ECON 919 - Oil demand and industry hopes continue to rise

Aug 24, 2018

 


The state’s biggest economic engine, for good or ill, remains oil and gas.

 

 


That reliance has proved costly at times, especially the past few years when low global oil prices drained the state budget and led to cuts in the state’s permanent fund dividends. But, Alaska tends to stay on the opposite economic track as the rest of the country. As the US as a whole was mostly recovering from the recession that started a decade ago, Alaska was slowing down.

 

Now, with some wondering when the big economy’s next contraction will begin, the state’s big industrial players are feeling hopeful, mostly amid rising demand for oil, and by extension, prices.

 

Kara Moriarty is the president of the Alaska Oil and Gas Association. At a recent meeting of the Kenai and Soldotna Chambers of Commerce, she talked about why the companies she represents are feeling good about the future.

“Reserves are going up, consumption is going up and production is going up. But what’s happening with worldwide demand? We have some in Alaska saying the era of oil is over. We would disagree with that, and the statistics and the forecasts prove that out. The U.S.Energy Information Administration is forecasting energy consumption until 2040. Over 58 percent of the globe’s energy is still going to come from those traditional sources, petroleum and natural gas.

 

How can Alaska play a role in that picture? Well, the key is, we have a lot of oil and gas resources remaining. We have them remaining here in Cook Inlet. The forecast is around 600 million barrels of oil left that is economically recoverable, and 19 trillion feet of gas, so that’s good for your own backyard...You have several companies who are actively drilling, whether it’s BlueCrest, whether it’s Furie, whether it’s Hilcorp...and the good news is, they’re still drilling. The drill rig just moved off the Swanson River Field, it’s over at Beaver Creek. Drilling is continuing offshore as well. You’re not going gangbusters with two million barrels a day, but investment is happening in your backyard and that’s a good sign.”

 

This week’s number: 5,000.

 

That’s approximately how many more people the state of Alaska predicts will call the Kenai Peninsula home by 2045. Every couple years, the Department of Labor updates its population numbers and forecasts. Across the state, the population is expected to grow by about 100,000 to a total of about 840,000. That will be due, according to the report, to mostly natural causes; births outnumbering deaths, and a steady flow of new residents from Outside who will choose the state for retirement.