THE ROLE OF THE Oil and Gas Industry in Alaska’s Economy · The Role of the Oil and Gas Industry...
Transcript of THE ROLE OF THE Oil and Gas Industry in Alaska’s Economy · The Role of the Oil and Gas Industry...
May 2017
PREPARED BY PREPARED FOR
THE ROLE OF THE
Oil and Gas Industry in Alaska’s Economy
The Role of the Oil and Gas Industry
In Alaska’s Economy
Prepared for:
Alaska Oil and Gas Association
Prepared by:
May 2017
McDowell Group Anchorage Office
1400 W. Benson Blvd., Suite 510
Anchorage, Alaska 99503
McDowell Group Juneau Office
9360 Glacier Highway, Suite 201
Juneau, Alaska 99801
Website: www.mcdowellgroup.net
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 1
Table of Contents
Executive Summary ....................................................................................................................... 3
Statewide Impacts ....................................................................................................................................................... 4 Key Regional Impacts of Oil and Gas Industry Private Sector Spending ................................................ 5 Economic Benefits Related to Oil and Gas Industry Payments of Taxes and Royalties .................... 5 In Summary .................................................................................................................................................................... 7
Introduction ................................................................................................................................... 8
Study Scope ................................................................................................................................................................... 8 Methodology ................................................................................................................................................................. 8
Chapter 1. Defining Alaska’s Oil and Gas Industry and its Economic Impact ....................... 10
Primary Companies in Alaska’s Oil and Gas Industry................................................................................... 11 Primary Company Spending on Goods and Services .................................................................................. 13 Other Indirect and Induced Economic Linkages to the Oil and Gas Industry .................................... 15 Economic Effects of Taxes and Royalties Paid by the Oil and Gas Industry ........................................ 16
Chapter 2. Statewide Impacts of the Oil and Gas Industry ..................................................... 17
Primary Company Employment and Wages .................................................................................................... 17 Indirect and Induced Employment and Income ............................................................................................ 17
Chapter 3. Local/Regional Impact Profiles ............................................................................... 19
Municipality of Anchorage ..................................................................................................................................... 19 Fairbanks North Star Borough .............................................................................................................................. 20 Kenai Peninsula Borough ........................................................................................................................................ 21 Matanuska-Susitna Borough ................................................................................................................................. 22 North Slope Borough ............................................................................................................................................... 23 Valdez ............................................................................................................................................................................. 24 Summary of Localized Impacts ............................................................................................................................. 25
Chapter 4. Oil Revenue Impacts on State and Local Governments ........................................ 26
Oil and Gas Revenue Impacts on State Government ................................................................................... 26 Local Government Revenue ................................................................................................................................... 41 Employment Impact of State and Local Oil Revenue .................................................................................. 43 Combined Economic Impact of Oil Industry Private Sector Spending and Public Sector Payments ...................................................................................................................................................................... 44
Chapter 5. Alaska’s Production in the U.S. and World Market............................................... 45
Alaska Oil Production and Prices ......................................................................................................................... 45 Alaska and the Domestic Petroleum Industry ................................................................................................ 46 World Oil Production ............................................................................................................................................... 48 U.S. Petroleum Consumption ................................................................................................................................ 49 Petroleum Imports and Exports ........................................................................................................................... 50 U.S. Natural Gas Production .................................................................................................................................. 51
Chapter 6. Economic Impact Comparisons of Alaska’s Other Key Sectors ............................ 53
Economic Impact Analyses ..................................................................................................................................... 53 Gross State Product .................................................................................................................................................. 55
Appendix A. Published Trends in Alaska’s Oil and Gas Industry ............................................ 56
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 2
List of Tables
Table ES1. Alaska Resident Employment and Wages in the Oil and Gas Industry, By Region, 2016 .......................... 3 Table ES2. Economic Impact of the Oil and Gas Industry in Alaska, 2016 ............................................................................. 5 Table 1. Primary Company Employment and Wages in Alaska’s Oil and Gas Industry, 2016...................................... 17 Table 2. Alaska Oil and Gas Industry Employment and Wages, 2016 ................................................................................... 18 Table 3. Oil and Gas Industry Employment and Wages in Anchorage, 2016 ..................................................................... 19 Table 4. Oil and Gas Industry Employment and Wages in Fairbanks North Star Borough, 2016 .............................. 20 Table 5. Oil and Gas Industry Employment and Wages in Kenai Peninsula Borough, 2016 ........................................ 21 Table 6. Oil and Gas Industry Employment and Wages in Matanuska-Susitna Borough, 2016 ................................. 22 Table 7. Oil and Gas Industry Employment and Wages in North Slope Borough, 2016 ................................................ 23 Table 8. Oil and Gas Industry Employment and Wages in Valdez, 2016 .............................................................................. 24 Table 9. Alaska Resident Employment and Wages in the Oil and Gas Industry, By Region, 2016............................. 25 Table 10. Summary of Oil-Related Payments to State and Local Governments in Alaska, FY2016 ........................... 26 Table 11. Sources of State of Alaska Revenue ($million), by Type, SFY2010-SFY2016 ................................................... 31 Table 12. Sources of State of Alaska Department Revenue, By Source ($thousands), SFY2016 ................................. 33 Table 13. State of Alaska Department Employment, By Type, SFY2016 ............................................................................... 34 Table 14. Oil & Gas Infrastructure Assessed Value ($million), 2010-2016 ........................................................................... 42 Table 15. Local Revenues from Oil & Gas Property Taxes ($million), 2010-2016 ............................................................. 42 Table 16. Comparison of Tax Revenue by Source, 2016 ............................................................................................................. 43 Table 17. Estimated Employment and Wages Related to Oil Industry Taxes and Royalties in Alaska, 2016 ......... 43 Table 18. U.S. Oil Production Change, 2008-2016 ........................................................................................................................ 47 Table 19. Proportion of Global Crude Oil Supply, 2015 .............................................................................................................. 48 Table 20. United States Natural Gas Production by State, 2008-2016 .................................................................................. 52 Table 21. Alaska Oil & Gas Industry Employment, Published Data, 2001-2016 ................................................................ 57 Table 22. Alaska Residents in the Oil & Gas Industry Workforce, 2015 ............................................................................... 59
List of Figures
Figure ES1. Estimated Economic Impact of Alaska’s Oil and Gas Industry on Alaska’s Employment, 2016 ............. 2 Figure 1. Economic Impact of Oil and Gas Industry Spending in Alaska’s Economy ...................................................... 10 Figure 2. Primary Company Alaska Vendor Spending, by Industry Sector, by Percent, 2016 ..................................... 14 Figure 3. Annual Unrestricted Petroleum Revenue ($2016), SFY1959-SFY2016 ................................................................ 26 Figure 4. Sources of State of Alaska Unrestricted General Funds, SFY2016 ....................................................................... 27 Figure 5. State of Alaska Total Oil and Gas-Related Revenue ($billion) and Average Annual ANS Price per Barrel, SFY2010-SFY2016 ....................................................................................................................................................................................... 32 Figure 6. Annual PFD Disbursed Amount ($2016), 1982-2013 ................................................................................................. 36 Figure 7. Estimated Proportion of Budget Supported by Oil and Gas Revenue by Campus, 2016 ........................... 39 Figure 8. Local Government Tax Revenue by Category ($million), SFY2016 ...................................................................... 41 Figure 9. Alaska Crude Oil Production* and Alaska North Slope Oil Price, SFY2001-SFY2016 ................................... 45 Figure 10. United States and Alaska Average Daily Oil Production (1,000 Barrels), 1900-2016 ................................. 46 Figure 11. United States Oil Production, by Key Production Regions, 2000-2016 ........................................................... 47 Figure 12. Alaska's Contribution to U.S. Oil Production, 1972-2016 ..................................................................................... 48 Figure 13. Global Oil Production by Region, 2000-2015 ............................................................................................................ 49 Figure 14. United States Refined Products Consumption, 1991-2016 .................................................................................. 50 Figure 15. United States Imports/Exports of Oil and Refined Products, 1992-2016 ....................................................... 51 Figure 16. United States Natural Gas Production, 1990-2016 .................................................................................................. 51 Figure 17. United States Annual Natural Gas Production by Key Producing States, 2000-2016................................ 52 Figure 18. Top Five Industries Contributors to Alaska’s Gross State Product, 2016 ........................................................ 55 Figure 19. Alaska Oil & Gas Industry Employment, Published Data, 2001-2016 .............................................................. 56 Figure 20. Annual Oil and Gas Wages, ($million) 2007-2016 ................................................................................................... 57 Figure 21. Percent of Positions Held by Nonresidents, by Sector, 2015 .............................................................................. 58
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 3
Executive Summary
Alaska’s oil and gas industry started with the discovery of the Swanson River oil field on the Kenai Peninsula in
1959, followed by the Sterling gas field in 1961, the Beluga River gas field in 1962, and the Beaver Creek gas
field in 1967. Prudhoe Bay, one of the largest oil fields in North America, was discovered on the North Slope in
1968. In 2017, Prudhoe Bay production and Trans-Alaska Pipeline (TAPS) operations celebrate a 40-year
anniversary. Since pipeline operations commenced, 17.5 billion barrels of oil have been transported through
TAPS from the North Slope to the Valdez Marine Terminal.
Alaska’s production of crude oil represented approximately 6 percent of the U.S.’s total production in 2016, and
approximately 0.6 percent of total global production in 2015. Between 2015 and 2016, Alaska’s economy
experienced a net loss of 6,500 jobs and $680 million in wages. Virtually all of the decline can be attributed to
fewer oil and gas industry-generated dollars flowing through Alaska’s economy. Yet for the first time in 14 years,
North Slope production increased slightly in 2016, growing 2.8 percent, or an average of nearly 14,000 barrels
per day. Alaska’s oil and gas industry remains the single most important economic engine in Alaska from both
its legacy fields and new developments.
The Alaska Oil and Gas Association (AOGA) contracted with McDowell Group to assess the role of the oil and
gas industry in Alaska’s private and public sector economy, and in six geographic locations, including:
Municipality of Anchorage; Fairbanks North Star Borough; Kenai Peninsula Borough; Matanuska-Susitna
Borough; North Slope Borough; and the City of Valdez.
The economic impact analysis was based on detailed 2016 employment, payroll, and spending data provided
by 14 “Primary Companies” in Alaska’s oil and gas industry; these companies include production and exploration
companies, refineries, and Alyeska Pipeline Service Company, operator of TAPS.1
The economic impact of the Primary Companies occurs at three levels in the economy (also termed the multiplier
effect):
• Direct impacts, including the Primary Companies’ own employment and payroll
• Indirect impacts, including jobs and income in businesses providing goods and services to the Primary
Companies
• Induced impacts, including jobs and income created when Primary Company employees and their
vendor employees spend their payroll dollars in the local economy
Further, this economic impact analysis also captures the impact of Primary Company payments to the State of
Alaska in the form of taxes, royalties, and other charges. These payments are used to fund state operating and
capital budgets. Additionally, oil and gas revenue is disbursed directly to Alaska residents in the form of transfer
payments, including the Permanent Fund Dividend. Key findings are summarized below.
1 Primary Companies include Alyeska Pipeline Service Company, BlueCrest Energy Inc., BP Alaska, Caelus Energy, LLC, Chevron Corporation, ConocoPhillips, ExxonMobil, Furie Operating Alaska, Glacier Oil & Gas Corporation, Great Bear Petroleum, Hilcorp Energy Company, Petro Star Inc., Shell Exploration & Production Company, and Tesoro Alaska.
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 4
Statewide Impacts
Oil and Gas Industry-Related Jobs and Wages
• In 2016, the Primary Companies employed 4,275 Alaska residents earning $749 million in wages. Alaska
residents represent 85 percent of “Primary Company” the total hire in Alaska (total: 5,035).
• Primary Companies spent $4.6 billion with approximately 1,000 Alaska vendors in 2016.
• Including all direct, indirect, and induced employment and wages, oil and gas industry spending in
Alaska accounted for 45,575 jobs and $3.1 billion in total wages in Alaska. This included:
o 6,095 Alaska resident jobs in the oil and gas support services sector.
o 35,205 other Alaska resident indirect and induced jobs in other private and public sectors.
• State and local government spending of taxes and royalties paid by the oil and gas industry directly
creates jobs in Alaska’s public sector and indirectly creates jobs and income throughout the private
sector. Government spending (including use of the oil-industry-funded Constitutional Budget Reserve)
accounted for 58,300 jobs and $2.9 billion in wages (direct, indirect, and induced impacts) in Alaska’s
economy.
• Combined, the employment and wage impacts of Primary Company spending in the private sector and
funding support to Alaska’s state and local governments totals:
• 103,875 jobs in Alaska, representing nearly a third of all wage and salary jobs in Alaska.
• $6.0 billion paid in wages in Alaska (including all multiplier impacts and jobs related to taxes and
royalties).
Figure ES1. Estimated Economic Impact of Alaska’s Oil and Gas Industry on Alaska’s Employment, 2016
Source: Primary Company data and McDowell Group estimates.
• For every Primary Company job, there are 9 more jobs supported by Primary Company activity in Alaska,
and 13 more jobs are supported by oil-related taxes and royalties.
• For each dollar earned by employees of the Primary Companies, a total of $8 in additional wages are
generated in Alaska.
+ 6,095 Oil & Gas Support Services Resident Jobs
6,095
4,275 Primary Company Resident Jobs
+ 58,300 Jobs Related to Oil and Gas Taxes and Royalties
58,300
+ 35,205 Other Indirect and Induced Jobs
32,205
= 103,875 Total Jobs
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 5
Key Regional Impacts of Oil and Gas Industry Private Sector Spending
The impacts in six local areas, including Municipality of Anchorage, Fairbanks North Star Borough, Kenai
Peninsula Borough, Mat-Su Borough, North Slope Borough, and the City of Valdez, capture most of the
employment and payroll impacts generated by the oil and gas industry in Alaska. A small portion is allocated
to an “Unattributed” category representing jobs not attributable to a specific area. The table below summarizes
these local impacts. (The table does not include jobs and wages related to state government spending of oil
and gas industry taxes and royalties.)
Table ES1. Alaska Resident Employment and Wages in the Oil and Gas Industry, By Region, 2016 (Excludes jobs & wages related to state government spending of oil & gas related taxes and royalties)
Category Alaska Municipality
of Anchorage
Fairbanks North Star
Borough
Kenai Peninsula Borough
Mat-Su Borough
North Slope
Borough
City of Valdez
Unattributed
Employment
Primary Companies
4,275 2,265 300 810 515 <5 290 90
Oil & Gas Support Services
6,095 2,025 545 1,615 1,580 50 150 125
Other Indirect & Induced
35,205 24,050 2,115 2,620 1,175 1,790 240 3,220
Total 45,575 28,340 2,960 5,045 3,270 1,845 680 3,435
Wages ($million)
Primary Companies
$749 $409 $52 $142 $89 <$1 $41 $15
Oil & Gas Support Services
$598 $220 $51 $153 $144 $3 $14 $13
Other Indirect & Induced
$1,783 $1,235 $105 $105 $54 $101 $16 $167
Total $3,130 $1,864 $208 $400 $287 $105 $71 $195
Note: Due to rounding some rows or columns may not add to total. Source: Alaska Department of Labor and Workforce Development, Primary Companies data, and McDowell Group estimates.
Economic Benefits Related to Oil and Gas Industry Payments of Taxes and Royalties
The oil and gas industry paid over $2 billion in taxes and royalties in SFY2016, including $1.6 billion to state
government, and $447 million to local governments.
