EDIT: This AMA is now complete. Thank you to everyone who posted such interesting and thoughtful questions.
Here’s the story for Bloomberg Opinion: https://www.bloomberg.com/graphics/2023-opinion-arctic-geopolitics-resources/oil-gas.html
Follow my Twitter account for updates on Part Three: https://twitter.com/liamdenning

I’m Liam Denning, a columnist with Bloomberg Opinion who recently flew all the way to Alaska's North Slope to see how and why oil producers are drilling in one of the remotest, and harshest, spots on the planet.

Alaska is home to the single biggest oilfield ever discovered in the US, Prudhoe Bay. But producing oil in the Arctic comes with formidable costs and risks. You have to build the very ground you work on and construct ice roads every winter, when temperatures dip to -60F and darkness descends for 56 days straight.

If something breaks, you had better know how to fix it because help is very far away.

Recent approval of the controversial Willow project promises something of a revival in Alaskan oil production. Coming amid mounting impacts from climate change and the repercussions of Russia's invasion of Ukraine, Alaska's future as an energy producer is shaped by the tension between decarbonization and energy security.

I’m writing a series of on-the-ground features about the changing Arctic, and this is part 2.

PROOF: https://i.redd.it/j9t4cbmqxqbb1.jpg

Comments: 185 • Responses: 17  • Date: 

abu_doubleu48 karma

Hello! I am interested what the Alaskan Natives think of the oil expansions. Do they mostly support it or are mostly against it? Why?

bloomberg38 karma

Oil development on the North Slope is, as elsewhere in the US, a complex topic for Native Alaskans.
On one hand, the Arctic is warming faster than elsewhere and impacting natural habitats and the permafrost there (which affects construction, too) already. The village closest to Willow also complains of impacts to Caribou migration and air quality.
On the other hand, oil property tax funds about 90% of the North Slope Borough budget, which pays for a lot of jobs and basic services (including energy subsidies). Inupiat leaders mostly supported Willow, as did Alaska's Congressperson, Mary Peltola, a Democrat and an Alaskan Native.
I did a separate video on this, take a look: https://www.youtube.com/watch?v=-jPc8XATRgY — LD

thomaskyd37 karma

How was the drive up the Dalton?

bloomberg50 karma

I actually flew up to the North Slope from Anchorage. My photographer Louie Palu drove the Dalton Highway all the way up to Deadhorse several years ago (those are the photos of the highway and the pipeline that you see in the piece). He tells me it required a lot of preparation, including checking government website to make sure that the Atigun Pass - where the highway crosses the Brooks Range into the North Slope - was clear of avalanches. -- LD

kqlx34 karma

What grade is the oil coming out of that oilfield?

bloomberg60 karma

Alaska North Slope (ANS) crude is considered a medium-grade, with an API gravity of about 30-32 and sulfur ~1%. It gets international (or Brent-linked) pricing, which enhances its economics and helps to offset the relatively high pipeline transport costs. It is typically shipped to West Coast refineries. -- LD

individualcoffeecake24 karma

Did you eat anything weird?

bloomberg19 karma

Not on this trip. On my prior trip to see the US Army's winter warfare training, I ate some of their cold weather rations, including rehydrated turkey tetrazzini, though that was actually pretty tasty.

Here's my story from that trip: https://www.bloomberg.com/graphics/2023-opinion-arctic-geopolitics-resources/army-training.html

Klaus_Hargreeves15 karma

What was your favorite warm drink while you were out there?

bloomberg16 karma

The coffee from the strategically-placed breakfast burrito bar just opposite the Conoco desk at the airport in Anchorage. I can't remember if it was any good but it was very early in the morning and the burrito was very welcome. -- LD

mannyrmz1239 karma

Oil barrel prices have been steady for some years now. What would be a breakeven point for the drill industry to keep drilling so far and with so many associated costs?

I don't think that kind of operation would be profitable if prices dropped below, say, $30-$40 a barrel...

bloomberg16 karma

This is a great question but the answer depends on what kind of project you're talking about. For Conoco, Willow is likely profitable down to $30 a barrel because it is onshore and can leverage existing infrastructure. For greenfield Alaskan development, particularly offshore, that figure would be higher. Consider how much money Shell spent in the Chukchi Sea - $7-8 billion by one estimate - and got zero barrels in return. -- LD

Leidenfrost17 karma

Cool, what did you learn about?

bloomberg19 karma

Mainly, what it takes to produce oil (or take up any industrial activity) in the Arctic. That the remoteness is as big, or bigger, a factor in the costs and risks of operating there. That the idea of a "scramble" for Arctic resources doesn't fit the realities of getting anything done in such a far-off and extreme environment. And that the tension between development and conservation is intense in this landscape and especially for the Inupiat who live there; and more complex than is often thought of in the Lower 48. -- LD

Fuck_You_Downvote6 karma

Isn’t that the worlds longest commute?

