Forty years ago, Alaska's largest and most important oil field began producing what quickly became the lifeblood of Alaska's economy. Of course, I am talking about mighty Prudhoe Bay, one of the largest oil fields ever discovered in North America and the primary source of most of the state's resource wealth. This year, we celebrate this legacy field, as well as the start-up of the Trans Alaska Pipeline System (TAPS), the engineering marvel that moved Alaska's enormous reserves of oil from the remote North Slope to tidewater in Valdez.
What has changed in the four decades since oil began flowing from Prudhoe? Some things remain virtually unchanged, whereas others are drastically different.
One constant, as true today as it was in 1977, is that Alaska is subject to the cyclical nature of the oil and gas business, a course often altered by unpredictable and dramatic fluctuations in prices. Longtime Alaskans have experienced first-hand the windfalls that accompany high oil prices. They have seen flush state budgets and a bonanza of private-sector investment and spending. Those same Alaskans have also experienced lean times born from low oil prices. They have seen the state struggle to meet budgetary demands and they have seen friends and family struggle to secure employment. Unfortunately, we currently find ourselves mired in a downturn, navigating a "lower-forlonger" oil price environment. This reality creates extraordinary challenges for both the oil and gas industry and state governments. In that sense, Alaskans are all in the same boat.
Nevertheless, much like in the past, we have reason for optimism. Alaska still has great rocks that portend a strong future. Our geology is the envy of the world. Just this year, companies have announced extraordinary discoveries with amazing potential: Caelus with its Smith Bay field, Repsol/Armstong in the Pika unit, and ConocoPhillips with its Willow find. All three of these discoveries could result in hundreds of thousands of barrels in new oil moving through the pipeline every day.
What has changed since Prudhoe Bay and TAPS' inception is that today Alaska has many decades of oil exploration, development, and production under its belt. Prudhoe Bay is now a mature oil basin, meaning we, as Alaskans, have already experienced the initial heyday and all the benefits that it provided. Sadly, it also means that it is harder to bring new oil online. That said, the industry has succeeded in doing just that...