In March, producers such as ExxonMobil, Shell and Repsol were ready to spend a record $163 million to secure leases in Alaska’s National Petroleum Reserve. This little-explored area, according to US Geological Survey (USGS) estimates, may contain up to 8.8 million barrels of recoverable oil.
ConocoPhillips and Australia’s Santos have applied for leases on more than 1 million acres (more than 400,000 hectares) on Alaska’s North Slope in the oil-rich but often ice-covered region of pristine wilderness, where exploration and production are extremely expensive, writes Financial Times.
Diversification and geopolitics
Major oil companies are returning to Alaska as the state becomes “the most promising region in the world.” The energy crisis triggered by the war in Iran has also emphasized the importance of diversifying supply beyond the Middle East, further increasing the state’s appeal.
Kevin Gallagher, CEO of Santos, said, “Events in the Middle East underscore the importance of supply diversification and Alaska’s location is a real strategic advantage, offering a route to key markets such as Japan and Korea.”
He added that barrels from Alaska are “highly strategic in a tightening global energy system”, noting that two recent discoveries, Quokka and Horseshoe, confirm the North Slope’s status as one of the world’s most attractive opportunities for new developments.
Jarrod Adjen, executive director of the Trump administration’s Energy Dominance Council, said record license sales in Alaska will unleash the “incredible resources” the state has to offer. “The slogan ‘Storm, Crumb, Storm’ is in action and is producing real results for Americans,” he said.
Production forecast and risks
Recent discoveries and the imminent startup of production at Pikka are expected to revitalize Alaska’s oil production, which peaked at just over 2 million bpd in 1988 but has fallen to a nearly 50-year low of 475,000 bpd in 2024, according to Wood Mackenzie. The research group predicts production will rise to nearly 750,000 bpd by 2030.
The resurgence of the oil industry in Alaska has alarmed conservation groups, which warn that it threatens one of the most pristine ecosystems on the planet. They also point to the risks of investing in new projects that could become the target of future Democrat-led U.S. administrations.
“It’s a pointless endeavor,” said Athan Manuel, director of the environmental group Sierra Club. – “We were surprised when Shell and Exxon applied for leases because we thought they had taken a longer-term stance, recognizing the risk that Alaska projects could become ‘frozen assets’ when another president is elected.”
