By far the most important source of income for Alaska is oil extraction. If Alaska were a country, the economic situation would be very similar to that of OPEC countries such as Kuwait and Saudi Arabia due to the great importance of oil. Mining, military bases and other government services are also important. After oil, fishery products are the state’s most important export product. Tourism is showing strong growth. The gross product of the state in 2001 was $29 billion.
Alaska oil production in 1973-2009. Source: US Energy Information Administration
De Trans-Alaska Pipeline
According to watchtutorials, in 1967, BP, along with partner Sinclair Oil, and US oil company ARCO both obtained oil exploration concessions in Prudhoe Bay in the far north of Alaska. On December 1, 1967, ARCO drilled into natural gas and oil. A second drilling 10 kilometers further and six months later was a success and confirmed the discovery of a huge oil field. It was the largest field ever discovered in North America.
In order to transport the oil, it was decided to build a 1,300 kilometer pipeline from the extreme north to the southern port of Valdez: the Trans-Alaska pipeline. The pipeline was 120 cm (48 inches) in diameter and cost more than $8 billion in total. Construction permits took a long time to be issued, and construction lasted from April 1974 to June 1977. The first oil arrived a short time later at the oil terminal at Valdez. From there, the oil is further transported to refineries, among others, on the US West Coast. In 1988, just over two million barrelsoil is transported through the pipeline per day. This was the peak and volumes transported have since gradually declined to 0.7 million barrels in 2009.
Natural gas is extracted in southern Alaska. Kenai has the United States ‘ only LNG facility. Production started here in 1969. The natural gas comes from fields in nearby Cook Inlet. The gas that is released in the north during the production of oil is pumped back to maintain the pressure in the fields and thereby stimulate oil production.
The discovery of the Prudhoe Bay field has led to more discoveries in northern Alaska. Kuparuk, the second largest field in North America, is located about 40 miles west of Prudhoe Bay, where oil production began in 1981. Current oil reserves are estimated at 3,500 million barrels, or 18% of the United States ‘ total.. Between 1977 and 1988 production rose sharply to two million barrels of oil per day after which a gradual decline occurred. Alaska was the second largest oil producing state in the United States after Texas in 2009.
Oil extraction has greatly boosted Alaska’s economy. Up to 2007, more than 15 billion barrels of oil were produced with a market value of $250 billion. Revenues for the state of Alaska totaled $113 billion, but this figure is calculated against the dollar’s purchasing power in 2007. Some of these revenues are reserved for future generations when oil runs out; this fund has assets of more than 40 billion dollars. Each year, the Alaska Permanent Fund pays out a small portion of its assets as dividends to residents of the state.
Alaska barely has a road network. The primary road is the Alaska Highway, which connects Alaska to Canada. This road was built in 1942 by the US military to transport military equipment overland in the fight against Japan. The road starts in Canada at Dawson Creek and ends 2,290 kilometers further at Delta Junction in the heart of Alaska. 1303 kilometers of the road is in Alaska and the rest in British Columbia. The road was opened to civilian traffic in 1948. Numerous improvements have been made since then; the route has been shortened to 2238 kilometers and the road is now completely paved. There are also some roads between the major cities and the Klondike Highway, which connect Skagwayconnects with Canada.
Alaska has one domestic railroad, the Alaska Railroad. It runs from Fairbanks to the coast and carries freight and passengers. Also, part of the White Pass & Yukon Route runs through Alaska.
Alaska is enclosed by sea, except on the border with Canada. A large part of the (freight) transport to and from Alaska therefore goes by water.
Due to the limited road network, most of Alaska’s transportation is by air. There are countless unpaved and paved runways, but seaplanes are also frequently used. Alaska’s main airport is in Anchorage: Ted Stevens Anchorage International Airport. This airport was opened in 1953. Until the opening of Russian airspace in 1989, it was an important stopover. Aircraft traveling between Europe and the Far East, over the North Pole, and landed here between North America and the Far East to refuel. After 1990, partly due to the greater range of new aircraft, the airport became less important. In 2000, the airport was renamed Ted Stevens Anchorage International Airport. Ted Stevens was a state senator for the state of Alaska. About five million passengers now use Ted Stevens Anchorage International Airport each year. Due to the presence of major carriers, such as FedEx and UPS, the airport is high on the list for air freight transport.
Because Alaska is partly dependent on oil exports, the Trans-Alaska pipeline is an important part of the infrastructure. In 2008, BP and Conoco Phillips announced plans to build a gas pipeline from northern Alaska to Alberta, Canada. The Denali Pipeline will be 120 cm in diameter, which will allow the transportation of 4.5 billion cubic feet of natural gas. The length will be 2700 kilometers, as far as Alberta, but can possibly be extended to the sales markets in the United States.