Renewable energy is gaining momentum in the US, but oil and gas will remain the country’s major sources of energy for at least the next three decades, according to the Alaska Oil & Gas Association.
AOGA executive director Kara Moriarty presented for the Sitka Chamber of Commerce’s Fall Speaker Series last week (10-27-21).
Moriarty painted a picture of the oil and gas industry as having been diminished by decreased demand, restrictive federal policies, and uncertainties in the state’s production taxes. Although it’s the largest economic engine in the state, the industry is not huge by national standards.
“Where do we stand today?” Moriarty asked. “Alaska used to be the second largest producer in the state in the nation certainly was that way when I started with AOGA a couple years ago, back in 2005. Today, this is data from the US Energy Information Administration. It’s from a six-month period of time. And you can see that Alaska is currently sitting fourth in production. Ironically, we also are 4% of all US production today. Certainly not where we used to be, especially considering the US is still the largest producer of oil and gas. Not sure how long that’s going to remain, but but for now we are in Alaska is currently only 4%.”
The state’s production tax scheme has been brought into sharper focus in recent years, since it is tied to wholesale prices for oil. When those prices crashed in 2020, the state found itself with little revenue, and owing companies production credits.
Moriarty said the industry pulled its weight in other ways.
“But it just highlights that even in a year, where we had no income tax, or very little income tax, we’re still contributing about $2 billion a year just to the state government, as well as local governments through the form of property tax,” she said.
Moriarty said that the recent turnaround in prices has been welcome, and should benefit the state financially. The spike in consumer prices is the result of high demand and limited supply, as people resume more normal economic activities.
Moriarty cited industry research (Energy Industry Information Administration) suggesting that demand for oil and gas would remain strong for the next 30 years, despite a global transition to renewable energy sources. She said that Alaska’s North Slope remains “the motherlode.”
There is a lot of oil that remains on the North Slope,” Moriarty said. “And in total, not counting the Chukchi Sea and the Beaufort Sea offshore, if you just look at the existing fields and what we think remains onshore, we think it’s about 14 billion barrels of oil. And to compare, we’ve produced about 18 billion and counting from the North Slope. So the best news for Alaska is demand remains for the next 30 to 40 years, and investment is needed to meet that demand. There are not enough identified sources to meet that demand globally. And we have really good rocks. So those are the most three positive things I can share today.”
Moriarty also reminded the Sitka Chamber of the oil and gas industry’s contribution to the state’s Permanent Fund. The dividend program is now about 40 years old. Residents who have received all 40 checks, she said, have accrued $46,000 in payments so far.