bloomberg6 karma

Looks like California might win that one: https://en.wikipedia.org/wiki/Extreme_commuting --LD

HHS20195 karma

What sorts of incentive packages do they need to offer to qualified professionals to go and work there (salary, vacation, benefits)? How do they vet applicants who worked on site in normal conditions to make sure they can cut (and won't quit) it in this environment?

bloomberg8 karma

One of the most attractive aspects of working there, I was told, was the 2 weeks on/2 weeks off rotation. Workers like the pattern of having that downtime in between stints to spend time with family etc. Similar to what I heard when I visited the Army base there, Alaska tends to attractive to a certain kind of personality, particularly those who prize its rugged landscape and relative isolation. At the facilities, there's a lot of support in terms of accommodation, catering, even a brand new Brooklynesque coffee bar at the Alpine facility. I'm told around 80% of the workforce at Conoco Alaska are from the state. -- LD

TrustMeImLeifEricson5 karma

What strategies are the oil drillers using to deal with the vampire problem up there?

bloomberg7 karma

The zombie bears eat the vampires, so it's all good. -- LD

coeruleus5 karma

For a while in the 2000s, a large concern seemed to be that as production on the North Slope winds down, less oil will be in the pipeline, thereby lowering the pressure. The concern was that the pressure would be so low that the last bit of oil could not be pumped [the problem I think was that the oil was under contract so it was like a promise that everything had to be taken out]. No one seems to talk about that anymore, and I don't know why.

My question is: was one of the reasons Willow was opened up due to just keeping the pressure high enough so that the rest of already-contracted North Slope oil could be pumped out?

bloomberg8 karma

Keeping flow rates above the minimum level is one argument for Willow. The pipeline used to carry 2 million barrels a day and is now down to about 400-450k per day. The reduced pressure means oil takes longer to get to Valdez (about two weeks) and arrives colder, which causes more wax to build up along the system that then has to be cleared. -- LD

ExternalThoughts5 karma

What are the potential short and long term impacts of the US taking these risks in AK? I assume it must be worth it for the oil companies that are funding it, but what about to the average citizen? Economic? Environmental?

bloomberg7 karma

For ConocoPhillips, the company developing Willow, the project is expected to generate a positive return - $3 billion by one estimate. That's partly because Willow will tie into a lot of existing infrastructure, reducing the upfront risk and cost.
From a US perspective, more domestic production of oil helps offset impacts from disruption in global markets arising from Russia's invasion of Ukraine. It also preserves the operation of the Trans Alaska Pipeline (by keeping the flow above minimum).

Longer-term, more oil production and consumption raises the level of risk from climate change, although Willow's direct contribution to that is very small. -- LD

nobino125 karma

Genuine question - is it better to drill oil in Alaska or Siberian basin or anywhere else? Please feel free to touch upon environmental impact, energy security, oil revenues to autocratic systems, assets under better environment regulations etc.

bloomberg7 karma

The answer to that really depends on where you're standing. From an environmental impact, all oil drilling carries that to varying degrees. Our present dilemma is making sure that, even as we decarbonize, we have adequate supply of fossil fuels to meet our energy needs until we don't require them anymore. Layered on that is the energy security angle.

I think there would have been a higher chance of President Biden rejecting the Willow project if Russia had not invaded Ukraine. The disruption that caused tipped the scale in favor of more domestic production. -- LD

me_elmo3 karma

So how do they plan to ship the oil to refineries? The current pipeline? Can it handle the capacity? Or with global warming, do they plan to send maritime tankers or even trucks up there?

bloomberg7 karma

It will go the same way as all the other oil: down the Trans-Alaskan Pipeline to Valdez on Alaska's south coast. The pipeline used to ship >2 million barrels a day in the 1980s and now only ships about 400-450 thousand a day, so there's plenty of capacity. In fact, the additional barrels help to stave off the point where the flow gets to low for the pipeline to operate. -- LD

PayPalsEnemy2 karma

Did you meet any colorful characters on your expedition, and what is a story you have of your trip that you can share with us that will most likely not be in your series of writings about the trip?

bloomberg0 karma

The project is ongoing, so watch this space! -- LD

cockknocker12 karma

Is this clean oil? /s

bloomberg1 karma

Just answered something similar above -- Alaska North Slope (ANS) crude is considered a medium-grade, with an API gravity of about 30-32 and sulfur ~1%. It gets international (or Brent-linked) pricing, which enhances its economics and helps to offset the relatively high pipeline transport costs. It is typically shipped to West Coast refineries. -- LD

nopoonintended-1 karma

Is there enough oil there to take ourselves off our dependence on middle eastern oil?

bloomberg7 karma

In theory, Alaska (including offshore areas) holds an estimated 30 billion barrels of crude oil. The US currently imports less than a million barrels of crude per day from the Persian Gulf. So, mathematically, it is possible. In practice, the costs and difficulty of extracting Alaskan oil - especially offshore - and shipping it anywhere other than the West Coast means that won't happen. -- LD