Northern Lights Glow Over Alaskan Pipeline

Several of the Lower 48 United States, such as North Dakota, are in the midst of rapid oil sector growth. Meanwhile, oil output in Alaska – traditionally a producing state – is declining. And who owns the land could be a factor in that disparity.

US oil production has grown rapidly over the past few years, outpacing expectations and raising a host of new questions about how the country should manage its resource renaissance. And President Barack Obama’s administration points to these impressive growth statistics as a proof of the success of its efforts to reduce dependence on imports.

But critics of the administration frequently point to a disparity between oil and gas activity on federal lands – where permitting, leasing and new drilling have declined since 2009, according to trade group API – and on state and private lands.

When viewed from the perspective of the US as a whole, where output is expected to continue rising, the urgency of the debate could be viewed as questionable. But in Alaska, where only a tiny fraction of land is privately- or state-owned, its significance comes sharply into focus.

When Alaskans see how energy production is booming in states like Texas and Oklahoma, “we’re a little bit jealous”, Anchorage Mayor Dan Sullivan told attendees of the USAEE North American Conference, which kicked off this morning in Anchorage.

Despite holding vast amounts of untapped oil and gas, “in Alaska we’re seeing energy production decline”, Sullivan said. Energy Information Administration data show that Alaskan crude oil production fell by 27% from 2007 to 2012, to 526,000 barrels per day.

Sullivan stressed that land ownership is the key difference between resource-rich states that are enjoying boom times, and those – such as Alaska – that are not.

“Most of the energy production happening in the states is because you’ve got state and private land being developed, and in Alaska there’s virtually no private land,” Sullivan said. “One or two percent of the entire Alaskan mass is in private hands, and so we have to fight through tremendous bureaucracies to develop energy here in Alaska.”

Federal restrictions prevent oil and gas activity in some of what may be the state’s most promising oil- and gas-rich areas, such as the National Petroleum Reserve – Alaska (NPR-A) and the Arctic Wildlife National Refuge (ANWR).

But some oil producers might contend that other factors have also contributed to the slowdown in Alaskan production. Companies such as ConocoPhillips and ExxonMobil have frequently pointed to the state’s fiscal regime as an impediment to additional investment.

Alaska recently reformed its tax regime to be more welcoming to oil producers. While this was a step in the right direction, reversing the production decline will take some time, according to ConocoPhillips Executive Vice-President of Exploration and Production Matt Fox.