids to increase oil production

Oil and gas are abundant in Alaska. Despite the harsh weather, the most northern state of the US is home to somewhat easily produced hydrocarbons, as well as a strong network of pipelines to connect that production to US markets.

Nonetheless, production in Alaska has been waning. Just this year, the LNG liquefaction and export terminal located on Alaska's Kenai Peninsula closed after 40 years of production -- and delays in obtaining drilling permits turn off operators. (After dropping its plans for drilling this year, Shell is working to drill in the Beaufort and Chukchi Seas offshore Alaska in 2012.)

To top it off, North Dakota's Bakken Shale is ramping up production at record rates, with more and more rigs drilling and infrastructure projects being awarded left and right. In fact, recent data revealed that oil production in North Dakota may well outpace Alaska by 2017.

This is despite the fact that a recent study found that Alaska's Outer Continental Shelf could produce 10 billion barrels of oil and 15 trillion cubic feet of gas.


Working for Change

To change the tide, Alaska's officials have been on the offensive, trying to boost oil and gas production in the state through oil-friendly initiatives and supportive legislation.

Drawing the line in 2010, the State of Alaska filed a lawsuit against the Secretary of the Interior to overturn the federal moratorium on offshore drilling in Alaska's Outer Continental Shelf.

Recently, Alaska Senator Lisa Murkowski introduced legislation to improve permitting offshore Alaska, recognizing that the "endless regulatory loop" is costing the state jobs and production.

"We have companies that have spent more than five years and billions of dollars attempting to conduct offshore exploration and production in Alaska, but have been unable to secure the necessary permits from EPA," Murkowski said. "It's clear that this process is not just overly costly and time-consuming, but simply does not work."

In April 2011, Alaska Governor Sean Parnell called on President Barack Obama to support the state's goal to increase the flow of oil through the Trans Alaska Pipeline System (TAPS) to 1 million barrels per day in the next 10 years.

Last week, Gov. Parnell and Natural Resources Commissioner Dan Sullivan revealed that Alaska plans to sell nearly 15 million acres of state-owned land and waters in October. The acreage up for grabs includes 2 million acres in the Beaufort Sea, 5.1 million acres on the North Slope and 7.6 million acres in the North Slope foothills -- and could hold up to 6 billion barrels of oil and 45 trillion cubic feet of natural gas.

"Releasing 30 million barrels of oil from the Strategic Petroleum Reserve is bad policy," Gov. Parnell said. "This decision only provides the nation with 30 days of additional oil supply. It will have no long term impact. The real Strategic Petroleum Reserve is Alaska, which has the potential to provide more than 30 billion barrels of oil over three decades. Developing Alaska's vast hydrocarbon resources will supply the nation with billions of barrels of domestic crude. It will provide tens of thousands of high paying jobs and it will generate hundreds of billions of dollars in revenue for the federal government. The right policy call for the nation is to develop Alaska's resources."

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Phaedra Friend Troy is the content director for PennEnergy.com, an all-energy website that provides oil and gas, power and infrastructure news, analysis, reports and more. Sign up for a free daily enewsletter today.