By Tim Bradner, Alaska Journal of Commerce
Offshore development off Alaska’s coasts could create an annual average of 35,000 new jobs in Alaska and $72 billion in total new payroll over a 50-year period, according to a study by the University of Alaska Anchorage’s Institute of Social and Economic Research and Northern Economics Inc.
The growth in jobs resulting from outer continental shelf development could also lead to a 5 percent increase in statewide population, the study said. Most of the growth would be concentrated in Alaska’s existing population centers but small coastal communities near the exploration areas could see dramatic expansion, the researchers said.
Shell Exploration and Production paid for the study, which was done over the last year, company spokesman Curtis Smith said. Shell hopes to explore leases in the Beaufort and Chukchi seas.
The study assumed development of a number of offshore projects in three active federal outer continental shelf leasing areas, the Beaufort and Chukchi seas, and the North Aleutian Shelf off the state’s southwest coast. Scenarios used were those developed by the U.S. Minerals Management Service in planning the sales, according to Patrick Burden, president of Northern Economic.
The new jobs would include 6,000 directly employed in production and by oil field services companies, 3,000 in support of the infrastructure needed for production, such as pipelines, 22,000 in indirect support work such as engineering and transportation, and 4,000 in the state and local governments near the offshore production areas, Burden said in a briefing held Monday for Anchorage business leaders.
Offshore oil and gas production would also result in an estimated $15.3 billion in additional state government revenue assuming an average price of $65 per barrel over the 50-year period, Burden said.
About $10 billion of that would result because of additional crude flowing through the Trans-Alaska Pipeline System from OCS production. Additional liquids in TAPS would lower tariffs for all oil moved through the pipeline, resulting in higher state royalty and tax revenues to the state from production on state-owned lands, Burden said.
OCS development would also increase municipal government revenues for local governments near the production areas by $4.5 billion, mostly through new property tax income on onshore pipelines and other support facilities.
Most of the new municipal revenue would go to the North Slope Borough, which borders the Beaufort and Chukchi regions where OCS development could occur.
The scenarios used in the analysis, which were developed by the MMS, include seven major offshore fields and seven production platforms in the Beaufort Sea, four major fields and four platforms in the Chukchi Sea and two field and two platforms in the North Aleutian Shelf area.
Assumptions used in the study, also by the MMS, include new oil production resulting from the developments totaling about 1.5 million barrels per day in 2032.
“Outer continental shelf-related employment growth could more than offset losses from the decline of petroleum production on state lands and could help sustain Alaska’s economy for several decades,” Burden said.