Oil industry investment in Alaska: three major players in our past and future.

• Author: Sharpe, Margaret
• Position: OIL & GAS

Investment in the oil and gas industry pays for Alaska in many ways. With a literal dividend paid out annually, Alaskans are de facto stockholders in the oil and gas industry. Though paperless members--aside from the annual Permanent Fund Dividend check--our holdings yield other benefits from oil and gas investment. According to the University of Alaska Anchorage Institute for Social and Economic Research, Alaska's petroleum wealth, both money in the bank and petroleum in the ground, was valued at $160 billion in 2012. The oil and gas industry has accounted for about 126,000 jobs and continues to provide approximately 85 to 90 percent of the state's annual revenues.

Since the 1968 discovery of Prudhoe Bay, the largest oil reservoir in North America, the history of Alaska has been joined with oil and gas exploration. Just over a decade after the discovery, North Slope crude oil flowed along the eight hundred-mile-long trans-Alaska oil pipeline, shipping out of Valdez on August 1, 1977. Five years later, the first PFD checks were distributed in June 1982. Alaska's Permanent Fund savings account balance today is more than $42 billion, in large part due to Prudhoe Bay.

Successful oil and gas development in Alaska has resulted from hard work and investment over the decades. There is little argument that the oil companies in Alaska have profited from extracting Alaska's resources, but Alaska has profited in many ways through the economic and community contributions. Although companies and names have merged and changed over the years, three major players have been constant in Alaska since the 1968 discovery: BP Exploration Alaska, Conoco Phillips Alaska, and ExxonMobil, all coventurerers in Prudhoe Bay and the trans-Alaska oil pipeline.

BP Exploration (Alaska) Inc.

BP has fifty years of history in the state. Today BP is one of Alaska's largest private sector investors and taxpayers and ranks in the top ten for employers. BP operates the most fields and produces the most (gross) oil in Alaska. As operator of Prudhoe Bay, the company invests heavily in infrastructure: In 2008 they commissioned a $500 million sixteen-mile oil transit line system, and in 2011 the company allocated one-third of its capital budget to infrastructure renewal projects.

A part of BP's investment is making strides in oil field technology to maximize production. When development started at the Prudhoe Bay reserve, only 40 percent or less of the oil was expected to be recovered. Through using new technologies, BP has increased that estimate to more than 60 percent. BP's enhanced oil recovery technologies have also doubled the production life of Prudhoe Bay field. Advanced drilling techniques--such as horizontal and multi-lateral drilling--mean many more wells can be drilled from a single surface location. For example, the BP-operated Endicott field has a surface footprint that is 70 percent smaller than the traditional North Slope development pad. BP wants to continue investing in new ways to extract the remaining, more challenging North Slope oil and gas.

Another investment avenue is the community: "BP is one of the largest private sector investors in Alaska, and our investments extend beyond our business to the communities where we operate and where our employees and their families live," says Dawn Patience, public...