Alaska Oil Production

Eli,

In the space of 10 years the US has become the #1 producer of oil in the world. More than Saudi Arabia. More than Russia.

The failing NY Times has an article on the 30+ year attempt to open up drilling in Alaska's Arctic National Wildlife Refuge (ANWR). I was a little disappointed by a lack of context about the US oil industry.

Here's a chart from EIA, showing oil production since 1973. Prudhoe Bay was discovered in 1968 and starting producing meaningful amounts of oil in 1978. Production at Prudhoe peaked in 1988 at 1.6 million barrels per day, about 25% of US oil production. US and Alaska production declined through 2008 when friend of the oil industry, Barack Obama, was elected President. Since then US oil production has doubled to almost 9 million barrels a day in 2017 and will be almost 12 million barrels a day in 2019. Total Alaska production is now less than 500 thousand barrels a day, less than 5% of total US production.

The US is now the swing producer of oil, displacing Saudi Arabia in that role. Increased prices results in rapid increases in US production, pushing down prices, until US producers can't make their required rate of return, and drilling and completions decline, or rise at a slower rate, and supply contracts.

ANWR used to be a much bigger deal. 30 years ago, no one thought there would be a technological breakthrough in hydraulic fracturing so drilling in ANWR was considered more important. The decline in US production also resulted in much greater government mandated conservation efforts, which I believe were futile. Letting prices clear results in the all the supply/demand adjustments that are necessary.

Maybe ANWR can fill the unused capacity of the Alaskan pipeline, but in terms of overall US production the real action is in Texas, Oklahoma, Colorado, Utah, Wyoming and North Dakota.

Bill