‘Significant’ Oil and Gas Investment Forecast at AOGA Conference
Kara Moriarty, president and CEO of the Alaska Oil and Gas Association, calls the 2023 conference at the Dena’ina Civic & Convention Center to order.
Alaska Business
The fifteen companies that define the core of the oil and gas industry in Alaska support fifteen jobs statewide for every one job in their own sector. That’s one of the findings of the annual jobs report prepared for the Alaska Oil and Gas Association (AOGA).
$14 Billion over Five Years
Katie Berry, the incoming president of McKinley Research Group, presented the findings at the 2023 AOGA conference. The report includes a new feature, forecasting the near-term impacts of oil and gas investment. Over the next five years, the report anticipates $14 billion in industry spending, supporting 2,600 to 2,900 jobs with $215 million in wages for each year through 2028.
“These companies are operating in a global environment in which they’re competing to bring capital to the projects in Alaska, so to have this level of investment in the state is very significant,” Berry said.
The forecast does not include production from ConocoPhillips’ Willow project, anticipated to start in 2029. Berry noted that a growing portion of industry spending will be at fields under development or evaluation, rather than at established fields.
“This investment that we expect to happen over the next several years in the oil and gas industry will not only be important to maintain the level of production in the state but growing that production as well,” Berry said. “There’s not a scenario in which we’re all here and these investments don’t happen and the same level of production persists.”
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April 2024
Those investments are far from guaranteed. “Our challenge has been finding investors willing to come to Alaska and invest in oil and gas,” said AOGA board chair Benjy Johnson. “What we hear is, ‘Wow, that would be great—if it were someplace other than Alaska.’ So we really have to work on that as a state.”
Johnson’s prefatory message was followed by a keynote address by Mike Sommers, president and CEO of the American Petroleum Institute. Sommers blamed what he called “very harmful rhetoric” from the Biden administration “that is putting a wet blanket on capital formation in the energy industry.”
Sommers and Johnson also agreed that renewable energy sources cannot easily replace oil and gas, at least where fossil fuels are the cheaper option.
“We just can’t stop using oil and gas without proper balances and accommodations. We’ve got to have viable alternatives, and there is no viable alternative over the short term in Alaska,” Johnson said.
Favorable Alternative
Katie Berry, the incoming president of McKinley Research Group, shared the annual oil and gas industry jobs report at the 2023 AOGA conference.
Alaska Business
In the specific case of Railbelt utilities, which have been warned of a shortfall in Cook Inlet natural gas production in the next few years, “There is no short-term alternative to natural gas,” Johnson said. “Without new gas development, the only reliable alternative is liquified natural gas imported, and that’s a higher cost.”
As president and CEO of BlueCrest Energy, Johnson is developing new gas resources in Cook Inlet, such as the Cosmopolitan unit. “That field, when it comes—if it ever comes online—will produce about 50 million cubic feet per day of gas. That’s about 25 percent of local demand,” Johnson said. “That would compare favorably to any other form of renewable energy.”
Compare he did, using the Bradley Lake Hydro Project near Homer as an example. The state’s largest hydroelectric dam has an energy output equivalent to about 3.5 million cubic feet of gas per day, Johnson said. Based on the cost of building the dam and turbine in 1990, adjusted for inflation, Johnson figures a hydro project would cost ten times as much as Cosmopolitan for the same energy capacity.
When it comes to wind and solar energy, Sommers welcomes them where their interests align with petroleum—namely, lobbying the government to streamline permitting. Sommers also expressed more optimism about direct air capture, a burgeoning technology to scrub carbon dioxide from the atmosphere and re-bury it.
Question of Where
Mike Sommers, formerly chief of staff to House Speaker John Boehner and now president and CEO of the American Petroleum Institute, delivers the keynote address at the 2023 AOGA conference.
Alaska Business
Noting that economic shutdowns during the COVID-19 pandemic reduced global oil consumption from 100 million barrels per day to 80 million, Sommers recounted how demand now surpasses the pre-pandemic level. “I’m proud to say that today the world is consuming 102 million barrels of oil, and it is projected that, in the next ten years, that number is going to go up to 108 million barrels of oil every single day,” he said.
Cutting back on fossil fuel is not feasible, according to the petroleum institute president. “We know we’re going to need more oil and natural gas,” Sommers said. “This isn’t a question of how much we’re going to need; it’s a question of where we’re going to get it.”
Alaska is in a position to contribute, Sommers suggested, to the applause of the AOGA audience.
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