NON-TRIVIAL TRIVIA

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NonTrivial Trivia

How well do you know Alaska’s oil and gas industry?

By Connor Lockmiter

It’s easy to take oil for granted in Alaska. The average citizen knows enough to be grateful that money from petroleum development is the reason the statewide income tax was abolished and why the Permanent Fund was established, sharing its dividends with residents each year. Beyond that, anyone not connected to the industry can be confused or overwhelmed by the terminology. Well, here’s some whelmable knowledge to increase appreciation for Alaska’s richest resource—and sharpen skills for pub trivia, as a bonus.

True or False: All of Alaska’s oil and gas resources are located near the northern coast of Alaska, often referred to as the North Slope. False

Oil production fields located near the north coast of Alaska are generally referred to as the “North Slope,” but it is not the only oil and gas resource in Alaska. Cook Inlet is Alaska’s second commercial oil region—or rather, first. The Swanson River oil field northeast of Nikiski was discovered in 1957 and is still producing today. Most wells in Cook Inlet are underwater, though, beneath ten offshore oil platforms and two offshore natural gas platforms.

True or False: The terms “North Slope” and “Prudhoe Bay” are interchangeable, referring to any oil coming from Alaska’s Arctic region. False

Prudhoe Bay is the name of one unit on the North Slope—yes, the largest and the site of the Prudhoe Bay Operations Center, the central camp for thousands of workers. However, ten other units are currently producing. Milne Point, northwest of Prudhoe Bay, is another onshore unit operated by Hilcorp, which also operates Northstar and Duck Island, just offshore from Prudhoe Bay. ConocoPhillips owns nearly all of the Kuparuk River, Colville River, and Greater Mooses Tooth units, west of Prudhoe Bay. ExxonMobil owns Point Thomson, to the east. That leaves Oooguruk and Nikaitchuq, two offshore units owned by Italian oil company ENI, and the Badami unit owned by Savant Alaska. Another True or False: Three companies control more than half of the land leased for oil production in Alaska. True

Alaska has issued leases for approximately 3.2 million acres for oil production. Three entities associated with ConocoPhillips control 566,870 acres. Two entities associated with Hilcorp control 759,743 acres. An entity associated with Oil Search, recently merged with the Santos group, controls 540,328 acres. Combined, these three companies control approximately 55 percent of the currently issued leases.

True or False: The Trans Alaska Pipeline System (TAPS) crosses three mountain ranges to bring oil from the North Slope to the shipping terminal in Valdez. True

TAPS, constructed from 1974 to 1977, stretches 800 miles from the North Slope to Prince William Sound. The pipeline crosses the Brooks Range, the Alaska Range, and the Chugach Range. It also crosses 34 rivers and nearly 500 smaller streams.

True or False: Oil production flowing through TAPS today is approximately one-third of the flow rate that the pipeline had at its peak. False

It’s less than that. The average throughput of oil through TAPS in February 2022 was 501,981 barrels per day. The highest daily throughput was 2,145,297 barrels in a single day on January 14, 1988. That makes today’s production approximately one-quarter of the throughput that the pipeline experienced at its maximum.

True or False: It took twenty-two years after the discovery of oil on the North Slope before oil production began. False

On March 13, 1968, the Atlantic Richfield Company and Humble Oil and Refining Company announced the discovery of oil at Prudhoe Bay.

First oil flowed through TAPS in 1977, making the gap between discovery and production only nine years. TAPS was designed, permitted, litigated, permitted again, and built entirely within that period. Even more trivially, the first barrel actually came out of Prudhoe Bay in 1969—literally one barrel, as a test of whether SS Manhattan, a tanker modified to be an icebreaker, could deliver North Slope crude via Canada’s Northwest Passage. Suffice to say, the sea route didn’t work.

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True or False: By acreage, nearly half of the oil and gas production leases in Alaska are offshore. False

Approximately 2.2 million acres of onshore land in Alaska are leased for oil and gas production. Approximately 1 million acres of oil and gas leases are offshore. That makes the ratio of offshore leases slightly less than onethird.

True or False: Nearly one quarter of all land in Alaska is being used for oil and gas production. False

Approximately 2.2 million acres of land in Alaska have been leased for oil and gas production. With approximately 365 million acres of land making up the state, only 0.6 percent of its land is currently dedicated to the production of oil and gas.

True or False: As far as is currently discovered, there is more than twice as much oil available to produce on the North Slope as there is in Cook Inlet. True

The US Geological Survey estimated as much as 600 million barrels of oil can be produced with available technology in Cook Inlet. For comparison, current technology can produce nearly 6 True or False: Cook Inlet oil and gas production leased acreage is less than one-quarter the size of the North Slope. True

There are approximately 450,000 acres leased for production in Cook Inlet. The North Slope has approximately 2 million acres of land leased for production.