State Taxes and Royalties
• Alaska is the only state in the U.S. that does not have either a state sales tax or personal income tax, as
revenues from Alaska’s oil and gas industry have largely funded state government for several decades.
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 6
• In State Fiscal Year (SFY) 2016, the oil and gas industry paid:
o $1.6 billion in taxes and royalties to state government.
o $1.1 billion in Unrestricted General Fund (UGF) revenue, or 72 percent of all UGF (unrestricted
revenue available for appropriation by the state legislature, subject to a governor’s veto).
o $518 million in Restricted revenue, including:
▪ $391 million deposited into the Alaska Permanent Fund
▪ $119.1 in the Constitutional Budget Reserve Fund
▪ $6.4 million in royalties to the Public School Trust Fund
▪ $1.8 million in NPR-A royalties, rents, and bonuses
• In SFY2016, $3.0 billion was transferred from the
Constitutional Budget Reserve Fund (funded almost
entirely by oil and gas activity) to help close the
fiscal gap needed to support the State’s operating
budget ($8.5 billion) and capital budget ($1.5
billion).
• State government agency operations are highly
dependent on oil revenue funding. Oil-revenue-
related UGF represented the majority of total
operating budgets for the departments listed below:
o Departments of Judiciary (88 percent), Office of the Governor (87 percent), Public Safety (80
percent), Corrections (80 percent), Education and Early Development (74 percent), Law (56
percent), and Natural Resources (51 percent).
o 45 percent of all state government agency positions (9,934 out of a total 22,251 positions) can
be attributed to oil-revenue-related UGF.
• Several statewide government programs are largely dependent on oil-related revenue, including:
o Alaska Permanent Fund Dividends paid to 635,997 Alaskans totaled $650 million in 2016.
Virtually all of the Fund’s principal comes from Alaska’s oil and gas production royalties,
including $285 million deposited in 2016.
o Of the $1.3 billion in UGF supporting Alaska Department of Education and Early Development’s
budget, an estimated 90 percent ($1.1 billion) originated from oil and gas revenue or $8,654
per student enrolled in K-12 public schools in Alaska.
▪ Approximately $5,292 out of the $5,880 per student in Base Student Allocation was
funded with oil and gas-related revenue.
o In 2016, 182,925 individuals received medical benefits under the Medicaid Program, of which
149,967 individuals were covered by state funding match required to leverage federal Medicaid
dollars. (The remaining 32,958 individuals were covered under the 2015 Medicaid expansion
funded entirely by the federal government.)
▪ Approximately $3.30 out of every $10 spent on Medicaid in Alaska (both state and
federal funds) is related to oil and gas revenue ($575 million out of $1.7 billion).
▪ Approximately $9 out of every $10 of Alaska’s state match of federal dollars is related
to oil and gas revenue ($575 million out of $639 million total).
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 7
o In SFY2016, $57 million was distributed to about 229 municipalities, boroughs, and
unincorporated communities throughout Alaska through the Community Assistance Program.
▪ Approximately $9 out of every $10 distributed from this Program came from oil and
gas revenue.
Local Oil and Gas Property Taxes
• In addition to property taxes collected by the State of Alaska, local governments generate revenue from
taxation of oil and gas property assets, providing unrestricted revenue to communities. In 2016, local
governments received $447 million from taxation of oil and gas properties, approximately 26 percent
of total tax revenue ($1.8 billion) and 32 percent of total property tax revenue ($1.4 billion).
In Summary
While there is no single study that compares the economic impact of Alaska’s oil and gas industry to other
important sectors in Alaska’s economy, other recent McDowell Group studies estimate the seafood industry
generates ~60,000 jobs and $2.1 billion in labor income, the visitor industry generates ~40,000 jobs and $1.4
billion in labor income, and the mining industry generates ~9,000 jobs and $700 million in labor income. No
other private sector comes close to generating more economic impact in Alaska than Alaska’s oil and gas
industry.
Table ES2. Economic Impact of the Oil and Gas Industry in Alaska, 2016
Estimated Impacts
Primary Company employment in Alaska 5,033
Primary Company employment of Alaska residents 4,275
Primary Company wages paid to Alaska residents $749 million
Primary Company spending with Alaska vendors $4.6 billion
Number of Alaska vendors providing goods and services to Primary Companies ~1,000
Total jobs related to Primary Company spending* $45,575
Total wages related to Primary Company spending* $3.1 billion
Total taxes and royalties paid by the oil & gas industry (SFY2016) $1.6 billion
Oil and gas industry taxes and royalties as a % of total state revenue (SFY2016) 28%
Oil and gas industry taxes and royalties as a % of total Unrestricted General Funds (SFY2016) 72%
Jobs related to oil and gas industry taxes and royalties 58,300
Wages related to oil and gas industry taxes and royalties $2.9 billion
Total jobs related to Alaska’s oil and gas industry* 103,875
Percent of total Alaska wage and salary jobs 32%
Total wage related to Alaska’s oil and gas industry* $6.0 billion
Percent of total Alaska wages 35%
*Includes direct, indirect, and induced impacts. Sources: Primary Company data, McDowell Group estimates, Alaska Department of Revenue, and Alaska Department of Labor and Workforce Development.
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 8
Introduction
Study Scope
The Alaska Oil and Gas Association (AOGA) contracted with McDowell Group to assess the role of the oil and
gas industry in Alaska’s economy and in the economies of the Municipality of Anchorage, the Kenai Peninsula
Borough, the Matanuska-Susitna Borough, the Fairbanks North Star Borough, the City of Valdez, and the North
Slope Borough. To accomplish this task, the McDowell Group study team collected data from a variety of
sources, including spending and payroll data from the 14 “Primary Companies” listed below.
• BP Exploration (Alaska) Inc.
• Chevron
• Petro Star Inc.
• Shell Exploration & Production Company
• Alyeska Pipeline Service Company
• BlueCrest Energy Inc.
• Caelus Energy, LLC
• ConocoPhillips Alaska, Inc.
• ExxonMobil Production Company
• Furie Operating Alaska
• Glacier Oil & Gas
• Great Bear Petroleum
• Hilcorp Energy Company
• Tesoro Alaska Company
Methodology
Each of these “Primary Companies” provided confidential data on spending in support of their Alaska
operations, including payroll, purchases of goods and services from oilfield support and other types of firms,
payments to local and state governments, and other information pertinent to spending in Alaska.
In addition to the data collected directly from the Primary Companies and others that are the major direct
recipients of their spending, the study team collected data and information from a variety of published and
unpublished sources. These include the Alaska Department of Labor and Workforce Development (ADOLWD),
the Alaska Department of Revenue, the Alaska Department of Commerce, Community and Economic
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 9
Development, the U.S. Bureau of Labor Statistics, the U.S. Bureau of Economic Analysis (BEA), and the U.S.
Department of Energy’s Energy Information Administration, among others.
To measure multiplier effects (secondary economic impacts) produced by the Primary Companies’ spending
with Alaska businesses and from the wages they paid to Alaska residents, the study team used the IMPLAN™
(IMpact Analysis for PLANning) input-output modeling system to build custom models for Alaska and each of
the regions studied. The task of the models was to quantify the jobs and payroll added to the Alaska economy
statewide and regionally, as spending by the Primary Companies was subsequently re-spent within the state.
Funding associated with the State of Alaska are described in a state fiscal year (SFY) which runs from July 1, 2015
to June 30, 2016.
All inflation adjustments have used the Anchorage Consumer Price Information data from the Bureau of
Economic Analysis.
North American Industry Classification System (NAICS) codes were used to understand the type of business
activity vendors were engaged in. Vendor data provided to McDowell Group was linked with the State of Alaska
Business License Database to identify company-specific NAICS codes.
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 10
Chapter 1. Defining Alaska’s Oil and Gas Industry and its Economic Impact
To understand the true impact of oil and gas activity on Alaska’s economy requires a broader definition of the
industry than the one typically used for government employment statistics. Government-published statistics for
oil and gas employment in Alaska include jobs in companies classified under “oil & gas extraction,” “drilling oil
and gas wells,” and “support activities for oil and gas operations.”2 However, they do not include approximately
800 Trans-Alaska Pipeline System (TAPS) jobs, which are classified as transportation, nor refinery employment
of about 360 workers. They also exclude several thousand jobs directly connected to North Slope and Cook
Inlet oil and gas production activity, but reported in other sectors such as construction, transportation, camp-
support services, engineering services, etc.
This chapter discusses the primary investors (labeled as Primary Companies) in Alaska’s oil and gas industry
infrastructure, including production, transportation, and refining of oil and gas. These companies play a pivotal
role in the development of Alaska’s oil and gas resources. The spending by these Primary Companies is termed
a “direct impact” on Alaska’s economy.
In addition to its direct impact, Primary Company spending filters through the state’s economy in what is often
labeled the “multiplier effect” or “indirect and induced impact.” Oil dollars move through the economy in the
form of spending on goods and services, payroll to Alaskan employees, taxes paid to local governments, and
taxes and royalties paid to state government.
Figure 1. Economic Impact of Oil and Gas Industry Spending in Alaska’s Economy
2 Alaska Department of Labor and Workforce Development (ADOLWD) estimated an annual average of 14,235 jobs in Alaska’s oil and gas sector in 2016, including employment in NAICS Sectors 211000 (oil and gas extraction), 213111 (drilling oil and gas wells), and 213112 (support activities for oil and gas operations).
Oil and gas production companies, pipelines, and refineries
(14 Primary Companies)
Spending with Alaska
Businesses
Indirect Employment and Payroll
Employment and Payroll in
Alaska
Induced Employment and Payroll
Taxes and Royalties
Local Government
Wages, Capital Projects, Programs
State Government
Wages, Capital Projects, Programs
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 11
The chapter also describes briefly the types of private sector firms affected by oil and gas spending, including
oilfield support and other types of businesses actively engaged in Alaska’s oil and gas industry.
Primary Companies in Alaska’s Oil and Gas Industry
The following companies (in alphabetical order) are defined as Primary Companies in Alaska’s oil and gas
industry for purposes of this analysis. They include 14 oil and gas production companies, pipeline operators,
and refineries. All but two, ConocoPhillips and Great Bear, are members of the Alaska Oil and Gas Association
(AOGA).
Alyeska Pipeline Service Company operates and maintains the 800-mile TAPS,
including the pump stations and the Valdez Marine Terminal. All North Slope crude
oil brought to market is transported through TAPS. Alyeska, which celebrates its 40-
year anniversary in 2017, is the largest employer and taxpayer in Valdez. It is owned
by four oil companies: BP Alaska, ConocoPhillips, Exxon Mobil, and Chevron.
BlueCrest Energy Inc. owns the Cosmopolitan project, an undeveloped offshore oil
and gas field located in Cook Inlet close to Anchor Point. The company plans to drill
up to five wells in 2017.
BP Alaska operates nine North Slope fields, including Prudhoe Bay. It also owns a
portion of four North Slope pipelines and significant interest in six other producing
fields. BP is the largest partner in TAPS with a 48 percent stake. BP’s net production
rate in Alaska in 2016 was 108,000 barrels of oil-equivalent per day.3 BP holds a 32
percent and 40 percent stake in the Point Thompson and Liberty developments,
respectively.
Caelus Energy, LLC operates the Oooguruk field on the North Slope and recently
announced the Smith Bay oil discovery, which may have potential to produce
200,000 barrels per day. The company is actively exploring 350,000 acres west of
Point Thompson and has plans to develop its Nuna project, an onshore
development project located just east of the Colville River and close to the
Oooguruk field.
Chevron Corporation has ownership interests across the North Slope, including
Endicott (11 percent), Kuparuk (5 percent), West Sak (5 percent), Tabasco (5
percent), Tarn (5 percent), Meltwater (5 percent), Greater Prudhoe Bay (1 percent),
and Greater Point McIntyre (1 percent) fields, among others. The company holds a
1 percent interest in TAPS.
3 A “barrel of oil-equivalent” is a unit of measurement representing the energy contained in 42 gallons of crude oil. This unit allows oil and natural gas production to be combined for simplicity.
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 12
ConocoPhillips is the largest oil producer in Alaska with a net production rate of
179,000 barrels per day of oil equivalent in 2015. On the North Slope, the company
owns and operates Kuparuk (55 percent) and Alpine (78 percent), in addition to
ownership in Prudhoe Bay (36 percent). ConocoPhillips owns the Kenai Liquefied
Natural Gas Plant, and is a 29 percent owner of TAPS. The company owns and
operates Polar Tankers, a five-vessel fleet that transports crude oil from the terminus
of TAPS to domestic refineries.
ExxonMobil has a 36 percent ownership stake in Prudhoe Bay, Midnight Sun,
Aurora, Orion, Polaris, Borealis, Point McIntyre, Niakuk, and Lisburne fields. The
company has smaller owner ship stakes in several other fields, in addition to being
the operator of Point Thompson with a 62 percent ownership stake. ExxonMobil
owns 21 percent of TAPS. The company’s net production for 2016 averaged 92,000
barrels of oil-equivalent per day.
Furie Operating Alaska is active in Cook Inlet. In 2011, the company brought the
first jack-up rig (Spartan 151) to Cook Inlet in 20 years. It installed an offshore
platform, pipeline, and onshore production facility that started producing gas in
2015. Furie continues its exploration in Cook Inlet, primarily in the Kitchen Lights
Unit.
Glacier Oil & Gas Corporation is focused solely on Alaska – operating oil assets in
the Redoubt and W. MacArthur River Unit in the Cook Inlet and at the Badami Unit
on the North Slope. Additionally, Glacier owns gas assets at the North Fork Unit on
the Kenai Peninsula as well as drilling, production and transportation infrastructure
associated with these fields
Great Bear Petroleum is conducting exploration on 570,000 acres the company
leases south of Prudhoe Bay and Kuparuk oilfields.
Hilcorp Energy Company operates the Endicott and Northstar units, located on
offshore gravel islands north of Prudhoe Bay. The company is obtaining permitting
for the offshore Liberty project and operates the Milne Point unit with a 50 percent
ownership stake. The company also operates 20 oil and gas fields in Cook Inlet,
including 14 offshore platforms.
Petro Star Inc. is an Alaskan-owned refining and fuel-marketing company that
operates refineries in North Pole and Valdez. Petro Star refineries draw crude supply
from TAPS to produce off-road and marine diesel, commercial and military jet fuel,
and home heating oil. The company operates retail outlets across Alaska, including
seven locations in the Fairbanks area, two locations in Kodiak, and one store in
Dutch Harbor.
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 13
Shell Exploration & Production Company has a long history in Alaska’s oil and
gas industry, including oil production in Cook Inlet dating back to the 1960s.
Following the end of exploration efforts in the Chukchi Sea in 2015, the company
maintains a small presence in Anchorage.
Tesoro Alaska operates a refinery in Kenai. The refinery manufactures jet fuel,
diesel, gasoline, propane, asphalt and heavy oils. The company also owns and
operates several gas stations in the state.
Primary Company Spending on Goods and Services
Primary Companies reported approximately $4.7 billion in Alaska vendor and inter-company spending in 2016.
For purposes of calculating economic impact, inter-company spending was subtracted, leaving approximately
$4.6 billion in operating and capital expenditures with Alaska vendors who provide goods and services in
support of the companies’ Alaska operations.
Approximately 1,000 Alaska businesses provided goods and services to the oil and gas sector; some based in
Alaska with resident and nonresident employees and some based outside Alaska but with satellite offices and
employees in-state. In addition, these firms (both Alaska- and Lower-48 based) spend non-payroll money in
and outside of Alaska, in support of their operations.
