Not that long ago, my family hosted a surprise birthday party for my mother. She had reached a milestone in life (I won’t say which one as she would not be happy with me if I did). One of the things she said was “It’s no big deal – it’s just a day.” We disagreed. It was a big deal to us. It was more than a day; it was a milestone and an opportunity for us all to reflect on the impact she has had on our lives.
You may not know it, but the State of Alaska has quietly achieved one of those significant milestones. Like my mother’s birthday, it is a really big deal. It’s a milestone that we should stop and recognize for the impact it has had on our state.
Late last year, Prudhoe Bay produced its 12 billionth barrel of oil. It quietly came and went and none of us seemed to notice.
Perhaps, we Alaskans have become quite used to large numbers. After all, we are the largest state in the union by a long shot and our resources are second to none. However, no matter how you slice it, 12 billion is a massive number. 12 billion barrels equals more than half a trillion gallons. If that doesn’t impress you – it’s like filling over 770 thousand Olympic swimming pools full with oil.
When Prudhoe Bay was discovered in 1968, they knew it was a big oil field. On June 20, 1977, the field came on line and it was immediately the largest oil field (by production) in North America. The consensus that day was that this massive oil field would operate for about 25 years and produce around 9.6 billion barrels of the estimated 22.6 billion barrels in place. Fast forward to 2013 – Prudhoe Bay is now nearly 11 years and more than 2.4 billion barrels of production beyond that 1977 forecast and it is still the largest oil field in North America.
Cumulatively, Prudhoe Bay field has produced more oil than any other field in the United States and is in the top 20 in the history of the world. At its peak, Prudhoe Bay accounted for up to 20% of US oil production. Unfortunately, with decline, it is only about 8% today.
You likely knew all of this already. As one of my college professors was known to say “So what?”
Here’s why we should stop and reflect on the impact Prudhoe Bay has had on us all.
First, we need to stop and think about what a remarkable achievement it is for Prudhoe Bay to go from 9.6 billion to 12 billion barrels with another couple of billion barrels of light oil to go. That doesn’t just happen. A lot of dedicated and talented Alaskans have committed their careers to finding ways to safely and efficiently increase the recovery of this massive oil reservoir.
It is amazing to think about the technology that has either been invented, tested or improved in Alaska. High tech imaging, improved drilling and completion techniques, and significant advancements in enhanced oil recovery (EOR) techniques have improved the recovery of Prudhoe Bay barrels. EOR has been the most significant contributor to improved recovery – more oil has been produced because of the strategic use of techniques like natural gas reinjection on a massive scale and water and natural gas liquids (NGL) (like propane) injection. Not many people realize that by putting Prudhoe’s own natural gas and NGL to work strategically, Prudhoe has been able to deliver billions of barrels more than ever thought.
Second, without Prudhoe Bay opening the door to investment, there would be no Northstar, Endicott, Milne Point, Oooguruk, Aurora, Borealis, Lisburne, or Niakuk. In fact, because of Prudhoe Bay there are 24 fields operating on the North Slope today. And as long as the oil flows from Prudhoe Bay, it creates more opportunities for North Slope production.
Third, we need to recognize the role that Prudhoe Bay has had in making the state of Alaska what it is today. Prudhoe Bay has been responsible for tens of thousands of direct jobs, billions of dollars in government revenues and much of the prosperity we see around us. As we end another year’s tax season, I am reminded that because of Prudhoe Bay we have no income tax and no state sales tax. Even without those revenue sources, according to the Institute of Northern Economic Research, Alaska’s state government has received $178 billion in petroleum revenues from oil, the largest share from Prudhoe. Oil share of the state’s discretionary income has grown steadily since the 1970s and today pays for about 90% of the discretionary government services we all enjoy. And don’t forget the $42 billion in the Permanent Fund.
A few years ago, a respected Alaskan stood in my office and looked out at south Anchorage. “Phil,” he said. “What do you see out there?” I took him literally and started to describe the roads, the buildings and the businesses when he stopped me. “No. What you see out there is oil. When I was young, there was nothing but a dirt trail and a few homes south of this building. What made all of this happen was oil. Stop and think about that for a minute.” That’s what I am doing today. I am marveling at Alaska’s remarkable past and the impact each and every one of those 12 billion barrels have had on our state. It’s quite the milestone.
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