True or False: Despite the huge volume of oil produced in Alaska, all of the state’s gasoline is refined in California and shipped back north. False

That would be silly! Which is why a cynic might believe it. Three refineries operate within the state. Petro Star runs the two smaller refineries, at North Pole and Valdez. The larger of the three, the Kenai facility now owned by Marathon, does indeed produce gasoline for Alaskan consumers. The refinery also makes jet fuel, ultra low sulfur diesel, propane, and asphalt for local use.

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However, it is true that that the majority of Alaska’s crude oil leaves the state, bound for refineries such as BP’s Cherry Point in Washington.

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True or False: BP entirely left Alaska when it sold its assets to Hilcorp. False

When the transaction between BP and Hilcorp completed on July 1, 2019, BP’s ties to Alaska were not entirely severed. BP agreed to remain secondarily liable for dismantlement, removal, and restoration on all North Slope assets in place at the time of the transaction and provide a guarantee to that effect.

The air temperature along TAPS’ route can range from -80°F to 95°F, which makes the potential difference 175°F.

True or False: All of Alaska’s state income comes from revenue from oil and gas production. False

In FY2021, of the State’s $29.8 billion in revenue, $19.8 billion was from the Permanent Fund’s investment income, $7.6 billion coming from the US federal government, and approximately $1.6 billion of revenue from oil and gas royalties, leases, and taxes. Arguably (this is pub trivia after all) the $19.8 billion counts as oil money, considering where the Permanent Fund got its nest egg to begin with. However, the state treasury also collects $300 million to $400 million of non-petroleum revenue (mostly taxes on alcohol, tobacco, marijuana, motor fuel, and insurance premiums, plus taxes on mining, cruise ship gambling, charitable gaming, fisheries, and corporate income). So no, not all state income comes from oil and gas; just four times more than all other instate revenue sources, not counting Permanent Fund earnings.

True or False: From January 1, 2019 to March 1, 2022, only thirty-seven new wells were completed in Alaska. False

In that time period, 333 wells were completed. This includes wells drilled for oil and gas production, wells for storage of petroleum or other production fluids, and wells drilled for injection for fracturing and other production purposes.

True or False: For North Slope oil production facilities, all of the available oil within those leases has been discovered. False

The US Geological Survey estimates that there could be 3.6 billion barrels of oil and 8.9 trillion cubic feet of natural gas still undiscovered within the same areas on the North Slope where oil and gas production is already occurring.

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What good are facts if you can’t back them up? Alaska has fantastic access to information about the oil and gas industry. Below are the many, many, many sources used as this article was researched and written.

• Alaska Oil and Gas Conservation

Commission. (2022, 3 21). AOGCC

DATA MINER. Retrieved from http:// aogweb.state.ak.us/DataMiner4/

Forms/WellHistory.aspx

• Alyeska Pipeline Service

Company. (2021). Fast Facts.

• Alyeska Pipeline Service Company. (2022). Historic Throughput.

• Alyeska Pipeline Service Company. (2022). TAPS Facts Tidbits.

• bp. (2020). bp completes sale of upstream Alaska business.

• Division of Oil and Gas. (2022). Acreage by Lessee - Summary.

• Division of Oil and Gas. (2021). Cook Inlet Oil and Gas Units. • Division of Oil and Gas. (2022). Lease Status.

• Division of Oil and Gas. (2022). Maps & GIS.

• Division of Oil and Gas. (2021). North Slope Oil & Gas Units.

• Division of Oil and Gas. (2021).

Working Interest Ownership of Cook Inlet Units.

• Division of Oil and Gas. (2021).

Working Interest Ownership of North Slope Units.

• Governor’s Oversight

Committee. (2020). Due

Diligence Memorandum.

• Richard G. Stanley, B. S. (2011).

US Geological Survey 2011

Assessment of Undiscovered Oil and Gas Resources of the Cook Inlet Region, South-Central Alaska.

• State of Alaska. (2022). alaska.gov/ kids/learn/aboutgeography.htm

• Tax Division. (2022). Spring 2022 Revenue Forecast.

• US Department of Energy. (2022).

March 13, 1968: Oil discovered on Alaska's North Slope.

• US Geological Survey. (2011).

National Assessment of Oil and Gas Fact Sheet.

• US Geological Survey. (2020).

Assessment of Undiscovered Oil and Gas Resources in the Central

North Slope of Alaska, 2020.

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