OIL AND GAS SUPPORT SERVICE COMPANIES
Slightly more than one-quarter (26 percent) of vendor
spending went to oil and gas-support service companies, for
example: Doyon Drilling; Schlumberger Technology
Corporation; Nabors Alaska Drilling; Parker Drilling Arctic
Operating; Halliburton Energy Services; Baker Hughes
Oilfield Operations; Peak Oilfield Service Company; Little
Red Services; Nordic-Calista Services; M-I LLC; and
Udelhoven Oilfield System Services.4
Oil and gas support-service companies offer a wide array of oil and gas goods and services, including (but not
limited to) regulatory, permitting and technical support, engineering, construction, construction management
and project management, module fabrication and installation, infrastructure, facility, and pipeline maintenance,
well logging, drilling, drilling engineering and exploration operations support, fleet services, operations support,
oil spill response management and equipment, procurement management, wireline, coil tubing, drilling fluids,
rig moving, rig operation, and decommissioning services.
4 Note: Many companies are active in multiple sectors, such as construction services and oil and gas support services.
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 14
CONSTRUCTION COMPANIES
Another 25 percent of vendor spending went to firms engaged in construction activity, primarily on the North
Slope, Cook Inlet, and TAPS corridor. Those firms include: Cruz Construction; CH; Alaska Frontier Constructors;
Ahtna Construction; Conam Construction; Cornerstone General Contractors; and ASRC Energy Services.
Construction services required by the oil and gas industry include project management, industrial construction,
pipeline construction, electrical contracting, welding and metal fabrication, road construction, bridge building,
roofing, painting and coverage contracting, and plumbing, among many others.
OTHER SUPPLIERS OF GOODS AND SERVICES TO THE OIL AND GAS INDUSTRY
The remaining approximately one-half of vendor spending goes to a wide variety of firms providing essential
goods and services, including professional and technical services (12 percent), transportation (air, ground, and
marine) and warehousing (8 percent), retail/wholesale trade (7 percent), accommodations and food service (3
percent), and all others (including communications, insurance, fuel, utilities computer and IT support,
manufacturing, administration support, education services, etc.) (19 percent).
Figure 2. Primary Company Alaska Vendor Spending, by Industry Sector, by Percent, 2016
Source: Primary Companies data and McDowell Group Estimates.
Examples of larger firms (typically more than 50 employees) directly engaged in oil and gas activity in Alaska,
but not reported in government employment statistics as part of the oilfield support sector include:
• Construction: CONAM Construction Company, based in Anchorage, is a general construction
contractor specializing in oil and gas facilities (NAICS 237000 “heavy construction”). ASRC Energy
Services provides construction and project management, module fabrication and installation,
infrastructure, facility, and pipeline maintenance, and other services (NAICS 236000 “construction of
Buildings”). Cruz Construction, based in Palmer and Anchorage, provides heavy civil contractor and
other services (NAICS 237000 “heavy construction”). Flowline Alaska, Inc., based in Fairbanks provides
corrosion coatings, insulation, and fabrication of pipe and structure items (NAICS 237000 “heavy
construction”).
Oil & Gas Support Services
26%
Construction25%Professional,
Scientific & Technical Services
12%
Transportation & Warehousing
8%
Trade7%
Accommodation and Food Services
3%
Other19%
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 15
• Professional, Scientific, and Technical Services: aeSolutions, based in Anchorage, is a process safety
consulting, engineering, and automation company (NAICS 541330 “engineering services”). CH2M Hill
Inc., based in Anchorage, provides project development, technological expertise and program
management, and other services (NAICS 541330 “engineering services”). Dowland-Bach Corporation,
based in Anchorage, performs engineering of wellhead control panels and chemical injection systems
(NAICS 541490 “other specialized design services”). Fairweather LLC, based in Anchorage, provides
occupational and remote medical support, drug & alcohol testing, HSE support, and other services
(NAICS 541618 “other management consulting services”). Hawk Consultants LLC, based in Anchorage,
provides project and construction management services, project controls, supply change support and
dispute resolution (NAICS 541690 “other scientific and technical consulting”).
• Transportation and Warehousing: Colville, Inc., based in Prudhoe Bay and Anchorage, provides fuel
distribution, delivery, and bulk storage services (NAICS 484000 “specialized freight”). Advanced Supply
Chain International, based in Anchorage, provides materials management services, purchasing
administration, warehouse operations, supply chain management/supplier management, and e-
commerce web tools. All of the firm’s business is with the oil and gas sector (NAICS 493 “warehousing
and storage”).
• Trade: Delta Western Petroleum, based in Anchorage, is a distributor of petroleum products and
lubricants (NAICS 424000 “merchant wholesalers, nondurable goods”). Puget Sound Pipe & Supply is a
supplier of pipe and other products such as valves, fittings, flanges, and accessories (NAICS 423
“merchant wholesalers, durable goods”).
• Services: GLM Corporation, based in Kenai, services and repairs gas turbines, compressors, pumps,
gearboxes, generators and other industry related machinery (NAICS 811000 “repair and maintenance”).
Alaska Roteq Corporation, based in Wasilla, services and repairs rotating equipment (NAICS 811000
“repair and maintenance”). Team Industrial Services, based in Kenai, provides inspection services (NAICS
811000 “repair and maintenance”).
Other businesses with substantial interest in Alaska’s oil and gas industry include NANA Management Services
and Doyon Universal Services (NAICS 561000), AHTNA Construction (NAICS 237000), Crowley Marine Services
(NAICS 483), Alaska Interstate Construction (NAICS 237000), and various transportation firms, such as ERA
Helicopters (NAICS 481000), and Lynden Transport (NAICS 484000). These firms are active in other sectors of
the Alaska economy, but the revenue generated in the oil and gas industry is important, if not essential, to
business sustainability.
Other Indirect and Induced Economic Linkages to the Oil and Gas Industry
The 1,000-plus businesses described above that provide goods and services to the Primary Companies also
purchase goods and services in support of their operations in Alaska, which creates additional jobs and wages.
Those employment impacts are collectively described as part of the “indirect” impact of Primary Company
activity in Alaska.
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 16
The impact of the Primary Companies also includes the economic activity that occurs when their own employees
spend their wages in the Alaska economy. Jobs and wages that are the result of primary-company wages being
spent are termed “induced” economic impacts.
Together, indirect and induced impacts are termed “multiplier effects” by economists because they increase the
impact of Primary Company spending by factors that vary depending on the type and location of the spending.
In Chapters 2 and 3 of this report the direct and multiplier effects of Primary Company spending is described
from a statewide perspective as well as for several local areas.
Economic Effects of Taxes and Royalties Paid by the Oil and Gas Industry
The jobs and wages associated with vendor and employee spending are largely in the private sector. Oil and
gas businesses also generate taxes and royalties, paid to state government, that fund a wide variety of public
services, programs, and capital projects. Similarly, property taxes paid by the oil and gas industry to local
governments help support local services, programs, and projects. Alaska’s dependence on oil and gas industry
revenues, and the employment and wages generated when those revenues are spent is described in Chapter 4.
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 17
Chapter 2. Statewide Impacts of the Oil and Gas Industry
Primary Company Employment and Wages
The 14 firms that comprise the group of Primary Companies directly employed 5,035 workers in Alaska in 2016,
including 4,275 Alaska residents (or 85 percent of Primary Company employees). These employees received
$936 million in wages; Alaska residents received $749 million of this total, or 80 percent. Spending by Primary
Companies and their employees then generate significant additional employment and wages, as described
below.
Table 1. Primary Company Employment and Wages in Alaska’s Oil and Gas Industry, 2016 Total and Alaska Resident Employment and Wages
Category Average Annual
Employment Percent of
Total Total Wages
($million) Percent of
Total
Alaska Resident Workers 4,275 85% $749 80%
Non-Alaska-Resident Workers 760 15% $187 20%
All Workers in Alaska 5,035 100% $936 100%
Source: Alaska Department of Workforce Development and Labor, Primary Companies data and McDowell Group estimates.
Indirect and Induced Employment and Income
Relying exclusively on government employment statistics under-counts the broad oil and gas impact on the
Alaska economy. For example, ADOLWD statistics indicate that an average of approximately 11,400 workers
were employed in Alaska’s oil and gas industry sector in 2016.5
However, this accounts for approximately one-
quarter of all employment connected with the
oil and gas industry in Alaska (and less still
when including jobs created by oil and gas
industry taxes and royalties). Not included in
the published data are a variety of support
services companies providing goods and
services to the Primary Companies but
classified in government statistics in several
other sectors, such as transportation,
construction, and professional and technical
services.
5Alaska Department of Workforce Development and Labor, QCEW, 2016.
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 18
In addition, as support services companies purchase goods and services in support of their business operations
(indirect impacts), and as Alaska resident employees of both Primary Companies and support services
companies spend their payroll dollars in-state (induced impacts), additional jobs and income are created.
Economic impact modeling conducted for purposes of this study indicates these subsequent cycles of spending
supported just under 35,205 indirect and induced jobs in Alaska. Combining direct, indirect, and induced
impacts, the oil and gas industry in Alaska supported 45,575 jobs and $3.1 billion in annual payroll in 2016. This
estimate does not include jobs and income in Alaska stemming from the expenditure of state and local
government oil-related taxes and royalties paid by the oil industry.
Table 2. Alaska Oil and Gas Industry Employment and Wages, 2016 (excluding non-resident oil production and oil field services workers)
Category Employment Wages ($million)
Primary Companies (Alaska residents only) 4,275 $749
Oil & Gas Support Services (Alaska residents only)* 6,095 $598
All Other Indirect and Induced 35,205 $1,783
Grand Total (Direct, Indirect, and Induced) 45,575 $3,130
*Includes ADOLWD Oil and Gas Support Services Sector 213111 and 213112. Note: Excludes non-resident employment. Source: Alaska Department of Labor and Workforce Development, McDowell Group Estimates, and Primary Companies data.
According to Bureau of Economic Analysis (BEA) employment data (which includes people who are self-
employed and active-duty military personnel), there were 465,780 jobs in the Alaska economy in 2015.6 Based
on that figure, the oil industry’s total employment of 45,575 workers accounts for about 1 in 10 jobs in Alaska,
not including additional impacts on Alaska’s employment associated with taxes and royalties paid by the oil
industry to state and local governments.
In terms of private sector employment, Alaska had an average of 252,600 private sector wage and salary jobs in
Alaska in 2016 which accounted for $13.2 billion in total wages.7 All told, the oil and gas industry accounted for
1 in 6 private sector jobs.
Based on ADOLWD wage and salary employment data (excluding the self-employed and active duty military
personnel), the oil and gas industry accounts for 15 percent of all employment and 20 percent of all wages
(again not including jobs associated with taxes and royalties paid by the oil industry to state and local
governments).
6 BEA 7 Ibid.
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 19
Chapter 3. Local/Regional Impact Profiles
This chapter provides an overview of the 2016 oil and gas industry employment and wage impacts in six
geographic areas: Municipality of Anchorage, Fairbanks North Star Borough, Kenai Peninsula Borough,
Matanuska-Susitna Borough, North Slope Borough, and City of Valdez.
Municipality of Anchorage
More than half the jobs (62 percent) created in Alaska as a direct or indirect result of oil industry activity affect
the Anchorage economy. Anchorage is Alaska’s service and supply hub. Many Alaska business, including oil
producers, oil industry support services and supply businesses, and other businesses serving the oil and gas
industry and its workforce are headquartered in Anchorage. As a result, much of the spending by Alaska’s oil
and gas industry funnels through the Anchorage economy, creating additional jobs and wages.
• Approximately 2,265 employees of the 14 Primary Companies reside in Anchorage, accounting for $409
million in annual wages. In addition, an estimated 2,025 oil and gas support services employees reside
in Anchorage, with annual wages of $220 million.
• An additional 24,050 jobs in Anchorage are also connected to the oil and gas industry in Alaska. This
includes indirect jobs, such as those with professional and technical services firms, transportation
providers, and a variety of other companies that provide services to oil and gas firms. Wages spent by
employees supporting the oil and gas industry create even more jobs and income in Anchorage
(induced impacts). In total, these indirect and induced jobs accounted for approximately $1.2 billion in
annual wages in Anchorage.
• Including all direct, indirect, and induced effects, the oil and gas industry accounted for an annual
average of 28,340 jobs and total annual wages of nearly $1.9 billion in Anchorage.
• The oil and gas industry accounts for about 15 percent of Anchorage resident employment and 16
percent of Anchorage resident wages.8
• In 2016, the oil and gas industry accounted for approximately 17 percent of all private sector jobs and
about 20 percent of private sector wages for Anchorage residents.9
Table 3. Oil and Gas Industry Employment and Wages in Anchorage, 2016
Category Employment Wages ($million)
Primary Companies (Alaska residents only)* 2,265 $409
Oil & Gas Support Services (Alaska residents only)* 2,025 $220
All Other Indirect and Induced 24,050 $1,235
Grand Total (Direct, Indirect, and Induced) 28,340 $1,864
*Includes workers who are employed statewide but reside in Anchorage, as well as workers who live and work in Anchorage. Source: Alaska Department of Labor and Workforce Development, Primary Companies data, and McDowell Group estimates.
8 McDowell Group estimates based on BEA and AKDOWDL data. 9 Alaska Department of Labor QCEW, 2016.
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 20
Fairbanks North Star Borough
The oil and gas industry in the Fairbanks North Star Borough (FNSB) includes Petro-Star refinery operations,
TAPS operations, and oil industry support services-related activity. The borough is also home to North Slope
workers.
• Approximately 300 Primary Company employees
reside in the FNSB, accounting for $52 million in
annual wages and benefits.
• Approximately 545 oil and gas support services
employees reside in the FNSB, with annual wages of
$51 million.
• An additional 2,115 jobs in the FNSB are also
connected to Primary Company spending in Alaska,
including jobs with construction, trade, transportation, professional and technical services, and a variety
of other companies, generating approximately $105 million in annual wages.
• Including all direct, indirect, and induced effects, the oil and gas industry accounted for an annual
average of 2,960 jobs and total annual wages of $208 million in the FNSB.
• The oil and gas industry (including all multiplier effects) accounts for approximately 7 percent of all
resident wages in the FNSB.10
• The oil and gas industry accounts for approximately 13 percent of all resident private sector jobs and
wages earned by residents in the FNSB.11
• The oil and gas industry paid $12 million in property taxes to the FNSB in 2016, or 11 percent of total
Borough property tax revenue. The industry also paid $300,000 in property taxes to the City of Fairbanks.
• Alyeska Pipeline Service Company is the single largest contributor of property-tax revenues in the
borough.12
Table 4. Oil and Gas Industry Employment and Wages in Fairbanks North Star Borough, 2016
Category Employment Wages
($million)
Primary Companies (Alaska residents only)* 300 $52
Oil & Gas Support Services (Alaska residents only)* 545 $51
All Other Indirect and Induced 2,115 $105
Grand Total (Direct, Indirect, and Induced) 2,960 $208
*Includes workers who are employed statewide but reside in the FNSB, as well as workers who live and work in FNSB. Source: Alaska Department of Labor and Workforce Development, Primary Companies data, and McDowell Group estimates.
