Federal Policies of Limitation
Although the potential for oil and natural gas production
on the North Slope has grown over time, actual production
has continued to diminish due in significant part to federal
policies. North Slope production peaked in 1988 and by
1998 had fallen by nearly 40 percent.
From a geologic standpoint, this decline results from
depletion of the major initial discoveries at Prudhoe Bay
after almost 40 years of production. In fact, declining costs
and increasing resource estimates mean we should be able
to recover more oil from the North Slope than ever before.
Yet, the most significant barrier to Northern Alaska
reaching its full energy production potential has been the
federal government’s consistent policy of restriction and
limitation in recent decades. It wasn’t always this way. In
the late 1800s and early 1900s, the federal government
helped encourage oil and natural gas development in
Alaska. Significant areas of Northern Alaska were set aside
specifically for oil development as early as 1923.
More importantly, a series of federal oil and natural gas
exploration and leasing programs have been administered
in Northern Alaska intermittently since shortly after
World War II. But following Alaska’s admission as a state
in 1959, the vast majority of competitive leasing activity
has taken place on state lands. As of mid-1999, federal
leasing had failed to result in a single barrel of commercial
oil production and only small quantities of natural gas
production used by local villages.
Nearly all of the Northern Alaskan oil development to date,
which has included some of the largest resource discoveries
in North America, has occurred on state and native lands –
which are surrounded by vast expanses of federal property.
The available geologic information for each of those federal
areas strongly suggests that the resource potential there
may actually far exceed the potential of state lands.
Allowing access to those federal lands offers the clear
potential to reverse the decline in Alaskan oil output.
In fact, most if not all of the expected decline in Lower
48 supply over the next few decades could be offset by
production on federal lands in Alaska. But that will not
happen without a change in federal policy to allow more
access and leasing.