Alaska Oil and Gas Association President Kara Moriarty sees a bright spot for Alaska’s oil future with major projects either in development or coming online in the next five years.
ConocoPhillips Alaska, Hilcorp LLC, and Santos are the largest North Slope operators. Hilcorp bought British Petroleum’s North Slope assets in 2019, which include Prudhoe Bay, Milne Point and Point Thompson, along with its interest in the trans-Alaska pipeline.
ConocoPhillips, the state’s largest oil producer, is currently developing the newly-approved Willow oil development and the Nuna project in the Kuparuk River Unit. Moriarty said while Willow has received the most attention over the past year, it won’t start producing until 2029. Nuna, however, began delivering oil in December and is expected to produce 20,000 barrels a day at its peak.
While Willow won’t be operational for years, Moriarty noted the economic benefits have already started as ConocoPhillips started an aggressive construction cycle.
“This is a large field and we are happy to have it,” she said during a Tuesday Greater Fairbanks Chamber of Commerce presentation.
The Santos-owned Pikka project is close to completion and is expected to produce 80,000 barrels by the second half of 2026. Santos has already made significant community investments in Nuiqsut, spending $59 million on a bridge, boat launch, and improvements to the village wastewater treatment plant. During its peak construction period, Santos also created 2,220 jobs and moved 224 people into a downtown Anchorage office location.
“For almost the past 30 years, economic studies will show that our industry has the highest economic impact in Alaska,” Moriarty said. She noted that every direct oil/gas job supports another 15 indirect in the state, while every dollar earned generates another $4 in indirect wages.
She noted the oil and gas corporations support more than 1,000 Alaska businesses, from food service to transportation.
“It is those businesses that make this industry work,” Moriarty said.
A positive outlook on Cook Inlet gas
Moriarty briefly touched on the looming natural gas crunch in Cook Inlet, noting that the state faced a similar crisis in 2008 and 2009.
“We faced a similar situation 15 years ago that we are facing today,” Moriarty said.
Hilcorp, LLC, the major Cook Inlet operator, informed its customers in 2022 that it was unlikely to be able to renew any contracts as its source of accessible natural gas as soon as 2026 or 2027.
The news caused Alaska Railbelt utilities to scramble for solutions. Southcentral Alaska utilities and Interior Gas Utility relied on Cook Inlet gas for their power generation or heating needs, while Golden Valley Electric Association purchased power from Anchorage-area utilities.
Chugach Electric Association and Enstar Natural Gas have both started moving on plans to import natural gas for the foreseeable future, while IGU signed agreements with Harvest Midstream and Hilcorp to truck liquefied natural gas from Prudhoe Bay to Fairbanks starting in late April.
However, she noted that Cook Inlet isn’t running short on natural gas but is harder to access.
“We don’t have developed resources today to meet the demand,” Moriarty said.
Alaska company HEX/Furie decided in 2023 to start production efforts in the Cook Inlet’s Kitchen Lights Unit. Enstar signed a five-year contract with Furie to provide an expanded natural gas supply starting with 3 billion cubic feet of gas in 2026.
However, the full contracted volume requires additional drilling. If outcomes are positive, the amount could jump to 9.5 billion cubic feet in 2027 for three years, representing 25% of Enstar’s annual gas demand.
HEX/Furie also benefits from a state royalty relief approved by the Alaska Legislature, which allows the project to be economical.
Hilcorp plans to continue drilling in its fields throughout 2025 to tap into its 300 billion cubic feet. Bluecrest is looking for investors to develop the Cosmopolitan unit, which has an estimated 250 billion cubic feet.
However, based on an analysis by industry expert Wood Mackenzie, over the past 15 years, Cook Inlet explorations have only had 9% success in yielding commercial discoveries.
Need for a ‘stable tax regime’
While Moriarty said Alaska’s oil and gas outlook is positive, she stressed the need to maintain a stable tax and royalty environment.
Over the past four years, Alaska lawmakers have introduced or entertained bills adjusting the state’s oil and gas tax structure to help counter a chronic budget shortfall.
Two bills were introduced this year. Senate Bill 112 would reduce the maximum tax credits paid to oil companies from $8 to $5 per barrel, generating $400 million in annual revenue for the state. SB 92 would apply corporate income taxes on Hilcorp, which doesn’t pay because of its status as a private “S corporation” entity.
However, no major rewrite of state oil taxes has been done since Senate Bill 21 was passed in 2013, which slashed oil industry taxes. Voters rejected a 2020 ballot measure that would increase the taxes on companies operating on legacy fields, such as those owned by Hilcorp.
Alaska faces as projected $650 million shortfall over two fiscal years based on lower-than-expected oil prices. In FY 2026, the amount is expected to fall to $68/barrel.
Moriarty said SB 21 did much to stabilize Alaska’s oil and gas industry for a decade. Had it not passed, she said, analysts have noted that oil production would have been much less.
Long-range projections in 2013 estimated North Slope production would have hit around 300,000 barrels a day. Instead, SB 21 stabilized the production and increased it by 160,000 barrels above the forecasted trajectory.
“All of that happened during volatility in the market prices,” she said. “A stable tax regime can help weather the price volatility when you have a stable fiscal environment.”
The Department of Revenue’s latest forecast shows production gradually increasing over the next decade and could hit 600,000 barrels a day by 2032.
“That is quite a difference from the forecast in 2014,” Moriarty said.
She acknowledged prices could rise or fall depending on market demand, but a stable tax revenue allows companies to continue investing.