10 McDowell Group estimates based on BEA and AKDOWDL data. 11 Alaska Department of Labor QCEW, 2016. 12 Fairbanks North Star Borough, Comprehensive Annual Financial Report, FY16, http://www.co.fairbanks.ak.us/fs/Comprehensive%20Annual%20Financial%20Reports/FY15%20FNSB%20CAFR%20FINAL%202-9-16%20OPTIMIZED.pdf
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 21
Kenai Peninsula Borough
The oil and gas industry has a substantial presence in the
Kenai Peninsula Borough (KPB). Oil and gas production in
Cook Inlet creates jobs and income for borough residents, as
does operation of Tesoro’s refinery. Additional economic
activity was generated from preparation for the Alaska LNG
project, which would terminate in KPB. The region also enjoys
economic benefits from wages spent in the local economy by
North Slope workers who reside in the borough.
• Approximately 810 Primary Company employees
reside in the KPB, accounting for $142 million in total annual wages.
• Approximately 1,615 oil and gas support services employees reside in the KPB, with total annual wages
of $153 million.
• An additional 2,620 jobs in the KPB are also connected to Primary Company spending in Alaska,
including jobs with the service sector, professional and technical services, trade, transportation,
construction, and a variety of other companies, generating approximately $105 million in annual wages.
• Including all direct, indirect, and induced effects, the oil and gas industry accounted for an annual
average of 5,045 jobs and total annual payroll of $400 million in the KPB.
• Economic activity related to the oil and gas industry accounts for approximately 20 percent of total KPB
resident employment, and 25 percent of wages.13
• The oil and gas industry paid $11.6 million in property taxes to the KPB in 2016, or 19 percent of total
property tax revenues for the Borough. The industry also paid $300,000 in property taxes to the City of
Kenai.
• Six of the top 10 property tax payers in the KPB are oil and gas companies. In order of taxable assessed
value, Hilcorp Alaska LLC. is #1; followed by ConocoPhilips Inc (#2), Tesoro Alaska (#3), Cook Inlet
Energy, LLC (#5), Alaska Pipeline (#7), and XTO Energy (#8).14 Together, these six companies account for
17 percent of KPB’s total assessed value.
Table 5. Oil and Gas Industry Employment and Wages in Kenai Peninsula Borough, 2016
Category Employment Wages ($million)
Primary Companies (Alaska residents only)* 810 $142
Oil & Gas Support Services (Alaska residents only)* 1,615 $153
All Other Indirect and Induced 2,620 $105
Grand Total (Direct, Indirect, and Induced) 5,045 $400
*Includes workers who are employed statewide but reside in the KPB, as well as workers who live and work in KPB. Source: Alaska Department of Labor and Workforce Development, Primary Companies data, and McDowell Group estimates.
13 McDowell Group estimates based on BEA and AKDOWDL data. 14 Kenai Peninsula Borough, Comprehensive Annual Financial Report, FY16, http://www.kpb.us/images/KPB/FIN/Finance_Documents/Financial_Statements/FY2016/KPBFINAL_WEBFY16.pdf
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 22
Matanuska-Susitna Borough
The oil and gas industry’s economic impact on the Matanuska-Susitna Borough (Mat-Su) is primarily the result
of oil and gas industry workers residing in the area and spending their wages in the local economy.
• Approximately 515 Primary Company employees reside in Mat-Su, accounting for $89 million in annual
wages.
• A larger number (1,580) of oil and gas support services employees reside in Mat-Su, with annual wages
of $144 million.
• An additional 1,175 jobs in Mat-Su are also directly connected to Primary Company spending in Alaska,
including jobs with construction, trade, professional and technical services, other services, and a variety
of other companies, generating approximately $54 million in total annual wages.
• Including all direct, indirect, and induced effects, the oil and gas industry accounted for an annual
average of 3,270 jobs in Mat-Su and total annual payroll of $287 million.
• While few oil and gas industry-related jobs are located in Mat-Su (as many workers commute to
Anchorage and some commute to work on the North Slope or in Cook Inlet), oil and gas industry-
related wages account for approximately 8 percent of employment and wages earned by local
residents.15
Table 6. Oil and Gas Industry Employment and Wages in Matanuska-Susitna Borough, 2016
Category Employment Wages
($million)
Primary Companies (Alaska residents only)* 515 $89
Oil & Gas Support Services (Alaska residents only)* 1,580 $144
All Other Indirect and Induced 1,175 $54
Grand Total (Direct, Indirect, and Induced) 3,270 $287
*Includes workers who are employed statewide but reside in the Mat-Su Borough, as well as workers who live and work in Mat-Su. Source: Alaska Department of Labor and Workforce Development, Primary Companies data, and McDowell Group estimates.
15 McDowell Group estimates based on BEA and AKDOWDL data.
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 23
North Slope Borough
There were approximately 14,000 jobs reported in the North
Slope Borough in 2016. Approximately 75 percent of those
jobs (10,500) were in the Prudhoe Bay area. While a very large
number of oil and gas industry jobs are based in the North
Slope Borough (NSB), very few of these workers reside in the
borough. The North Slope oil industry infrastructure and
work sites are self-contained and hundreds of miles away
from most of the borough’s resident population. The oil
industry’s greatest economic impact on the NSB residents are
through oil and gas-related property-tax revenues.
• By place of work, Primary Companies in the NSB provided approximately 1,845 jobs and accounted for
$399 million in annual wages.
• By place of work, oil and gas support services companies with operations in the NSB provided 5,590
jobs and accounted for $512 million in annual wages.16 Alaska residents held an estimated 3,410 (61
percent) of these positions and earned $315 million (62 percent) in wages.
• By place of residence, Primary Companies and oil and gas support services companies supported
employment for approximately 55 residents with about $4 million in wages.
• An additional 1,790 jobs in the NSB are also connected to oil and gas industry activity in Alaska,
generating approximately $101 million in annual wages. These jobs and wages are linked with property
taxes paid by the industry that support borough government operations. It also includes high-level
estimates of the economic impact of Arctic Slope Regional Corporation (ASRC), which has important
interests in the oil and gas industry.
• Including all direct, indirect, and induced effects, the oil and gas industry accounted for an annual
average 1,845 jobs in the NSB and total annual wages of $105 million.
• The oil and gas industry paid $347.5 million in property taxes to the NSB, or 96.7 percent of total
Borough tax revenues.
• Due to the significant number of individuals traveling to the region for work, the number of jobs
outnumbers residents. BEA data indicates the area is home to approximately 10,000 residents and nearly
16,500 jobs.17
Table 7. Oil and Gas Industry Employment and Wages in North Slope Borough, 2016
Category Employment Wages
($million)
Primary Companies (Alaska residents only) <5 <$1
Oil & Gas Support Services (Alaska residents only) 50 $3
All Other Indirect and Induced 1,790 $101
Grand Total (Direct, Indirect, and Induced) 1,845 $105
Source: Alaska Department of Labor and Workforce Development, Primary Companies data, and McDowell Group estimates.
16 Alaska Department of Labor QCEW, 2016. 17 Ibid.
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 24
Valdez
Valdez is the terminus of the 800-mile TAPS and the
Alyeska marine terminal, where oil is loaded for marine
transport to market. The marine terminal, Petro Star’s
Valdez refinery, and other TAPS pipeline facilities
within the city typically account for 90 percent of all
local property-tax revenues.
An additional source of revenue dates back to the
1970s when the owners of TAPS paid the city $13.6
million in exchange for use of the city’s bonding
authority to issue tax-exempt bonds. That money was
used to create the Valdez Permanent Fund; at the end of 2016, the fund held approximately $175 million.18
• Approximately 290 Primary Company employees reside in Valdez, accounting for $41 million in annual
wages.
• Approximately 150 Oil and Gas Support Services company employees reside in Valdez, with annual
wages of $14 million.
• An additional 240 jobs in Valdez are also connected to Primary Company spending and employee
spending in Valdez, accounting for approximately $16 million in annual wages.
• Including all direct, indirect, and induced effects, the oil and gas industry accounted for an annual
average of 680 jobs and total annual wages of $71 million in Valdez.
• The oil and gas industry paid $43.4 million in property taxes to the City of Valdez in 2016, or 88 percent
of total City tax revenues.
Table 8. Oil and Gas Industry Employment and Wages in Valdez, 2016
Category Employment Wages
($million)
Primary Companies (Alaska residents only) 290 $41
Oil & Gas Support Services (Alaska residents only) 150 $14
All Other Indirect and Induced 240 $16
Grand Total (Direct, Indirect, and Induced) 680 $71
Source: Alaska Department of Labor and Workforce Development, Primary Companies data, and McDowell Group estimates.
18 City of Valdez, 2016 budget, http://www.ci.valdez.ak.us/DocumentCenter/View/2720
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 25
Summary of Localized Impacts
The impacts for the six geographic areas described in this section capture most of the employment and payroll
impacts generated by the oil and gas industry in Alaska. However, other regions of Alaska (such as Southeast,
Southwest, and rural Interior) are home to a number of North Slope workers. These workers spend their wages
in their local economies.
Some economic activity related to oil and gas industry spending in Alaska is difficult to attribute to any particular
community. For example, spending by the oil and gas industry and their workers in Fairbanks, Mat-Su, or Kenai
Peninsula is likely to funnel eventually through service and supply hubs in Anchorage. Local-level modeling
conducted for this study does not capture this inter-regional effect and therefore understates local employment
and payroll (especially in Anchorage).
The following table summarizes local-level employment and payroll impacts of the oil and gas industry. The
“Unattributed” category is an accounting of jobs created in areas other than the six locations considered in this
study and captures all the jobs created by inter-regional flow of oil and gas industry-related dollars.
Table 9. Alaska Resident Employment and Wages in the Oil and Gas Industry, By Region, 2016
Category Alaska Municipality
of Anchorage
Fairbanks North Star
Borough
Kenai Peninsula Borough
Mat-Su Borough
North Slope
Borough
City of Valdez
Unattributed
Employment
Primary Companies
4,275 2,265 300 810 515 <5 290 90
Oil & Gas Support Services
6,095 2,025 545 1,615 1,580 50 150 125
Other Indirect & Induced
35,205 24,050 2,115 2,620 1,175 1,790 240 3,220
Total 45,575 28,340 2,960 5,045 3,270 1,845 680 3,435
Wages ($million)
Primary Companies
$749 $409 $52 $142 $89 <$1 $41 $15
Oil & Gas Support Services
$598 $220 $51 $153 $144 $3 $14 $13
Other Indirect & Induced
$1,783 $1,235 $105 $105 $54 $101 $16 $167
Total $3,130 $1,864 $208 $400 $287 $105 $71 $195
Note: Due to rounding some rows or columns may not add to total. Source: Alaska Department of Labor and Workforce Development, Primary Companies data, and McDowell Group estimates.
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 26
Chapter 4. Oil Revenue Impacts on State and Local Governments
Alaska relies on revenue generated from oil and gas resources to fund state operating and capital budgets.
Municipal governments also directly or indirectly depend on oil and gas-related revenue. Further, oil and gas
revenue is also disbursed directly to Alaska residents in the form of transfer payments, including the Permanent
Fund Dividend. In summary, oil and gas industry payments to state and local governments totaled $2.1 billion.
This chapter details the economic impact of this state and local government revenue.
Table 10. Summary of Oil-Related Payments to State and Local Governments in Alaska, FY2016
Amount ($million)
Local government payments (Oil and Gas Property Taxes) $446.8
State government payments (Royalties, Production Tax, Oil and Gas Property Tax, and other payments)
$1,627.3
Total oil and gas-related revenue paid to local and state governments $2,074.1
Source: Alaska Department of Revenue.
Oil and Gas Revenue Impacts on State Government
Oil and gas revenue flows to the State of Alaska by means of a variety of taxes, royalties, and other charges
related to oil and gas development and production. Between statehood in 1959 and state fiscal year (SFY)2016,
oil-related unrestricted revenues totaled $177.7 billion ($2016), in addition to billions more in restricted revenue
(See discussion of restricted and unrestricted revenue below.) In SFY2016, Alaska received $1.6 billion in total
oil and gas revenue or 28 percent of all restricted and unrestricted state revenue ($5.8 billion).
Figure 3. Annual Unrestricted Petroleum Revenue ($2016), SFY1959-SFY2016
Source: State of Alaska Department of Revenue; adjusted for inflation by McDowell Group.
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
1959 1978 1997 2016
Real
Un
rest
ructe
d P
etr
ole
um
Reven
ue
($m
illi
on
)
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 27
State revenue is categorized into two distinct pools of funding – unrestricted and restricted funds. Below is a
brief description of the sources of oil and gas revenue payments to the State of Alaska in each category.19
Unrestricted Revenues
Unrestricted revenues are paid into the General Fund (GF) and may be appropriated for any purpose by the
legislature (subject to the Governor’s veto). Most revenue generated from petroleum activity is unrestricted. In
SFY2016, of the $1.6 billion in total petroleum revenue, $1.1 billion (or 69 percent) was unrestricted.
Alaska’s oil and gas industry revenue provided 72 percent of unrestricted revenue from all sources, in SFY2016.
Non-petroleum corporate income tax accounted for the second largest component at just 6 percent.
Figure 4. Sources of State of Alaska Unrestricted General Funds, SFY2016
Source: Alaska Department of Revenue
ROYALTIES – OIL AND GAS BONUSES, RENTS, AND INTEREST
Royalty agreements allow the state to share the risk of oil and gas development with the industry (11 ACC
04.010-199, 11 AAC 83.201-295) in return for a portion of the profits. When a company purchases a lease from
the state it pays various “fees” and promises the state a portion of revenue (usually 12.5 percent, although some
newer leases have a higher royalty rate) if and when the oil and gas are marketed. Royalty payments are based
on the value and volume of the oil and gas removed from the state-leased land and the lease’s royalty rate.
19 More detailed descriptions can be found in the Alaska Department of Revenue, 2016 Annual Report. http://www.tax.alaska.gov/programs/documentviewer/viewer.aspx?1038r
Petroleum Revenue,72%
($1,109.5 Million)
Corporate Income Tax
(All Corporations),6%
Fuel Tax, 3%
Cigarette Tax, 2%
Fisheries Tax, 1%
Alcohol Tax, 1%
Other Revenue, 14%
Non-petroleum Revenue, 28%
($430.3 Million)
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 28
Large lease-owners have agreements with the state about what expenses can be deducted from the sales value
to calculate royalty due.20
In SFY2016, royalties—including bonuses, rents, and interest—on petroleum production totaled $840.3 million.
This revenue represented:
• 76 percent of unrestricted oil and gas-related revenue
• 52 percent of all oil-related revenue (both restricted and unrestricted)
• 15 percent of all state revenue (including payments from the federal government and other sources)
• 12 percent of all restricted revenue (including payments from the federal government and other
sources)
OIL AND GAS PRODUCTION TAX
Since January 1, 2014, the state has levied an
annual tax on the value of oil and gas
production in Alaska (AS 43.55) per Senate Bill
21, or the More Alaska Production Act (MAPA).
Oil and gas production is taxed at its
“production tax value” (PTV) which is gross
value at the point of production minus lease
expenditures.
For North Slope producers, the base tax rate is 35 percent with lower tax rates occurring when prices fall below
$25 per barrel. An additional alternative minimum tax of between 0 and 4 percent is levied upon the gross value
when the average annual ANS price is above $25 per barrel. A Per-Taxable-Barrel Credit is activated at $8 per
barrel when prices are less than $80 per barrel and decreases to $0 per barrel as the price reaches $150 per
barrel.
Cook Inlet producers operate under a tax structure similar to that of the North Slope, including the 35 percent
tax rate on the production tax value of oil and gas. However, the effective rate cannot exceed $1 a barrel for oil
and $0.177 per thousand cubic feet of natural gas. The Qualified Capital Expenditures Credit, Well Lease
Expenditures Credit, and Net Operating Loss Credit are available to Cook Inlet producers until January 1, 2018.
