CONSTRUCTION

from Alaska Business September 2021

by Alaska Business

ANC CONSTRUCTION

Images of Infrastructure

What industry has made of Alaska

By Tasha Anderson

Alaskans are both connected to, and disconnected from, oil and gas in a way that isn’t replicated anywhere else.

The development of oil and gas resources directly impacts every Alaskan resident through dividends paid out from the Alaska Permanent Fund. This was a deliberate choice made by Alaskans for the benefit of generations to come.

According to the History of the Alaska Permanent Fund by the Alaska Permanent Fund Corporation, “In 1974, as construction of the Trans Alaska Pipeline neared completion, Alaskans were looking towards the future and deliberating on how to best utilize the anticipated mineral royalties… Alaska’s Constitution does not allow for dedicated funds, so in order to direct these oil revenues into a permanent fund, the Constitution had to be amended.” In 1976, “by a margin of 75,588 to 38,518, a Constitutional Amendment establishing the Permanent Fund was approved.”

The Alaska Constitution now states: “At least twenty-five percent of all mineral lease rentals, royalties, royalty sale proceeds, federal mineral revenue sharing payments and bonuses received by the State shall be placed in a permanent fund, the principal of which shall be used only for those income-producing investments specifically designated by law as eligible for permanent fund investments. All income from the permanent fund shall be deposited in the general fund unless otherwise provided by law.”

The first deposit into the fund, on February 28, 1977, was $734,000. The first dividend check of $1,000 was distributed two years later.

It has since grown: as of December 31, 2020, the total fund value was approximately $71.7 billion.

Over the years, as production and oil prices have waxed and waned, how much money every Alaskan finds in his or her pocket has varied significantly. The lowest individual payment to ever come out of the fund was $331.29 in 1984. The highest was $2,072 in 2015 (though in 2008 when then-Governor Sarah Palin signed Senate Bill 4002, which distributed a one-time payment of $1,200 to every PDF-eligible Alaskan, it made the total for that year higher).

But although the amount has varied, every year since 1978 Alaskans have had direct access to funds provided by oil and gas development, which they use in countless ways: paying down debt, funding vacations, purchasing luxury items, catching up on bills, building savings accounts—and the possibilities have only expanded over the years through Alaska Permanent Fund programs like Pick.Click.Give, which connects Alaskans to nonprofits, or the Education Raffle, a quick and convenient way for Alaskans to opt into supporting public education.

Oil money is everywhere, and not just through the Permanent Fund Dividend.

According to The Role of the Oil & Gas Industry in Alaska’s Economy, published in January 2020 and prepared by McKinley Research (formerly McDowell Group) for the Alaska Oil and Gas Association, “Combined, [in 2018] the employment and wages impacts of Primary Company spending in the private sector together with taxes and royalties to Alaska’s state and local governments totals 77,600 jobs in Alaska, or 24 percent of all wage and salary jobs in Alaska [and] $4.8 billion in Alaska wages (including all multiplier impacts and jobs related to taxes and royalties). For every Primary

Company job, there are eight more jobs supported by Primary Company activities in Alaska, and seven more jobs supported by oil-related taxes and royalties.”

And yet, despite the many ties Alaskans have to the oil and gas industry, relatively few interact with it directly. Most oil production and exploration takes place on the North Slope, hundreds of miles north of the state’s population centers in Anchorage, Juneau, Fairbanks, and the Mat-Su. The nature of the Slope requires workers to fly in and reside in local camps a few weeks at a time, literally separating the workforce from their home communities.

The Dalton Highway does make northern travel possible, but the road isn’t built out for casual traveling or sightseeing as it lacks rest stops, gas stations, options for food—portions of it still have no cell service (though Alaska’s telecommunications providers are working on that).

Even the Trans Alaska Pipeline, an iconic, massive piece of oil and gas infrastructure, is primarily out of sight south of Fairbanks.

And while there is some oil and gas production in Cook Inlet, the majority takes place offshore in the inlet itself.

Indirectly we all have ties to the oil and gas industry, but according to The Role of the Oil & Gas Industry in Alaska’s Economy, in 2018 the “primary” oil and gas companies employed approximately 4,111 Alaskans and there were just fewer than 5,800 Alaska resident jobs in the oil and gas support services sector. Several factors build (literal) distance between oil and gas production and the majority of Alaskans: required safety and security precautions, the fact that production primarily takes place in areas with incredibly limited access, and the relatively few people that work directly in those spaces. These all combine with the result that, while the money is everywhere—the work is often out of sight.

In the following photo essay, we want to give our readers a better vision of the oil and gas industry infrastructure behind their last vacation to Hawaii or that final push to pay off a college loan.

The images have been generously provided by ConocoPhillips Alaska, Hilcorp, Alyeska Pipeline Service Co., and Judy Patrick Photography. www.akbizmag.com

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Northstar Island, 6 miles offshore of Prudhoe Bay, was constructed in 2000/2001 by BP and is operated today by Hilcorp.

Judy Patrick | Hilcorp

The Central Compression Plant (foreground) and Central Gas Facility (background) at Prudhoe Bay.

Judy Patrick | Hilcorp

The Central Gas Facility at Prudhoe Bay, the largest gas handling facility in the world, behind which is the Prudhoe Bay Discovery Well.

Judy Patrick | Hilcorp

Flow Station 1 at Prudhoe Bay.

Judy Patrick | Hilcorp

On the North Slope, Milepost 0 of the 800-mile TAPS.

Alyeska Pipeline Service Company

ConocoPhillips’ Alpine Oilfield; construction and development took three years, 6 million man-hours, and more than $1.3 billion.

Judy Partrick | ConocoPhillips Alaska, Inc

ConocoPhillips’ Kuparuk River Unit; it’s the second largest oilfield in North America and began production in 1981.

Judy Partrick | ConocoPhillips Alaska, Inc

Valdez Marine Terminal; here oil from the Trans Alaska Pipeline System is transferred from the pipeline to tankers for marine transport.

Alyeska Pipeline Service Company

Deadhorse Aviation Center and a Shared Services Aviation aircraft in 2016; today, Alaska Airlines transports workers to and from their shifts on the North Slope.

Judy Patrick