What others say: New oil find will help state, but doesn’t solve budget problems

It seems that almost every time talk picks up about Alaska’s oil days being on the wane, a new discovery extends the horizon a bit further. On Thursday, the talk in Juneau pivoted suddenly from budget woes to potential opportunities offered by an expanded field on the North Slope, which producer partners Repsol and Armstrong.

Oil and Gas are calling the biggest onshore find in North America in 30 years. Indeed, there’s much to cheer about the find from the standpoint of the state’s budget and economy. At the same time, it isn’t a way to sidestep addressing Alaska’s fiscal situation.

The discovery took place near the North Slope village of Nuiqsut at a prospect known as Horseshoe. It expands a previously discovered oil formation known as the Pikka unit, on the edge of the National Petroleum Reserve-Alaska. The unit, when it was first discovered in 2015 by the two companies, was estimated to range between about 500 million barrels and 3.76 billion barrels of recoverable light oil. With the additional data from the Horseshoe wells, Repsol and Armstrong say they have identified a total of 1.2 billion barrels in recoverable oil.

When the two companies initially announced the find in 2015, they estimated the Pikka unit could produce as much as 120,000 barrels of oil per day. That’s close to a quarter of the trans-Alaska oil pipeline’s current throughput, which stood at an average of about 517,000 barrels per day in 2016. Given that the Pikka formation is on state land, that stands to have a considerable positive impact on the state’s bottom line.

But the find, as well as revenue from it that will flow to the state, will take time to develop. Repsol and Armstrong estimate first production from their wells in the area will take place in 2021. That’s beyond the horizon of when state savings would run out if current spending and revenue patterns are maintained. Though the Pikka Unit find and its expansion via the Horseshoe wells are a significant positive development with regard to the future of oil development on the North Slope, they won’t solve the state’s budget woes or alleviate the need for immediate budget action to put Alaska on a stable revenue trajectory.

Repsol and Armstrong’s new field will be a boon for the state. But while Alaska’s leaders are right to cheer the expanded discovery, they shouldn’t see it as an excuse to take their eye off the ball. Alaska needs a revenue solution that doesn’t lean so heavily on oil production; the Pikka Unit will give the state’s economy some breathing room, but not a new lease on life. To think otherwise would be repeating the same mistake that has put the state in its current budget condition.

— Fairbanks Daily News-Miner, March 10, 2017

More in Opinion

An array of stickers awaits voters on Election Day 2022. (Clarise Larson / Juneau Empire file photo)
Opinion: The case for keeping the parties from controlling our elections

Neither party is about to admit that the primary system they control serves the country poorly

Voters fill out their ballots at the Challenger Learning Center in Kenai, Alaska on Election Day, Nov. 8, 2022. (Jake Dye/Peninsula Clarion)
Voter tidbit: Important information about voting in the upcoming elections

Mark your calendar now for these upcoming election dates!

Larry Persily (Juneau Empire file photo)
Opinion: State’s ‘what if’ lawsuit doesn’t much add up

The state’s latest legal endeavor came July 2 in a dubious lawsuit — with a few errors and omissions for poor measure

The entrance to the Homer Electric Association office is seen here in Kenai, Alaska, on May 7, 2020. (Photo by Brian Mazurek/Peninsula Clarion file)
Opinion: Speak up on net metering program

The program allows members to install and use certain types of renewable generation to offset monthly electric usage and sell excess power to HEA

Gov. Mike Dunleavy signs bills for the state’s 2025 fiscal year budget during a private ceremony in Anchorage on Thursday, June 25, 2024. (Official photo from The Office of the Governor)
Alaska’s ‘say yes to everything’ governor is saying ‘no’ to a lot of things

For the governor’s purposes, “everything” can pretty much be defined as all industrial development

Alaska Permanent Fund Corp. board members, staff and advisors meet Oct. 30, 2023. (Mark Sabbatini / Juneau Empire file photo)
Opinion: The concerns of reasonable Alaskans isn’t ‘noise’

During a legislative hearing on Monday, CEO Deven Mitchell referred to controversy it’s created as “noise.”

(Juneau Empire file photo)
Opinion: Crime pays a lot better than newspapers

I used to think that publishing a quality paper, full of accurate, informative and entertaining news would produce enough revenue to pay the bills

Mark Sabbatini / Juneau Empire file photo
Lt. Gov. Nancy Dahlstrom addresses the crowd during an inaugural celebration for her and Gov. Mike Dunleavy at Elizabeth Peratrovich Hall on Jan. 20, 2023.
Opinion: The many truths Dahlstrom will deny

Real conservatives wouldn’t be trashing the rule of law

Gov. Mike Dunleavy discusses his veto of a wide-ranging education bill during a press conference March 16 at the Alaska State Capitol. (Mark Sabbatini / Juneau Empire file photo)
Governor, please pay more attention to Alaskans

Our governor has been a busy guy on big issues.

Priya Helweg is the acting regional director and executive officer for the Region 10 Office of Intergovernmental and External Affairs, Office of the Secretary, U.S. Department of Health and Human Services. (Photo courtesy U.S. Department of Health and Human Services)
Happy Pride Month

This month is dedicated to acknowledging and uplifting the voices and experiences of the LGBTQI+ community

A roll of “I voted” stickers sit at the Alaska Division of Elections office in Juneau in 2022. (Ben Hohenstatt / Juneau Empire File)
Strengthening democracy: Native vote partners to boost voter registration

GOTNV and VPC are partnering to send over 4,000 voter registration applications this month to addresses and P.O. boxes all over Alaska

Hiroko Masuike/The New York Times
Former President Donald Trump arrives at Trump Tower after he was found guilty of all counts in his criminal trial in New York on May 30.
Opinion: Trump’s new fixers

Fixers from Alaska and elsewhere step in after guilty verdict