A Small-Producer Credit is gradually being phased out for the region; no new companies can claim the credit.
In SFY2016, the production tax generated $176.8 million in state revenue.
PROPERTY TAX
A total of $559 million in oil and gas property taxes were paid to both state and local governments. Alaska levies
an oil and gas property tax on the value of taxable exploration, production, and pipeline transportation property
20 More detailed description can be found on the Alaska Department of Natural Resources’ website: http://dog.dnr.alaska.gov/Royalty/Accounting.htm
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 29
(AS 43.56) at a rate of 20 mills, or 2 percent of the assessed value. In SFY2016, this tax generated $112 million
for the state with the remaining $447 million paid to local governments, which represented:
• 10 percent of unrestricted oil and gas-related revenue
• 7 percent of all oil-related revenue (both restricted and unrestricted)
• 2 percent of all state revenue (including federal government and other sources)
OIL CONSERVATION SURCHARGE
The Oil and Hazardous Substance Release Prevention and Response Fund (AS43.55.201/300) is maintained
through a per-barrel tax to fund mitigation of oil spills or other hazardous releases. The fund is separated into
two accounts: one supporting response to a hazardous release and another that supports the prevention of
hazardous releases (primarily funding a division at the Alaska Department of Environmental Conservation).
The surcharge can total up to $0.05 per barrel, with $0.04
per barrel allocated to the prevention account with no limit.
However, when the response account totals more than $50
million, a $0.01 per barrel surcharge is suspended. As of
September 2016, the response fund held $49 million.
Commonly referred to as the “470 Fund”, the Alaska oil and
gas industry paid $9.3 million into the fund in in SFY2016.
This surcharge is added to the Oil and Gas Production Tax.
PETROLEUM CORPORATE INCOME TAX
Alaska levies a corporate income tax on Alaska businesses (AS 43.20). According to the Alaska Department of
Revenue (DOR), in SFY2016, corporate income tax revenue was negative (-$58.8 million) due to: “[L]arge refunds
of prior-year estimated taxes and low estimated taxes for [S]FY 2016.” 21 However, the negative tax balance is
an outlier since the tax generated annual average revenue was nearly $390 million over the previous five years.
DOR estimates SFY2017 and SFY2018 corporate income tax revenue will be positive.
Corporate income tax on oil companies is based on a “modified apportionment formula” of property, sales, and
extraction. The extraction factor is the production of oil and gas in Alaska divided by worldwide production.
Alaska taxes corporate income at graduated rates ranging from 0 to 9.4 percent spread across more than 10 tax
brackets. Credits, such as the Gas Exploration and Development Credit, Gas Storage Facility Tax Credit, and the,
LNG Storage Facility Tax Credit, apply.
Restricted Revenues
While most oil and gas revenue is unrestricted, a portion is considered restricted and is designated for specific
uses. In SFY2016, of the $1.6 billion generated from oil and gas activity, $518 million (or 24 percent) was
21 Alaska Department of Revenue, Revenue Sources Book Fall 2016, http://www.tax.alaska.gov/programs/documentviewer/viewer.aspx?1295r
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 30
restricted revenue.22 This component represented 8.9 percent of all state revenue. This revenue is placed in
several funds described below.
ALASKA PERMANENT FUND
The Alaska Permanent Fund receives between 25 to 50 percent of oil and gas royalties, depending on the royalty
agreement for the specific property. As of May 8, 2017, the fund held $58.8 billion.23 A more detailed discussion
of the Alaska Permanent Fund may be found later in this report.
PUBLIC SCHOOL TRUST FUND
The Public School Trust Fund is funded by a 0.5 percent royalty on receipts connected with the management of
State of Alaska Lands (AS 37.14.150), including revenue generated through royalties, mineral lease rentals, the
sale of surface rights, and other activity. Revenues associated with oil and gas development and production
fund most of the trust.
Income generated from the Public School Trust Fund can only be used to support the Alaska public school
system. On April 30, 2017, the fund’s market value was $619.7 million. In SFY2016, $13.0 million was distributed
to school districts throughout the state.
CONSTITUTIONAL BUDGET RESERVE FUND
The Constitutional Budget Reserve Fund (CBRF) receives settlements associated with mineral-related disputes.
At the discretion of the state legislature, GF revenue can also be added to the CBRF.
Established in 1990, the CBRF is funded almost entirely by oil and gas activity; mining-related settlements
contributed a small amount.
On April 30, 2017, the fund had a market value of $4.7. billion.24 In SFY2016, $119.1 million was placed in the
CBRF, and the fund generated $138.3 from investment activities.25 In the same year, $3.0 billion was transferred
from the CBRF to the GF.
NPR-A ROYALTIES, RENTS, AND BONUSES
The State of Alaska is entitled to 50 percent of bonuses, rents, and royalties associated with leasing of federal
lands in the National Petroleum Reserve-Alaska (NPR-A). This restricted revenue first goes to municipalities in
the form of grants to minimize impacts associated with NPRA development. Any remaining funds are treated
like other State of Alaska royalty revenue.
22 State of Alaska Department of Revenue, Revenue Sources Book Fall 2016, accessed 3/15/2017, http://tax.alaska.gov/programs/documentviewer/viewer.aspx?1321r. 23http://www.apfc.org/home/Content/home/index.cfm 24 http://treasury.dor.alaska.gov/Investments/ConstitutionalBudgetReserve.aspx 25 State of Alaska Department of Revenue, Revenue Sources Book Fall 2016, accessed 3/15/2017, http://tax.alaska.gov/programs/documentviewer/viewer.aspx?1321r.
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 31
In SFY2016, $1.8 million was collected for activity on NPR-A lands, supporting local government operations,
youth programs, and infrastructure projects in Utqiaġjik (formerly Barrow), Wainwright, Anaktuvuk Pass, Nuiqsut,
and Atqasuk.26
Oil and Gas Revenue Trends
The following tables summarizes State oil and gas revenue and other revenue from SFY2010 to SFY2016.
Table 11. Sources of State of Alaska Revenue ($million), by Type, SFY2010-SFY2016
1Includes hazardous release revenue. Source: Alaska Department of Revenue.
26 https://www.omb.alaska.gov/ombfiles/16_budget/PDFs/FY16_by_House_District_w_Funding_Detail_6-30-15.pdf, p. 13.
Category SFY2010 SFY2011 SFY2012 SFY2013 SFY2014 SFY2015 SFY2016
Unrestricted Revenue
Oil and Gas Royalties $1,469.0 $1,821.3 $2,022.8 $1,748.4 $1,685.0 $1,052.1 $840.3
Production Tax 2,860.7 4,543.2 6,136.7 4,042.5 2,605.9 381.6 176.8
Property Tax 118.8 110.6 111.2 99.3 128.1 125.2 111.7
Petroleum Corporate Income Tax
446.1 542.1 568.8 434.6 307.6 94.8 -58.8
Other Oil & Gas Revenue1 18.3 31.7 18.3 27.2 36.2 34.2 39.5
Total Oil & Gas-Related Revenue
$4,912.9 $7,048.9 $8,857.8 $6,352.0 $4,762.8 $1,687.9 $1,109.5
Non-Oil & Gas Revenue 600.4 624.0 627.4 576.5 627.3 568.4 430.3
Total Unrestricted Revenue $5,513.3 $7,672.9 $9,485.2 $6,928.5 $5,390.1 $2,256.3 $1,539.8
% from Oil & Gas Revenue 89% 92% 93% 92% 88% 75% 72%
Restricted Revenue
Royalties to Permanent Fund
$696.1 $857.3 $904.9 $842.1 $773.7 $510.4 $390.5
Tax Settlements to CBRF 552.7 167.3 102.1 176.6 114.4 149.0 119.1
Royalties to Public School Trust Fund
11.1 13.6 14.7 13.8 12.5 7.9 6.4
NPR-A Royalties, Rents, and Bonuses
21.3 3.0 4.8 3.6 6.8 3.2 1.8
Total Oil & Gas-Related Revenue
$1,281.2 $1,041.2 $1,026.5 $1,036.1 $907.4 $670.5 $517.8
Non-Oil & Gas Revenue 7,150.4 10,809.8 3,017.2 7,762.7 10,861.3 5,537.4 3,708.8
Total Restricted Revenue $8,431.6 $11,851.0 $4,043.7 $8,798.8 $11,768.7 $6,207.9 $4,226.6
% from Oil & Gas Revenue 15% 9% 25% 12% 8% 11% 12%
Combined Unrestricted and Restricted Revenue
Total Oil & Gas-Related Unrestricted and Restricted Revenue
$6,194.1 $8,090.1 $9,884.3 $7,388.1 $5,670.2 $2,358.4 $1,627.3
Average Alaska North Slope (ANS) Price per Barrel
$79 $110 $111 $108 $98 $52 $43
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 32
Recent changes in oil and gas-related revenue have been driven primarily by the price of oil and Alaska’s tax
structure. Peak average prices of $111 per barrel in SFY2012 saw associated revenue of $9.9 billion, but as prices
began to slide in the following two years, oil and gas revenue began to decline. By SFY2016, oil prices had
declined more than 60 percent from SFY2012, and oil and gas revenue slid more than 80 percent.
Figure 5. State of Alaska Total Oil and Gas-Related Revenue ($billion) and Average Annual ANS Price per Barrel, SFY2010-SFY2016
Source: Alaska Department of Revenue.
Oil and Gas Revenue-Related Impacts on State Government Funding and
Employment
As a critical source of unrestricted funding, the oil and gas industry supports thousands of state government
jobs and millions of dollars in annual wages. Recognizing that the impact of oil and gas related-revenue on
state government employment and payroll is greater than the UGF spending alone due to leveraging of
additional federal dollars (for example, transportation projects and Medicaid funding). The following analysis
focuses on the impacts of oil and gas revenue-related UGF on state department operations and programs.
In SFY2016, the state’s combined operating ($8.5 billion) and capital ($1.5 billion) budget was $10.0 billion. UGF
accounted for 52 percent of these budgets ($5.2 billion). Federal funding accounted for 33 percent ($3.3 billion)
and designated and other funds totaled the remainder ($1.4 billion).
In SFY2016, the proportion of Alaska department budgets funded with oil and gas revenue from the UGF,
including the Constitutional Budget Reserve funds, ranged from 89 percent (for the Alaska State Legislature) to
8 percent (Alaska Department of Revenue). In absolute terms, the Alaska Department of Education and Early
Development received the most oil and gas revenue-related UGF ($1.2 billion).
ANS Crude Oil Average
Price
$6.2
$8.1
$9.9
$7.4
$5.7
$2.4
$1.6
$79
$110 $111 $108
$98
$52
$43
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
2010 2011 2012 2013 2014 2015 2016
$0
$20
$40
$60
$80
$100
$120
Total Oil and Gas Revenue Average Price Per Barrel
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 33
Table 12. Sources of State of Alaska Department Revenue, By Source ($thousands), SFY2016
State Departments
Undesignated General Funds
Designated General Funds
Other Funds Federal Funds
Total Funding
UGF Funding
Attributable to Oil & Gas
Revenue
Percent of Department
Budget Attributable to Oil & Gas
Revenue
Legislature $65,798 $62 $355 $0 $66,215 $59,219 89%
Judiciary 110,142 518 1,656 443 112,759 99,128.0 88
Office of the Governor
21,688 0 630 201 22,519 19,519.4 87
Public Safety 157,595 3,956 9,624 5,898 177,072 141,835.3 80
Corrections 274,822 6,450 22,263 6,404 309,939 247,340.2 80
Education and Early Development
1,299,093 24,512 49,448 210,843 1,583,896 1,169,184.0 74
Law 55,696 2,723 30,638 1,020 90,077 50,126.2 56
Natural Resources
115,349 22,099 31,383 34,480 203,311 103,814.0 51
Health and Social Services
1,179,724 60,912 87,802 1,324,614 2,653,052 1,061,751.2 40
University of Alaska
350,787 284,967 72,461 126,055 834,270 315,708.1 38
Transportation & Public Facilities
237,684 63,422 280,625 916 582,647 213,915.9 37
Fish and Game 64,616 11,829 49,871 54,366 180,682 58,154.1 32
Military and Veterans Affairs
16,268 0 11,866 18,627 46,761 14,640.8 31
Environmental Conservation
19,904 25,451 10,722 19,977 76,053 17,913.2 24
Administration 75,941 26,847 205,672 995 309,455 68,347.2 22
Labor and Workforce Development
25,536 33,151 18,948 69,161 146,797 22,982.1 16
Commerce, Community, & Economic Development
27,836 69,582 48,564 27,047 173,030 25,052.5 14
Revenue 28,313 1,807 212,262 72,036 314,419 25,481.8 8
Total $4,126,792 $638,288 $1,144,789 $1,973,085 $7,882,953 $3,714,113 48%*
*Indicates an average value. Note: Assumes 90 percent of UGF originates with oil and gas revenue, including CBR revenue. Source: Governor’s Office of Budget and Management, Alaska Legislative Finance, Department of Revenue, and McDowell Group estimates.
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 34
Depending on their reliance on UGF, some departments are more dependent upon oil and gas-related revenue
for operations. The departments with the most jobs supported by this revenue included the University of Alaska
(1,793 jobs), Alaska Department of Corrections (1,444), and Alaska Department of Health and Social Services
(1,381). Total positions supported by oil and gas-related revenue across all departments is nearly 10,000.
Table 13. State of Alaska Department Employment, By Type, SFY2016
State Departments Full-Time
Positions
Part-Time
Positions
Temporary Positions
All Positions
# Positions Supported by
Petroleum-Related UGF
% of Positions Supported by
Petroleum Related UGF
Legislature 373 57 0 430 384 89%
Judiciary 627 41 133 801 704 88
Office of the Governor 127 1 56 184 160 87
Public Safety 796 3 154 953 763 80
Corrections 1,776 0 33 1,809 1,444 80
Education and Early Development
294 3 68 366 270 74
Law 485 1 2 488 272 56
Natural Resources 826 6 91 922 471 51
Health and Social Services
3,167 53 232 3,452 1,381 40
University of Alaska 4,518 221 - 4,739 1,793 38
Transportation & Public Facilities
3,145 22 114 3,281 1,205 37
Fish and Game 1,236 108 70 1,414 455 32
Military and Veterans Affairs
233 1 3 236 74 31
Environmental Conservation
475 1 9 485 114 24
Administration 946 12 49 1,006 222 22
Labor and Workforce Development
675 4 48 727 114 16
Commerce, Community, & Economic Development
451 2 11 463 67 14
Revenue 487 0 6 493 40 8
Total 20,637 535 1,079 22,251 9,934 45%*
*Indicates an average value. Note: Assumes 90 percent of UGF originates with oil and gas revenue, including CBR revenue. Source: Governor’s Office of Budget and Management, Alaska Legislative Finance, Department of Revenue, and McDowell Group estimates.
