North Slope Oil Investment Pipeline Could Exceed $22 Billion, Report Shows

Katie Berry, president and economist at McKinley Research Group, told Alaska legislators at an Alaska Oil and Gas Association luncheon on March 19 that oil and gas companies anticipate roughly $22 billion in investments over the next several years on the North Slope and in Cook Inlet, covering construction, capitalized drilling, and support services. The figure, drawn from confidential data shared by major oil companies and public analysis by the Alaska Department of Natural Resources, signals a production landscape that looks markedly different from the one operating today.

The numbers Berry presented to the legislative audience underscore just how much the North Slope's output is set to shift. DNR forecasts increased production over the next decade, with more than half of the output by 2031 coming from fields not yet operating. By 2034, Berry said, more than 60 percent of North Slope production will come from fields that today have yet to put a single drop into the Trans Alaska Pipeline System. That trajectory points toward TAPS carrying more than half a million barrels of crude oil per day within a decade as new projects come online.

The pace of development is significant enough that AOGA updated its economic impact report ahead of schedule, commissioning McKinley Research Group two years after the previous report rather than waiting the customary three years. The study measured economic impacts across six geographies: the Municipality of Anchorage, the Kenai Peninsula Borough, the Matanuska-Susitna Borough, the Fairbanks North Star Borough, the City of Valdez, and the North Slope Borough.

For the North Slope Borough, which relies heavily on property taxes from the oil and gas sector, the broader fiscal picture from the McKinley analysis is substantial. Government revenue from the industry totaled $3.5 billion in taxes, royalties, and fees, with $3 billion flowing to the State of Alaska and $510 million to local governments. That $3 billion state share represented approximately 19 percent of total Alaska government revenue. Vendor spending across the industry reached $5.8 billion with more than 1,000 Alaska businesses, including roughly $1.9 billion in construction and $1.3 billion in oil and gas services, with additional flows into retail, wholesale, transportation, and professional services.

Projected annual state oil and gas revenue sits at approximately $2 billion between FY2023 and FY2028, according to McKinley and AOGA materials, with new production expected to offset forecasted declines in existing fields. A separate projection puts the figure closer to $2.4 billion annually, with rising royalties from new fields accounting for roughly 27 percent of unrestricted general fund revenue on average. Berry cautioned that these figures remain subject to oil price movements and will be refined by Department of Revenue updates.

Among the projects driving the investment outlook, Santos, the second largest oil and gas leaseholder in Alaska, acquired the Pikka project through its 2021 purchase of Oil Search Ltd. Santos and non-operating partner Repsol reached a final investment decision on Pikka in 2022, and construction is underway. The Alaska Gasline Development Corporation is separately pursuing Alaska LNG, a proposed 800-mile natural gas pipeline capable of moving 3.5 billion cubic feet of gas per day from the North Slope to a liquefaction facility in Nikiski.

The McKinley analysis described the industry's "record-high jobs multiplier" without specifying its exact value, and characterized the sector as Alaska's strongest economic engine, noting its "unique production stability amid price volatility" and "continued capital commitment.