While we’re in Alaska, we keep hearing the same joke that if Alaska were split in two, Texas would be the third largest state. It turns out that when it comes to oil production, there’s a new state that’s fallen to third place – Alaska.
In March, North Dakota passed Alaska to be the second-largest oil producer. From the AP:
North Dakota has passed Alaska to become the second-leading oil-producing state in the nation, trailing only Texas.
Assistant State Mineral Resources Director Bruce Hicks says North Dakota oil drillers pumped 17.8 million barrels in March, with a daily average of 575,490 barrels.
Alaska Oil and Gas Conservation Commission statistician Steve McMains says that state pumped 17.5 million barrels in March, with a daily average of 567,480 barrels.
North Dakota has had a remarkable increase in oil production thanks to the growth in oil production from shale in the Bakken. Back in 2005, production in North Dakota was less than 100,000 b/d, ranking it in 9th place as an oil producing U.S. state.
North Dakota’s rise is likely to continue. An analysis from April 2012 suggests that the Bakken has a potential to reach an oil production rate of 1.5 million b/d or more. Alaska’s Prudhoe Bay field production reached Alaska’s authorized producing rate of 1.5 million b/d in late 1979 and essentially maintained that production through 1988.
Meanwhile, drilling in Alaska is likely to keep falling slowly as its giant Prudhoe field continues to decline. Back in 1989 at its peak, Alaska was producing over 2 million b/d. Even if Shell and other companies are successful and production starts offshore in the Chukchi and Beaufort Seas, the drilling would occur in Federal waters and would not count toward state totals. The offshore production would, however, benefit the state’s economy by adding jobs and other indirect revenue.
Unlike Alaska, Texas does not have to worry about North Dakota taking over the #1 spot immediately, if ever. The other major liquids-rich shale play is the Eagleford in South Texas, leading to a jump in Texas’s production of 300,000 b/d in 2011 alone. Texas produced 1.47 million b/d in 2011 and other shale plays are emerging in other parts of the state that will add to its cumulative production levels.
Now that North Dakota has overtaken Alaska in oil production, it can learn a lot from how Alaska handled the flood of wealth that comes with an oil boom. Both states have populations of about 700,000 and face similar sustainability challenges. For more on how the oil boom and subsequent decline is influencing Alaska’s future budget situation and society at large, visit the Baker Institute’s new multi-media student blog “Sustainable Alaska.”
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