STATE OF ALASKA CAPITAL BUDGET
The economic impact of capital projects may be spread out over several years, as construction can take time to
ramp up (and ramp down). Capital projects supported by oil and gas-related revenue GF allocations covered a
wide variety of infrastructure between SFY2014 to SFY2016. A sample of this spending on large and small
projects includes:
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 35
SFY2014
• Southeast Inter-Island Ferry Authority, $500,000 (of which $440,000 was supported by oil and gas-
related GF revenue)
• Ouzinkie Emergency Repairs for Mahoona Dam, $300,000 ($264,000 supported by oil and gas-related
GF revenue)
• Fairbanks UAF Heat and Power Plant, $50,000,000 ($44,000,000 supported by oil and gas-related GF
revenue)
• Chugiak Volunteer Fire Department Engine Replacement, $450,000 ($396,000 supported by oil and gas-
related GF revenue)
• Big Lake Lions Club Community and Recreational Center, $500,000 ($440,000 supported by oil and gas-
related GF revenue)
SFY2015
• Dalton Highway Emergency Repairs, $5,000,000 ($3,750,000 supported by oil and gas-related GF
revenue)
• Juneau Capitol Building Seismic and Restoration Project, $7,385,700 ($5,539,275 supported by oil and
gas-related GF revenue)
• Koyukuk Power House and Distribution System Improvements, $250,000 ($1875,000 supported by oil
and gas-related GF revenue)
• Anchorage Campbell Airstrip Road Pedestrian/Bike Trail, $140,000 ($105,000 supported by oil and gas-
related GF revenue)
SFY2016
• North Pole Sewer Improvements, $2,018,800 ($1,816,920 supported by oil and gas-related GF revenue)
• Juneau Water Treatment Improvements, $3,090,000 ($2,781,000 supported by oil and gas-related GF
revenue)
• Homer Water Storage and Distribution Improvements, $1,980,254 ($1,782,228 supported by oil and
gas-related GF revenue)
Statewide Impacts of Oil-related Revenue on Selected State Government
Programs
Following are some key examples of programs funded by oil and gas-related revenue in SFY2016 that have far-
reaching, statewide benefits:
• Alaska Permanent Fund Dividends (PFD), paid to 635,997 individuals.
• Education funding, supporting nearly 130,000 K-12 and 35,000 University of Alaska students.
• Medicaid payments, affecting approximately 182,925 recipients of health care services in 2016.
• Community Assistance Program, affecting about 230 municipalities, boroughs, cities, and
unincorporated communities throughout Alaska.
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 36
THE ALASKA PERMANENT FUND AND THE PERMANENT FUND DIVIDEND
In 1976, as TAPS neared completion, Alaska voters approved a constitutional amendment to establish the Alaska
Permanent Fund. The Fund is an account to help cover future State needs in the event of volatility or decline in
oil revenues. The principal of the fund represents at least 25 percent of all mineral lease rents, royalties, royalty
sales proceeds, federal mineral revenue-sharing payments and bonuses. The Alaska Constitution says the
principal of the Fund may not be spent. However, the earnings may be spent by the Alaska State Legislature for
any public purpose, including Permanent Fund Dividend (PFD) distribution. Perhaps the most recognizable
impact the oil industry has had on the average Alaska resident is the PFD.
• Most of the Fund’s principal comes from Alaska’s oil and gas production royalty payments (a relatively
small amount comes from mining activity). In SFY2016, a total of $284.5 million was deposited into the
fund. 27
• As of May 24, 2017, the fund was valued at $59.3 billion.28
• An Alaskan resident who has received an annual dividend since 1982 has received $40,121 (or $56,830
measured in 2016 dollars) in PFDs.
• The Alaska Permanent Fund has paid a cumulative total of $23.1 billion (or $32.1 billion in 2016 dollars)
in PFDs since 1982.
• The PFD distribution in 2016 ($650 million) represented slightly more than 10 percent of all government
transfer payments ($6.2 billion) to Alaska residents.29
Figure 6. Annual PFD Disbursed Amount ($2016), 1982-2013
Note: Does not include a $1,200 “energy rebate” payment which accompanied the 2008 PFD disbursement. Oil and gas-related revenue funded more than 90 percent of this rebate payment. Source: Alaska Permanent Fund Corporation, inflation-adjusted by McDowell Group.
27 http://www.apfc.org/_amiReportsArchive/2016_09_AR.pdf 28 http://www.apfc.org/home/Content/home/index.cfm 29 Bureau of Economic Analysis, Personal Income data,2015.
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
1982 1999 2016
An
nu
al
Dis
bu
rsed
Am
ou
nt
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 37
Each fall, every Alaska resident – adults and children
alike – receives a PFD check in an amount that has
ranged from about $400 to more than $2,000. The
initial legislation creating the dividend in 1980 was
invalidated by the U.S. Supreme Court because it
based the size of payments to recipients on their
years of residency in Alaska. After adjustments were
made to the legislation to authorize equal dividend
payments to all residents, the first dividend of
$1,000 was distributed to Alaskans in 1982.
PFD payments serve an especially important role in rural Alaska where opportunities to earn cash income are
often limited. To illustrate, the 2015 median family household income in Kusilvak Census Area was an estimated
$39,375.30 The average family household included five people. Assuming each member of the family received a
$2,072 PFD in 2015 (totaling $10,360), the combined PFD income would represent 26 percent of that family’s
total household income. Research conducted by Berman & Reamey in 2016 estimate these annual payments
lift between 15,000 and 25,000 Alaskans above the federal poverty line. 31
A statewide survey conducted by McDowell Group in 2008 showed that 62 percent of Alaskans used a portion
of their PFD to pay for household expenses (such as maintenance, rent, utility bills), 58 percent saved or invested
a portion of their PFD, including college funds, 40 percent used it to pay debt (such as credit card debt,
garnishment, child support payments), 33 percent used it for vacation, 31 percent donated a portion to a charity,
and 19 percent used it to make a major purchase of more than $500 (such as snow machines, TVs, four-
wheelers).32 Like other income that enters Alaska’s economy, the PFD supports additional jobs and income
beyond the initial payment to recipients and has far-reaching impacts on many sectors in Alaska’s economy
(which are described in more detail later in this chapter).
Pick. Click. Give.
The Pick. Click. Give. (PCG) program enables donations of a portion or all of an individual’s PFD to a charitable
organization. Since the program began in 2009, PCG has facilitated more than $20 million in donations.33
University of Alaska College Savings Plan
Eligible PFD applicants can place up to 50 percent of their PFD in a 529 college savings plan created by the state
legislature in 1990. Since 1991, Alaska residents have contributed $174.9 million to this plan.34
30 American Community Survey 2011-2015 Five-Year Estimates. 31 Permanent Fund Dividends and Poverty in Alaska, Matthew Berman and Random Reamey, November 2016, http://www.iser.uaa.alaska.edu/Publications/2016_12-PFDandPoverty.pdf 32 McDowell Group, A Statewide Household Survey of Alaskan Giving, prepared for The Alaska Giving Coalition, March 2008. 33 Personal Communication, Sofia Fouquet, Pick.Click.Give. Program Manager, 5/8/2017. 34 State of Alaska Department of Revenue Permanent Fund Dividend Division, Annual Report 2016, https://pfd.alaska.gov/LinkClick.aspx?fileticket=rSpgeMOLgys%3d&tabid=506&portalid=6&mid=6428
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 38
State Funding of K-12 Schools and The University of Alaska
Public schools, including the University of Alaska, receive a significant portion of their funding from oil and gas
revenue as described below.
K-12 Support
In SFY2016, the Alaska Department of Education and Early Development (DEED)’s budget totaled $1.6 billion,
of which 82 percent ($1.3 billion) was UGF. Of the $1.3 billion in UGF, an estimated 90 percent ($1.1 billion)
originated from oil and gas revenue (including Constitutional Budget Reserve funding) or $8,654 per student
enrolled in K-12 public schools in Alaska.35 Note that this education spending does not include local
contributions.
Aside from specific state program funding (such as federal grants), most support of Alaska’s public K-12 school
funding is determined using a “foundation formula” (adopted in 1998). The formula calculates the amount of
state aid to individual school districts each year based on student enrollment, defined as the “average daily
membership” (ADM). ADM is adjusted for variations in school size, geographic cost differentials, special and
intensive needs student populations, correspondence programs, federal aid, and the ability of communities to
provide local contributions.
The adjusted ADM is then multiplied by the Base Student Allocation (BSA) to determine each district’s level of
state funding. In 2016, the ADM was 129,704.74 and the BSA totaled $5,880 per student, with oil and gas-related
revenue accounting for $5,292.36
University of Alaska System
The University of Alaska system includes three campuses—University of Alaska Fairbanks, University of Alaska
Anchorage, University of Alaska Southeast—and serves approximately 35,000 full and part-time students
annually. The university system employed 4,700 people in 2016.37
In SFY2016, the University of Alaska budget of $834.3 million included:
• 42.0 percent ($350.8 million) in UGF
• 34.2 percent ($285.0 million) in DGF
• 15.1 percent ($126.0 million) in federal funding
• 8.7 percent ($72.5 million) from other sources.
Because of UGF funding, nearly 40 percent of the university’s budget was supported by oil and gas revenue.
The University of Alaska Southeast benefits most, with 48 percent of funding coming from oil and gas-related
funding. University of Alaska Fairbanks and University of Alaska Anchorage also benefit greatly, with 43 percent
35 Average spending per 128,705 total students enrolled. 36 https://education.alaska.gov/stats/SchoolEnrollment/2017SchoolEnrollment.pdf 37 Alaska Legislative Finance Division,
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 39
and 37 percent, respectively, coming from oil and gas-related funding. In terms of university employment, this
level of oil and gas-related revenue is the equivalent of approximately 1,400 positions.
Figure 7. Estimated Proportion of Budget Supported by Oil and Gas Revenue by Campus, 2016
Note: Assumes 90 percent of UGF originates with oil and gas revenue, including CBR revenue. Source: Governor’s Office of Budget and Management and McDowell Group estimates.
MEDICAID PAYMENTS
Medicaid is the nation’s major funding source for basic health and long-term-care services for low-income
families and people with disabilities. The Medicaid program in Alaska is administered by the Alaska Department
of Health and Social Services.
Medicaid financing rules require states to spend their own funds to receive a federal financial match for
Medicaid services.38 Prior to Medicaid expansion on September 1, 2015, the federal government covered 50
percent of state expenditures for most Medicaid services for eligible recipients and 65 percent of state
expenditures for eligible children (ages 0-18) and expectant and new mothers (60 days after birth). With
Medicaid expansion, 32,958 enrollees (or 18 percent of all people covered by Medicaid) were 100 percent
federally funded through CY2016 (and will transition to 90 percent federally funded in 2020 and beyond.)39
Medicaid coverage for children and new mothers is handled through the Denali Kid Care program (Alaska’s
Children Health Insurance Program).40
• Since state funds are required to obtain the federal match, without oil and gas-related revenue (and
absent additional revenue generated by a statewide property, sales, or income tax) the entire Medicaid
program in Alaska would be at risk.
o Approximately $9 of every $10 of Alaska’s state match of federal dollars is related to oil and
gas revenue ($575 million of $639 million total)
38 There are no federal limits on program spending. 39 http://dhss.alaska.gov/HealthyAlaska/Pages/dashboard.aspx 40 The Federal Medical Assistance Percentage (FMAP) and Enhanced Federal Medical Assistance Percentage (eFMAP) are formula based and can vary. The eFMAP for 2013 is 65 percent.
38% 37%
43%
48%
Statewide University ofAlaska
University of AlaskaAnchorage
University of AlaskaFairbanks
University of AlaskaSoutheast
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 40
o Approximately $3.3 of every $10 spent on Medicaid in Alaska (both state and federal funds) is
related to oil and gas revenue ($575 million of $1.7 billion).
• In 2016, 182,925 individuals received medical benefits through the Medicaid Program.41
o State funding covered approximately 149,967 individuals.
• The SFY2016 budget for Medicaid was $1.7 billion, including $638.9 million in UGF (37 percent of total),
$1,089.4 million in federal support (62 percent), and $5.4 million in other funding (<1 percent).
COMMUNITY ASSISTANCE PROGRAM
The Community Assistance Program is one of the most important sources of non-locally generated operating
revenue for many communities in Alaska (AS 29.60.850-.879 and 3 AAC 180). The program annually provides
Alaska’s boroughs, cities, and unincorporated communities with funds vital to the delivery of basic public
services. Payments received may be used at a community’s discretion for any public purpose.42 Municipalities
and unincorporated communities may receive, upon application, a base payment, plus a per capita payment.
This funding generates economic activity in the form of local government staffing, operating expenses, or
community projects.
The Community Assistance Program is established in the State’s GF. One-third of the Fund’s amount is
distributed by the Alaska Department of Commerce, Community and Economic Development. If the fund
balance falls below $60 million, no payments may be made from the fund. The Legislature can also appropriate
less than $60 million (including nothing at all); in SFY2016, $57 million was distributed.
• The Fund has distributed $1.9 billion (or $3.0 billion in 2016 dollars) since its inception in 1985.
• An estimated $9 of every $10 distributed from the Fund came from oil and gas revenue, reaching about
229 municipalities, boroughs, and unincorporated communities throughout Alaska.
In SFY2016, the Legislature appropriated the fund at base payments of:
• $458,800 for Municipalities, of which $412,920 comes from oil-related UGF
• $367,000 for Organized Boroughs ($330,300 oil-related UGF)
• $91,800 for Cities ($86,620 oil-related UGF)
• $30,600 for Unincorporated Communities in the unorganized borough ($27,540 oil-related UGF)
• $19,300 for Unincorporated Communities in organized boroughs ($17,370 oil-related UGF)
If the amount of funding available exceeds the amount needed to fund the basic payments, the balance is
distributed on a per capita basis, excluding the unincorporated communities located within organized boroughs.
For some of Alaska’s smaller communities, the Community Assistance Program is critical to sustain their
operations. For example, in Bettles and Eagle program funding accounted for 94 percent ($96,866 of $102,827
total (SFY2015)) and 54 percent ($100,625 of $184,671 total (SFY2015)) of total annual revenues, respectively.43,44
41 Source: FY14 Budget Overview citing MMIS/JUCE. Count includes beneficiaries for whom a direct services claim was paid. Total associated payment is $731.7 million. Excludes CAMA, Senior Care Drug and Public Assistance field service benefits. 42 http://www.commerce.alaska.gov/dnn/dcra/CommunityAidAccountability/CommunityRevenueSharing.aspx 43 https://www.commerce.alaska.gov/dcra/dcrarepoext/RepoPubs/FinDocs/EagleFY2015CertifiedFinancialStatement.pdf 44 https://www.commerce.alaska.gov/dcra/dcrarepoext/RepoPubs/FinDocs/EagleFY2017Budget.pdf
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 41
Local Government Revenue
In addition to property taxes collected by the State of Alaska, local governments generate revenue from taxation
of oil and gas property assets. As with the Community Assistance Program, property taxes provide unrestricted
revenue to communities. Without the oil-related revenue, local governments, like the State, would need to
provide fewer services and spend less on capital projects and/or raise more taxes from businesses and
households.
Property holders can claim local oil and gas property taxes paid as credits towards state oil and gas property
taxes.
Oil and Gas Property Taxes
In SFY2016, local governments generated $446.8 million from taxation of oil and gas properties, approximately
26 percent of total tax revenue ($1.8 billion).45 Other property tax revenue accounted for the largest portion (54
percent or $950.1 million). Sales and other tax revenue composed the remainder ($358.5 million or 20 percent).46
Figure 8. Local Government Tax Revenue by Category ($million), SFY2016
Source: Alaska Department of Commerce, Community and Economic Development.
45 Oil and gas property tax (commonly termed the 43.56 tax) does not include property taxes on refineries. 46 Other taxes apply to motor fuel, raw fish, hotel beds, and alcohol and tobacco products, among others.
