THE EXPLORERS 2006 - The past, the present, a new day 2006-2046

Judy Brady

AOGA Executive Director

The history of the oil and gas industry and the State of Alaska is the story of huge risks taken, incredible challenges met, and the promise kept to provide a secure economic base for Alaska and its people.

Beginning with the Swanson River discovery that led to statehood, to the development of Prudhoe Bay and the construction of the trans-Alaska oil pipeline, oil and gas development has been, and continues to be, the economic linchpin for Alaska’s present and future.

From l959 to today, revenues from oil and gas development touch every Alaskan by providing thousands of jobs and financing for schools, roads, harbors and rural airports. Revenues from the industry also support statewide community growth.

• More than 34,000 jobs are generated each year in Alaska by the oil and gas industry.

• The State of Alaska has collected over $72 billion from the oil and gas industry since the l957 Swanson River discovery.

• Since the completion of the trans-Alaska oil pipeline, petroleum revenues have averaged 84 percent of the state’s unrestricted general fund.

• The oil and gas industry has invested over $50 billion in North Slope and Cook Inlet infrastructure.

• The Alaska Permanent Fund, now worth over $35 billion, sets aside a portion of oil revenue for future generations and provides an annual dividend for every Alaskan.

• State petroleum revenues reached a record of $4 billion in FY 2006, nearly 90 percent of the general fund.

• The proposed Alaska Natural Gas Pipeline Project, estimated to cost more than $20 billion, will be the largest pipeline project in the world.

The accomplishments of the past didn’t “just happen.” They came about because of hard work, hard decisions made and a confidence in the future.

Today both the State of Alaska and the industry face serious challenges and the challenges of the next 40 years will be much different than those of the past.

The most serious threat to Alaska’s future is declining oil production. Revenues to the state in the past years have been almost exclusively oil revenues. Now the maturing North Slope “super giant” fields are in natural decline. Production through the trans-Alaska pipeline is less than half what is was in l989 — we have a pipeline that is more than half empty.

A natural gas pipeline and new oil production are absolutely essential to Alaska’s future. New investment in Alaska is absolutely essential to both.

What is the future for Alaska? A natural gas pipeline; heavy oil; in-field development; satellite development; wildcats; offshore; ANWR; National Petroleum Reserve-Alaska; and new basins.

All of these developments require new investment. Some of these developments, in particular the gas pipeline, require taking huge risks and making huge investments. To secure our economic future, Alaska and the oil and gas industry must be prepared to take new risks and adopt new ways of doing business.

We are at a turning point in Alaska’s history. It will take thoughtful public policy, teamwork and tenacity to meet the challenges ahead. Working together, the oil and gas industry and the State of Alaska have created a strong economic base. Working together, we can create a vibrant future.