As the world's largest oil corporations reenter exploration in Alaska's Arctic, the state's status is changing. Analysts say Alaska is reemerging as a hub for the global oil industry, as the Donald Trump administration's regulatory rollbacks, supply chain insecurity from the Middle East war, and successive discoveries of major oil fields converge.
According to the Financial Times (FT) in the United Kingdom, ExxonMobil, Shell and Repsol took part in the bidding in March for blocks in the National Petroleum Reserve in Alaska (NPR-A), securing development rights worth a total of $163 million (about 244 billion won). The U.S. Geological Survey (USGS) estimates the area holds about 8.8 billion barrels of recoverable crude.
FT said the industry is paying particular attention to Shell's return. After losing about $7 billion when its 2015 Arctic offshore drilling project in Alaska failed, Shell declared it would halt Alaska exploration "for the foreseeable future." At the time, Arctic drilling was cited as a textbook failed investment due to massive expense, pushback from environmental groups and low profitability.
But sentiment has shifted recently, as a string of large oil field discoveries has been made in Alaska's North Slope. The "Pikka" project, jointly developed by Santos and Repsol, is set to begin producing up to 80,000 barrels per day this month, while ConocoPhillips' $9 billion "Willow" project is targeting 180,000 barrels per day starting in 2029.
Wael Sawan, Shell's chief executive officer (CEO), told FT, "This exploration is a completely different area from the past," noting that "it is not the offshore Arctic drilling that was problematic before, but an onshore region where a production base is already in place." Exxon, too, has focused over the past decade on exploration in other regions such as Guyana, but is now turning its eyes back to Alaska.
At the center is U.S. independent explorer Bill Armstrong. After discovering the Pikka field in 2013, he has consistently highlighted the potential of Alaska's Arctic. Armstrong said, "Right now, Alaska is the hottest promising oil province in the world," adding, "In terms of reserves, it can surpass Guyana."
Against this backdrop, global oil corporations are betting everything on "finding new fields." Even amid oil price volatility and pressure to transition to cleaner energy, oil demand has held up more firmly than expected, while production from existing fields keeps declining. In the industry, some even say, "The biggest problem is not money, but securing new reserves."
In this situation, Alaska is again drawing attention as one of the few "untapped large resource provinces." Once regarded as a project that had ended "due to environmental regulations and low profitability," Alaska is reemerging as a stage for the global battle for energy dominance.
One major advantage is that production would be within the United States. Since the launch of the Trump administration, environmental regulations have been significantly eased, and investment barriers have fallen as a policy to expand fossil fuels under the slogan "Drill, baby, drill" has taken off. In fact, capital expenditure in Alaska's energy industry reached $5 billion last year, a 10-year record high.
Supply chain instability after the Middle East war is also adding to Alaska's strategic value. According to Wood Mackenzie, Alaska's crude output, which topped 2 million barrels per day in 1988, has trended downward and fell to about 475,000 barrels in 2024, the lowest in 50 years. But after Pikka and Willow come online, daily production is expected to rise to about 750,000 barrels by 2030. Santos CEO Kevin Gallagher said, "The Middle East situation shows the importance of supply diversification," adding, "Alaska is a strategic location with excellent access to Asian markets such as Japan and Korea."
Environmental group opposition, however, remains strong. Concerns are high about damage to the Arctic ecosystem, and if a Democratic administration takes office in the future, development projects could become stranded assets. Aithan Manuel, Director-General at the Sierra Club, an American environmental group, said, "Developing Alaska's oil fields carries a high risk of becoming stranded assets in the future," adding, "It is unexpected that Shell and Exxon have returned."