Oil and Gas Property Tax, $446.8
Other Property Tax, $950.1
Sales Tax, $229.2
Other Taxes, $129.3
Total Revenue
$1.8 Billion
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 42
In 2016, oil and gas assets in Alaska were assessed at $27.6 billion, with more than 73 percent of total assessed
value (or $20.3 billion) in the North Slope Borough. In contrast to the North Slope, where assets consist mainly
of oil and gas production infrastructure, assessed values in the Fairbanks North Star Borough ($677.8 million)
and Valdez ($1.9 billion) result from refineries, TAPS, and marine terminal facilities (Valdez). Production facilities
in Kenai Peninsula Borough were assessed at $1.4 billion, nearly double the 2010 assessment due to increased
oil and gas activity and investment related to the Alaska Liquified Natural Gas (Alaska LNG) project. Oil and gas
assets in Mat-Su, Anchorage, Cordova, Whittier, and other locations make up the remaining $301.5 million in
oil and gas infrastructure assessed value.
In 2016 dollars, total oil and gas property taxes to local governments increased by $79.3 million (22 percent),
between 2010 and 2016.
Table 14. Oil & Gas Infrastructure Assessed Value ($million), 2010-2016 City, Borough, or Municipality
2010 2011 2012 2013 2014 2015 2016
North Slope $16,113.5 $16,591.8 $17,427.0 $18,784.7 $18,602.1 $20,181.1 $20,267.1
Valdez 2,151.2 1,943.9 1,882.7 2,676.7 2,303.9 2,169.0 1,920.8
Kenai Peninsula Borough 714.0 699.0 810.1 989.8 1,139.8 1,224.5 1,415.1
Fairbanks North Star Borough
763.4 705.6 669.2 951.7 869.7 832.7 677.8
Anchorage 229.0 255.4 283.3 350.8 333.6 429.2 283.2
Cordova 10.1 8.7 8.6 12.5 10.9 10.9 9.4
Mat-Su 7.7 7.2 7.1 7.8 7.3 16.7 7.5
Whittier 1.7 1.5 1.5 2.1 1.8 1.8 1.6
Outside Taxing Jurisdictions (State and Fed)
4,045.6 3,609.2 3,402.3 4,874.6 4,120.6 3,753.7 3,021.5
Nominal State Oil & Gas Full Value Assessment
$24,036 $23,822 $24,492 $28,651 $27,390 $28,620 $27,604
Total Inflation-adjusted Oil & Gas Full Value Assessment
$26,456 $25,418 $25,602 $29,518 $27,768 $28,981 $27,604
Source: Alaska Department of Commerce, Community and Economic Development.
Table 15. Local Revenues from Oil & Gas Property Taxes ($million), 2010-2016
City, Borough, or Municipality 2010 2011 2012 2013 2014 2015 2016
North Slope $270.8 $307.0 $322.4 $347.5 $344.1 $339.1 $373.3
Valdez 43.0 43.8 38.9 34.5 53.5 43.4 43.4
Fairbanks North Star Borough 9.3 10.7 9.6 9.1 13.0 12.1 12.0
City of Fairbanks 0.2 0.1 0.2 0.1 0.2 0.4 0.3
Kenai Peninsula Borough 6.8 7.1 6.7 7.8 9.3 10.3 11.6
City of Kenai 0.1 0.1 0.1 0.1 0.2 0.3 0.3
Anchorage 3.5 3.4 3.9 5.5 5.5 5.0 5.6
Mat-Su 0.1 0.1 0.2 0.1 0.2 0.4 0.2
All Other (Cordova/Whittier) 0.1 0.1 0.1 0.2 0.3 0.2 0.1
Nominal Total Oil & Gas Property Tax Revenues
$333.9 $372.3 $382.0 $404.7 $426.3 $411.1 $446.8
Total Inflation-adjusted Oil & Gas Property Tax Revenues ($2016)
$367.5 $397.3 $399.4 $416.9 $432.2 $416.3 $446.8
Note: Columns may not sum due to rounding. Source: Alaska Department of Commerce, Community and Economic Development.
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 43
Table 16. Comparison of Tax Revenue by Source, 2016
City, Borough, or Municipality Oil & Gas
Property Tax ($million)
Total Property
Taxes ($million)
Total Taxes ($million)
% of Property Tax from
O&G Property
% of All Taxes From O&G
Property
North Slope $373.3 $386.1 $386.1 97% 97%
Valdez 43.4 48.9 49.3 89% 88%
Fairbanks North Star Borough 12.0 107.1 111.5 11% 11%
City of Fairbanks 0.3 15.2 21.3 2% 1%
Kenai Peninsula Borough 11.6 62.1 92.2 19% 13%
City of Kenai 0.3 3.8 10.6 8% 3%
Anchorage 5.6 515.3 583.4 1% 1%
Mat-Su 0.2 119.3 128.7 <1% <1%
Cordova/Whittier 0.1 2.3 5.8 5% 2%
All Other 0.0 136.7 366.4 0% 0%
Total Oil & Gas Property Tax Revenues $446.8 $1,396.8 $1,755.3 32% 25%
Note: Columns may not sum due to rounding. Source: Alaska Department of Commerce, Community and Economic Development.
Employment Impact of State and Local Oil Revenue
As described above, taxes and royalty payments from the oil and gas industry to state and local governments
are used to fund a broad range of agency operations, programs and projects. As these oil-related revenues are
spent, thousands of jobs and millions of dollars in wages are generated across Alaska. Economic modeling
conducted for purposes of this study provide estimates of the total (direct, indirect, and induced) employment
and wage impacts associated with government spending of oil-related revenue.
Table 17. Estimated Employment and Wages Related to Oil Industry Taxes and Royalties in Alaska, 2016
Category
Spending of Oil &Gas
Taxes & Royalties ($billion)
Total Employment
Total Annual Wages
($billion)
State Agencies (Excluding K-12 Education and Medicaid) $2.02 19,500 $1.13
State Programs (K-12 Education and Medicaid) $1.70 19,600 $0.80
State Capital Projects (5-yr. Average) $1.11 10,400 $0.56
Permanent Fund Dividend $0.65 4,200 $0.17
Local Government Operations and Projects $0.45 4,600 $0.26
Total $5.92 58,300 $2.93
Source: Alaska Legislative Finance and McDowell Group estimates.
Employment and wages impacts in 2016 include,
• State Agency Operations: $2.0 billion in unrestricted oil and gas revenues were used to fund state
agency operations (including the University of Alaska). That spending funded a total of 19,500 jobs,
including approximately 9,900 state government jobs and another 9,600 jobs in the support sector.
These jobs accounted for a total of $1.1 billion in annual wages.
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 44
• Statewide Program Expenditures: Approximately $1.7 billion in K-12 and Medicaid expenditures (of oil
and gas derived revenues) supported approximately 19,600 jobs in schools, medical care facilities, and
throughout the support sector.
• Capital Spending: Approximately $1.1 billion of oil and gas-related revenue was used to fund capital
projects throughout Alaska. While this capital funding is often matched with funding from other sources
(especially federal dollars), in general this level of construction spending would have direct, indirect,
and induced effects of approximately 10,400 jobs and $0.6 billion in wages.
• PFD Distribution: Assuming dividends are spent much like other household income, the $650 million
disbursed in 2016 supported an estimated 4,200 jobs with wages of $0.2 billion.
• Local Government: An estimated 4,600 direct, indirect and induced jobs are connected to the $0.5 billion
paid to local governments by the oil and gas industry. An estimated $0.3 billion in wages was supported
by this revenue.
In summary, taxes and royalties paid by the oil and gas industry account for about 58,300 jobs in Alaska and
$2.9 billion in annual wages.
Combined Economic Impact of Oil Industry Private Sector Spending and Public Sector Payments
Combining with the oil and gas spending total impacts (45,575 jobs and $3.1 billion), the total employment
impact of Alaska’s oil and gas industry is 103,875 jobs and $6.0 billion. This impact represents 32 percent of
Alaska’s wage and salary employment, and 35 percent of total wages paid to these employees.47
47 In 2016, Alaska’s total wage and salary employment was 331,800 jobs paying $17.7 billion in wages.
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 45
Chapter 5. Alaska’s Production in the U.S. and World Market
This chapter briefly describes Alaska’s current and historical oil and gas production and the state’s role in
national production of energy and refined oil products.
Alaska Oil Production and Prices
Alaska has produced oil from the North Slope since the early 1970s (oil and gas production started in the 1950s
in Cook Inlet) and production has generally declined since a peak of slightly more than two million barrels per
day in 1988. Since 2001, production from the North Slope has declined an annual average of 4.2 percent.
Through much of that time, however, the decline was substantially masked by strong oil prices. Within this
period, peak daily production of 1,004,000 barrels occurred in SFY2002, and the average Alaska North Slope
(ANS) price peaked in SFY2013 at $113 per barrel. For SFY2016, production averaged 532,000 barrels per day
with an average price of $43 per barrel. For the first time in 14 years, North Slope production increased over the
prior year (increasing 2.8 percent, or nearly 14,000 barrels per day compared to SFY2015).
Alaska’s three primary refineries—the Petro Star refineries in North Pole and Valdez, and Tesoro’s refinery in
Kenai—use Alaska crude oil to produce refined products such as diesel fuel, gasoline, and jet fuel.48 However,
most Alaska crude oil is transported to larger-scale refineries in Washington, California, and Hawaii.
Figure 9. Alaska Crude Oil Production* and Alaska North Slope Oil Price, SFY2001-SFY2016
* Includes Cook Inlet and North Slope production. Source: Alaska Department of Revenue.
48 Two facilities on the North Slope provide refined products for local operations.
$113
$43
$0
$20
$40
$60
$80
$100
$120
2001 2004 2007 2010 2013 2016
0
200
400
600
800
1,000
1,200
Avera
ge P
rice p
er
Barr
el
Avera
ge D
ail
y P
rod
ucti
on
(1
,00
0 B
arr
els
)
Average Daily Alaska Oil Production ANS West Coast Spot Price
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 46
Alaska and the Domestic Petroleum Industry
After peaking at 9.6 million barrels per day in 1970, total U.S. oil production declined by an average of 1.7
percent per year for nearly 40 years. Technological innovations such as fracking and directional drilling, along
with significant new investment encouraged by high oil prices, resulted in a nearly 80 percent increase in
national production between 2008 and 2015. While oil production fell slightly in 2016 to an average of 8.9
million barrels per day, that year was the tenth highest on record.
Figure 10. United States and Alaska Average Daily Oil Production (1,000 Barrels), 1900-2016
Source: United States Energy Information Agency.
Production increased primarily in Texas, North Dakota, New Mexico, Colorado, Wyoming, and Oklahoma.
Combined, these states have added slightly more than 3.7 million barrels of new production since 2008, or more
than seven times Alaska’s current production.
(1988)2,017
(2016)490
(1970)9,637
(2008)5,000)
2016(8,876)
-
2,000
4,000
6,000
8,000
10,000
12,000
1900 1929 1958 1987 2016
Avera
ge D
ail
y P
rod
ucti
on
(1
,00
0
Barr
els
)
Alaska United States
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 47
Table 18. U.S. Oil Production Change, 2008-2016
Region
2008 Avg. Daily
Production
(1,000 barrels)
2016 Avg. Daily
Production
(1,000 barrels)
Percent
Change
Percent of
Total 2016 US
Production
Texas 1,109 3,213 190% 36%
North Dakota 170 1,035 509% 12%
New Mexico 164 402 145% 5%
Colorado 82 315 284% 4%
Wyoming 145 198 37% 2%
Oklahoma 184 420 128% 5%
Alaska 683 490 -28% 6%
California 586 513 -12% 6%
Other 1,877 2,290 22% 26%
Total 5,000 8,876 78% 100%
Note: Annual daily average data from the EIA are based on a calendar year while data from the Alaska Department of Revenue are based on the state’s fiscal year. Columns may not sum due to rounding. Source: United States Energy Information Agency.
Figure 11. United States Oil Production, by Key Production Regions, 2000-2016
Source: United States Energy Information Agency.
Alaska’s 194 million barrels of crude oil in 2016 represented approximately 6 percent of the nation’s total
production, down from a high of approximately 25 percent in 1988, when more than 2 million barrels per day
flowed through TAPS. As recently as 2011, Alaska contributed more than 10 percent to national production.
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
2000 2004 2008 2012 2016
Avera
ge D
ail
y P
rod
ucti
on
(1
,00
0 B
arr
els
)
All Other Texas Gulf of Mexico (Federal) North Dakota California Alaska
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 48
From 1977 (when oil started flowing through TAPS) to 2016, the U.S. produced nearly 104 billion barrels of oil.
Alaska contributed 17 percent or approximately 18 billion barrels.49
Figure 12. Alaska's Contribution to U.S. Oil Production, 1972-2016
*2016 data is preliminary. Source: United States Energy Information Agency; Alaska Department of Revenue.
World Oil Production
Alaska crude oil represented approximately 0.6
percent of total global production in 2015. Because
of this relatively small contribution, changes in the
state’s production levels have little or no impact on
international oil prices. Alaska’s peak contribution
to global supply was 3.5 percent in 1987, a level
comparable to Kuwait’s current contribution.
In 2015, Russia, Saudi Arabia, and the U.S. were the
top three global producers, accounting for nearly 37
percent of total oil production. From 2000 to 2015,
U.S. production grew 62 percent; compared to 58
percent in Russia and 21 percent in Saudi Arabia.
49 United States Energy Information Agency; Alaska Department of Revenue.
Table 19. Proportion of Global Crude Oil Supply, 2015
Country
Avg. Daily
Production
(1,000
barrels)
Percent
of
Global
Supply
Russia 10,253 12.7%
Saudi Arabia 10,168 12.6%
United States (Exc. Alaska) 8,932 11.1%
Alaska 483 0.6%
China 4,278 5.3%
Iraq 4,054 5.0%
Canada 3,677 4.6%
Iran 3,300 4.1%
United Arab Emirates 3,019 3.7%
Kuwait 2,804 3.5%
Venezuela 2,500 3.1%
All Other 27,085 33.6%
Total 80,553 100%
Note: Data represents a calendar year, instead of a fiscal year used by the State of Alaska. Source: United States Energy Information Agency.
24.8%
5%
0%
5%
10%
15%
20%
25%
30%
1972 1983 1994 2005 *2016
Perc
en
t o
f U
.S. O
il P
rod
ucti
on
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 49
Figure 13. Global Oil Production by Region, 2000-2015
Source: United States Energy Information Agency.
U.S. Petroleum Consumption
Consumption of refined oil products in the U.S. averaged 20,000 barrels per day in 2016, most of which came
from domestic refineries, according to the U.S. Energy Information Administration. Gasoline accounted for
nearly half (47 percent) of total consumption, followed by diesel products (19 percent), jet fuel (8 percent), and
other products such as propane, asphalt, heavy oil fuels, and naphtha (26 percent).
Between 1991 and 2016, annual average consumption of refined oil products in the U.S. increased slightly (0.8
percent). However, the trend masks a significant decline of more than 10 percent following the economic
recession of 2008. Consumption has not yet recovered to pre-2008 levels.
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
2000 2003 2006 2009 2012 2015
Avera
ge D
ail
y P
rod
ucti
on
(1
,00
0 B
arr
els
)
All Other Other Middle East Russia United States Saudi Arabia China Canada
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 50
Figure 14. United States Refined Products Consumption, 1991-2016
Source: United States Energy Information Agency.
Petroleum Imports and Exports
The U.S. is a net importer of oil and a net exporter of refined oil products. In 2016, the U.S. imported an average
of 7.9 million barrels of oil per day (crude and refined combined) while exporting an average of 0.5 million
barrels per day.
