Opinion Piece 35th anniversary of TAPS, June 20, 2012 By Sen. Lisa Murkowski
The Trans-Alaska Oil Pipeline System, commonly referred to as TAPS, turns 35 years old this week. We should all wish the pipeline a very happy birthday, and most importantly, many happy returns.
Since oil first flowed down the 800-mile pipeline on June 20, 1977, TAPS has delivered more than 16.6 billion barrels of oil. For Alaskans, that translates into more than $171 billion in revenues to the state treasury.
About $130 billion of that has been used to provide government services; $31.4 billion has gone to the Alaska Permanent Fund and nearly $10 billion to the state’s budget reserves, providing both current dividends and savings for future generations.
TAPS delivers more than just dollars, however. There would be no oil development in Alaska without a way to get the oil to market, and oil production is a major jobs engine for the state. According to the University of Alaska’s Institute of Social and Economic Research, oil production supports approximately 42,000 jobs direct jobs, 31,000 government jobs, and another 18,000 private-sector jobs. This adds up to three out of every 10 jobs in Alaska that can ultimately be attributed to TAPS.
North Slope oil production allowed the state to do away with its income tax in 1980. And because of the forethought of state leaders at the time, the Permanent Fund was created that same year to manage the state’s oil wealth for future generations.
Oil wealth has paid for improving our roads, water and sewer systems, building parks, renewing our cities, and improving life in our most remote villages. The riches that Alaskans have extracted from under the North Slope have also funded our schools, and helped bring our health care system into the 21st century.
Oil production is not without risk. The 1989 grounding of the Exxon Valdez caused untold environmental damage in Prince William Sound. There have also been leaks, though the total amount equals about two ten-thousandths of a percent of the oil carried by the line and all spills have been cleaned up without lasting environmental damage.
But as we count the blessings TAPS has provided, we must also think about the future.
TAPS once carried nearly 2 million barrels of oil a day from the North Slope to the port of Valdez, but is now down to almost a quarter of that. Today, Alaska is no longer America’s second-largest producer of oil, having been surpassed by North Dakota. And North Slope production continues to decline by 7 percent annually.
Without new oil production, throughput in the pipeline could fall enough to threaten its future viability. Shutting down the pipeline would mean closing up shop on the North Slope. Alaska’s oil – like its massive natural gas reserves today – would be stranded with no way to market, leaving the state scrambling to replace the 85 percent of its annual revenue that today comes from oil.
Politicians ignore these warnings at their own peril. Alaska without TAPS would be a far different place, with far fewer state services, a far weaker economy, and, most likely, far fewer Alaskans.
Luckily, there is an alternative. Alaska isn’t running out of oil, it’s simply running out of access.
The easy oil at state-owned Prudhoe Bay has been extracted and what remains, is more expensive and challenging to produce.
The federally owned lands and waters to the east, west and north of Prudhoe Bay hold tremendous resources, but access has been slowed by an administration more interested in designating new wilderness than shoring up Alaska’s economy.
At the federal level, we must finally gain access to our resources in the Beaufort and Chukchi seas. And we must continue our battle to win approval for production from the coastal plain of ANWR – still the largest single prospective onshore source for conventional oil in North America. We also must perfect production from our sizable oil shale reserves.
At the local level, the state must have a competitive tax structure to encourage new investment in aging fields. We must work harder to get a pipeline and transportation system underway to get North Slope natural gas to market – since gas exploration by itself will generate more oil for TAPS.
But mostly, we must stop taking our economic lifeline for granted.
It’s not just that TAPS generates the vast majority of our government revenues, accounts for 60 percent of direct private investment, or a third of Alaska’s gross state product – the pipeline and the oil it carries is still our best hope to have the ability to transform Alaska from a resource-dependent state to one that is technology-rich, location-blessed, and a leader in renewable energy.
Alaska’s economy needs to diversify, but it can’t do so without oil revenue as its foundation. That is why we should wish the TAPS a long and full life.
Posted: June 18, 2012