Over the next two weeks, I am traveling to two of the most important oil-producing states in the U.S. This week I am in Alaska, and next week I will be in North Dakota. As I am traveling through these states, I thought it might be of interest to provide an overview of these key oil producers.

The first oil in Alaska was produced in the late 1890s, but oil production was a minor industry there until the discovery of the Prudhoe Bay oilfield in 1967. When Prudhoe Bay was discovered on Alaska’s North Slope, it was the largest oil field in the U.S. with a total resource of 25 billion barrels of crude oil, and a total recoverable estimate of 16 billion barrels. The field also contained an estimated recoverable natural gas deposit of 26 trillion cubic feet (Tcf). 

Oil companies flocked to the region, but there was no infrastructure to get this oil to market. Because the Beaufort Sea north of the region freezes in the winter, a pipeline was the only feasible option. The Trans-Alaska Pipeline System (TAPS), a consortium of ARCO, British Petroleum, and Humble Oil surveyed a route for the pipeline and began construction. 

But events played out much like they still do today. There were protests and court challenges, primarily from Native Americans and environmentalists (a situation reminiscent of the Dakota Access Pipeline). Then in 1973, President Nixon pushed through the Trans-Alaska Pipeline Authorization Act, which cleared away legal challenges from those seeking to stop construction of the pipeline.

The Alaska Pipeline didn’t start production until 1977, during President Carter’s first year in office. Oil production in Alaska surged as the pipeline came online and reversed six years of oil production declines in the U.S. Alaska’s oil production rose from under 200,000 barrels per day (BPD) in 1976 to more than 1.2 million BPD in 1978, and ultimately topped 2 million BPD in 1988. That year Alaska produced a quarter of U.S. oil production, and briefly topped Texas as the top oil-producing state in the U.S.

But oil fields eventually peak and decline, and 1988 marked the peak of Alaska’s oil production. Since then, production has fallen steadily and is now only a quarter of its peak rate. Not even the surge in oil prices over the past decade halted the decline.

Alaska was notably absent from the shale oil boom. There are some shale resources in the state, however. The U.S. Geological Survey (USGS) estimated that the Shublik Formation on the North Slope contains technically recoverable resources of up to 2 billion barrels of oil and nearly 80 Tcf of gas. But it is still unknown as to whether those resources will prove to be economically recoverable. 

Oil production in Alaska has long been dominated by three companies: BP (NYSE: BP), ExxonMobil (NYSE: XOM), and ConocoPhillips (NYSE: COP). BP is the operator of the Greater Prudhoe Bay Field and owns 26% of the field. ExxonMobil and ConocoPhillips each own 36%.

Alaska remains the country’s 4th largest oil producer, behind Texas, North Dakota, and California respectively. But none of these states are as dependent on oil revenues as Alaska. Taxation of North Slope oil has generated more than $50 billion in revenue for the state of Alaska, which generates around 80% of the state’s revenues. About one-third of the economic base in Alaska is derived from oil-related activities. 

Next week I will be reporting from North Dakota. Like Alaska, North Dakota rose from oil production obscurity to become (at present) the nation’s second largest oil-producing state. I will be in North Dakota to deliver a talk at the 2017 Bakken Conference and Expo and then tour some oil production facilities in the Bakken. 

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