Oil exports have increased since late 2015 when a 40-year-old ban on U.S. crude-oil export was lifted.50 Canada
is the primary destination for most crude oil exports and is also the U.S.’s largest source of oil imports, providing
an average of 3.3 million barrels per day (or 41 percent of U.S. oil imports).
In 2016, the U.S. imported 2.1 million barrels per day of refined products and exported an average of 4.1 million
barrels per day of refined products. Canada was the primary source of refined products, averaging 0.5 million
barrels per day. Mexico and Canada were the main markets for U.S.-produced refined products, receiving a daily
average of 879 and 564 thousand barrels, respectively.
50 Note: Exports of crude oil to Canada and small shipments from Alaska were allowed prior to 2015.
0
5,000
10,000
15,000
20,000
25,000
1991 1996 2001 2006 2011 2016
Avera
ge D
ail
y C
on
sum
pti
on
(1
,00
0 B
arr
els
)
Other Gasoline Diesel Jet Fuel
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 51
Figure 15. United States Imports/Exports of Oil and Refined Products, 1992-2016
Source: United States Energy Information Agency.
U.S. Natural Gas Production
Primarily due to advances in technology, U.S. natural gas production grew approximately 50 percent between
2005 and 2016. While 2016 production (28,300 BCF) was 1.6 percent lower than 2015 levels (28,753 BCF), those
two years represent the highest production levels on record.
Figure 16. United States Natural Gas Production, 1990-2016
Source: United States Energy Information Agency.
Most of the growth in domestic gas production has occurred in Pennsylvania (+5,100 BCF), Ohio (+1,400 BCF),
West Virginia (+1,200 BCF), and Oklahoma (+800 percent). Combined, production in these four states grew from
2,100 BCF in 2005 to 10,600 BCF in 2016, a 400 percent increase. At the same time, Alaska production fell from
487 BCF to 344 BCF (a 29 percent decline).
-
2,000
4,000
6,000
8,000
10,000
12,000
1992 1996 2000 2004 2008 2012 2016
Avera
ge D
ail
y V
olu
me
(1,0
00
Barr
els
)
Oil Exports Oil Imports Refined Product Imports Refined Products Exports
(1973)22,648
(2005)18,927
(2016)28,300
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
1900 1929 1958 1987 2016
An
nu
al
Pro
du
cti
on
(B
CF)
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 52
Table 20. United States Natural Gas Production by State, 2008-2016
State 2005 Annual
Production (BCF)
2016 Annual
Production (BCF) Percent Change
Percent of Total
2016
Production
Texas 5,276 6,986 32% 25%
Pennsylvania 169 5,260 3,022% 19%
Oklahoma 1,639 2,475 51% 9%
Louisiana 1,296 1,859 43% 7%
Colorado 1,133 1,703 50% 6%
Wyoming 1,639 1,603 -2% 6%
Ohio 84 1,472 1,662% 5%
West Virginia 221 1,375 522% 5%
Alaska 487 344 -29% 1%
All Other 6,983 5,223 -25% 18%
Total 18,927 28,300 50% 100%
Source: United States Energy Information Agency.
Figure 17. United States Annual Natural Gas Production by Key Producing States, 2000-2016
Source: United States Energy Information Agency.
0
5,000
10,000
15,000
20,000
25,000
30,000
2000 2004 2008 2012 2016
An
nu
al
Pro
du
cti
on
(B
CF)
All Other Texas Pennsylvania Oklahoma Louisiana Colorado Alaska
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 53
Chapter 6. Economic Impact Comparisons of Alaska’s Other Key Sectors
This section provides data on the economic impact of Alaska’s key sectors other than oil and gas. While each
industry is a very important part of the Alaska economy, the analysis illustrates by comparison the critical and
predominant role of the oil and gas industry.
Economic Impact Analyses
While there is not a single, comprehensive study that compares the economic impact of all sectors using the
same methodology and same time period, there have been some recent statewide economic impact studies of
Alaska’s seafood, visitor, and mining industries.
Seafood Industry
In 2015, McDowell Group conducted a statewide economic impact analysis of Alaska’s seafood industry.51 Key
findings include:
• A total of 60,000 workers were engaged in Alaska’s seafood industry, earning $1.6 billion in annual labor
income (2013 and 2014 averages). The industry employed 34,100 non-Alaska residents in Alaska during
2014.
• Including multiplier impacts, the seafood industry accounts for 41,200 full-time equivalent jobs (many
jobs are temporary and seasonal), $2.1 billion in total labor income, and $5.9 billion in total economic
activity in Alaska.
• A total of 31,580 fishermen earned income in Alaska’s commercial fisheries, including skippers and crew;
17,600 Alaska resident commercial fishermen had a total gross (ex-vessel) income of $735 million in
2015.
• Alaska’s 2014 seafood harvest of 5.7 billion pounds had a total ex-vessel value of $1.9 billion. Processors
generated 2.8 billion pounds of Alaska seafood products in 2014 with a first wholesale value of $4.2
billion.
• Alaska’s seafood processing employment, including on-shore and off-shore, included an estimated
25,055 workers in 2014. Shore-based processing employment in Alaska peaked at just under 20,800
jobs in 2014, with annual average employment of about 9,200. Shore-side and floating processors paid
a total of $400 million in wages in 2014.
• The seafood industry accounted for about 20 percent of Alaska’s basic private sector economy (based
on 2013-2014 data).
51 McDowell Group, The Economic Value of Alaska’s Seafood Industry, Prepared for Alaska Seafood Marketing Institute, 2015, http://ebooks.alaskaseafood.org/ASMI_Seafood_Impacts_Dec2015/pubData/source/ASMI%20Alaska%20Seafood%20Impacts%20Final%20Dec2015%20-%20low%20res.pdf
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 54
• The businesses and individuals in Alaska’s seafood industry contributed roughly $138.6 million in taxes,
fees, and self-assessments, which help fund state, local, and federal government.
Visitor Industry
In 2016, McDowell Group conducted a statewide economic impact analysis of Alaska’s visitor industry.52 For the
12-month period between October 2014 and September 2015, the study reported:
• Total employment estimated at 39,700 full- and part-time jobs, and $1.4 billion in labor income,
including multiplier impacts. This represented 9 percent of statewide employment and 5 percent of
statewide labor income in 2014-2015.
• A total of 2 million out-of-state visitors traveled to Alaska. Cruise ship passengers accounted for 48
percent of the annual total, followed closely by 47 percent who traveled to and from Alaska by air.
Summer visitation represented 86 percent of annual visitors.
• Out-of-state visitors spent an estimated $1.9 billion in Alaska.
• The visitor industry accounts for:
o Southeast: 21 percent of employment and 15 percent of labor income
o Interior: 10 percent of employment and 6 percent of labor income
o Southcentral: 7 percent of employment and 3 percent of income
o Southwest: 4 percent of employment and 2 percent of income
o Far North: 1 percent of employment and <1 percent of income
• Visitor-related tax revenues to local governments in 2014-2015 totaled $82.9 million.
• Visitor-related revenues to state government in 2014-2015 totaled $104.8 million.
Mining Industry
In 2017, McDowell Group prepared an updated summary of the statewide economic impact analysis of Alaska’s
mining industry.53 In 2016, the summary reported:
• A total of 4,350 direct mining jobs in Alaska
• Including the multiplier impacts, 8,600 total jobs attributed to Alaska mining industry
• $675 million in total direct and indirect payroll
• $111 million in payments to Alaska Native corporations
• $81 million in state government-related revenues through rents, royalties, fees, and taxes
• Mostly year-round jobs for residents of more than 50 communities throughout Alaska, half of which are
found in rural Alaska where few other jobs are available
• Some of Alaska’s highest paying jobs with an estimated average annual wage of $108,000, over twice
the state average for all sectors of the economy
• $23 million in local government revenue through property taxes and payments in lieu of taxes
52 http://www.mcdowellgroup.net/wp-content/uploads/2016/07/Visitor-Impacts-2016-update-4_15_16.pdf 53 http://alaskaminers.org/economic-impact/
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 55
Gross State Product
While Gross State Product (GSP) does not measure the full extent of an industry’s economic impact, it does
measure the market value of all final goods and services produced within a state.54 In 2016, Alaska’s GSP was
$50.7 billion, ranking 46th in the U.S. Between 2015 and 2016, Alaska’s GSP contracted by 5.0 percent. The largest
industry in Alaska as measured by GSP was government ($10.6 billion), accounting for 20.9 percent of Alaska’s
2016 GSP. Government’s GSP value declined by 0.9 percent between 2015 and 2016. The second largest industry
in Alaska was mining ($7.5 billion) which includes oil and gas extraction, support activities for mining (including
oil and gas), and mining.55 Between 2015 and 2016, the mining sector contribution to GSP declined by 19.8
percent -- subtracting the most from Alaska’s GSP, down 3.7 percentage points from 2015. The second largest
industry to subtract from growth was construction – down 0.6 percentage points.56
Figure 18. Top Five Industries Contributors to Alaska’s Gross State Product, 2016
Source: Bureau of Economic Analysis.
54 An industry's GSP, referred to as its "value added", is equivalent to its gross output (sales or receipts and other operating income, commodity taxes, and inventory change) minus its intermediate inputs (consumption of goods and services purchased from other U.S. industries or imported). GSP differs from national Gross Domestic Product; GSP excludes and national GDP includes the compensation of federal civilian and military personnel stationed abroad and government consumption of fixed capital for military structures located abroad and for military equipment, except office equipment. 55 The term mining includes the extraction of minerals occurring naturally: solids, such as coal and ores; liquids, such as crude petroleum; and gases such as natural gas. It also includes quarrying, well operations, milling, and other preparation customarily done at the mine site, or as a part of mining activity. Exploration and development of mineral properties are included. Data on subsectors of mining (oil and gas extraction, mining, except oil and gas, and support activities for mining are not published. 56 https://www.bea.gov/regional/bearfacts/action.cfm?geoType=3&fips=02000&areatype=02000. Accessed May 23, 2017.
Government(Public Sector), $10.6 B, 21%
Mining (includes oil and gas), $7.5 B, 15%
Finance, Insurance, Real Estate, Rental, and Leasing,
$6.5 B, 13%
Transportation and Warehousing,
$6.1 B, 12%
Education services, health care, and social assistance,
$3.8 B, 7%
All other, $16.2 B, 32%
Total: $50.7 B
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 56
Appendix A. Published Trends in Alaska’s Oil and Gas Industry
This appendix discusses trends in the oil and gas industry as it is narrowly defined in government statistics.
Published employment data indicates Alaska oil and gas industry employment – as defined by the U.S. Bureau
of Labor Statistics and ADOLWD – peaked in December 2014 at 15,300 jobs. Between 2001 and the peak in
2014 (and calculated on an annual average basis), oil and gas industry employment expanded 56 percent,
adding 5,300 jobs. From peak annual employment in 2014 through 2016, the sector lost 3,500 jobs, declining
24 percent.
Figure 19. Alaska Oil & Gas Industry Employment, Published Data, 2001-2016
Note: Includes NAICS Sectors 211 (oil and gas extraction), 213111 (drilling oil and gas wells), and 213112 (support activities for oil and gas operations). Source: Alaska Department of Labor and Workforce Development.
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
2001 2004 2007 2010 2013 2016
Annual Average Employment Peak Monthly Employment
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 57
Table 21. Alaska Oil & Gas Industry Employment, Published Data, 2001-2016
Year Annual Average Peak Month
2001 9,500 9,800
2002 8,900 9,200
2003 8,100 8,400
2004 8,200 8,500
2005 8,700 9,300
2006 10,100 10,700
2007 11,500 12,000
2008 12,800 13,700
2009 12,900 13,600
2010 12,700 13,400
2011 13,000 13,400
2012 13,600 14,300
2013 14,100 14,500
2014 14,800 15,300
2015 14,200 14,800
2016 11,300 12,900
Note: Includes NAICS Sectors 211 (oil and gas extraction), 213111 (drilling oil and gas wells), and 213112(support activities for oil and gas operations). Source: Alaska Department of Labor and Workforce Development.
A similar pattern is seen in wage data, with total annual wages peaking in 2014 at slightly more than $2.0 billion,
following years of stable growth. Wages fell slightly in 2015 then sharply in 2016 after the oil price crash,
declining by approximately $490 million, or 24 percent.
Figure 20. Annual Oil and Gas Wages, ($million) 2007-2016
Note: Includes NAICS Sectors 211 (oil and gas extraction),213111 (drilling oil and gas wells), and 213112 (support activities for oil and gas operations). Source: Alaska Department of Labor and Workforce Development.
$1,280
$1,475 $1,516 $1,523$1,594
$1,734$1,818
$2,009 $1,978
$1,520
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 58
Employee Residency
ADOLWD’s methodology for calculating workforce residence is based on Permanent Fund Dividend (PFD)
applications and results in a conservative estimate of “resident” employment. A new resident to Alaska must
reside in the state for a full calendar year before they are eligible to apply for a PFD. A new Alaska resident who
arrived in the state in February of 2017, for example, would not be eligible to apply for a PFD until the 2019
application period. As a result, this person would reside in Alaska for nearly two years before being recorded as
an Alaska resident.
For comparison purposes, in 2015 (2016 data are not released yet), on average 16 percent of Alaska’s jobs were
held by nonresidents. Some sectors, including the oil and gas sector, are above that average. Other sectors
relying on nonresidents include: seafood processing (65 percent); metal mining (34 percent); accommodations
(32 percent); transportations and warehousing (24 percent); and professional, scientific, and technical services
(22 percent).
Nonresidents are often employed in seasonal industries, remote site locations (where workers work on a rotation
schedule, allowing for workers to not live close to their job) or have specific job skills not readily available in
Alaska. Additionally, nonresident status as determined by DOLWD is whether a worker received an Alaska PFD;
therefore, some people may have intent to be permanent residents yet have not met the minimum length of
residency requirement to be eligible for a dividend.
Figure 21. Percent of Positions Held by Nonresidents, by Sector, 2015
Note: Data exclude self-employed, fishermen, and private household workers. Source: Alaska Department of Labor and Workforce Development.
3%
4%
4%
4%
8%
9%
22%
24%
28%
32%
34%
38%
65%
Utilities
State Government
Local Government
Finance and Insurance
Healthcare and Social Assistance
Retail Trade
Professional, Scientific and Technical Services
Transportation and Warehousing
Oil and Gas
Accommodations
Metal Mining
Oilfield Services
Seafood Processing
Average: 16%
The Role of the Oil and Gas Industry in Alaska’s Economy McDowell Group, Inc. Page 59
Within the oil and gas industry, residency rates vary, with approximately 39 percent of oil and gas support
services jobs held by non-residents in 2015. Nonresidents held 40 percent of drilling oil and gas well positions,
and 29 percent of oil and gas extraction jobs. Employment at refineries and pipelines had a much higher
residency rate, with only 7 percent of jobs being held by nonresidents.
Table 22. Alaska Residents in the Oil & Gas Industry Workforce, 2015 Resident Workers
Nonresident Workers
Nonresident % of Total Workers
Resident Wages
($millions)
Nonresident Wages
($millions)
Nonresident % of Total
Wages
Oil & Gas Extraction
3,317 1,385 29% $658 $253 28%
Drilling Oil and Gas wells
750 501 40% $69 $34 33%
Support Services
7,684 4,842 39% $661 $421 39%
Refineries and Pipelines
1,441 116 7% $173 $11 6%
Total 13,192 6,844 34% $1,561 $719 32%
Note: Includes NAICS codes 211, 213111, 213112, 324, and 486. Source: Alaska Department of Labor and Workforce Development.
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