Everything You Ever Wanted To Know About Alaska's Oil Production & The Pipe

Trans-Alaska Pipeline On The Dalton Highway (Photo, Courtesy BLM)

U.S. Energy Information Administration Describes Where The Pipe Fits In The International Scope 

Overview

Alaska, the largest U.S. state, is one-fifth the size of the Lower 48 states, and with its Aleutian Island chain is as wide as the Lower 48 states from east to west.¹ It is the only U.S. state with land north of the Arctic Circle, and it has the highest mountains and longest coastline of any state.² Alaska's winters are frequently severe, but its climate varies significantly from north to south and from winter to summer, particularly in the interior of the state, where temperatures range from -30°F in winter to 90°F in summer.³ Large areas of Alaska remain uninhabited. It has the third-smallest population of the U.S. states and is the least densely populated state at about 1 person per square mile.⁴ Nearly half of Alaskans live in the cities of Anchorage, Juneau, and Fairbanks.^5,6

The oil and natural gas industries are a key part of Alaska's energy-intensive economy, and the state ranks second in the nation, after Louisiana, for the highest amount of energy consumption per dollar of GDP.^7,8 The area of Alaska known as the North Slope contains 6 of the 100 largest oil fields in the United States and 1 of the 100 largest natural gas fields. Alaska's Prudhoe Bay field is among the 10 largest oil and natural gas fields in the nation.⁹Alaska does not have a state sales tax or a personal income tax, as revenues from Alaska's oil and gas industry fund about half of state government.¹⁰Since 1982, every eligible state resident receives an annual dividend that is based on the value of oil royalty revenue in the Alaska Permanent Fund. The 2024 dividend was $1,702, up about 30% from the year before but down from the record $3,284 in 2022.^11,12

Alaska’s energy demand per capita is the highest in the nation.

Alaska has other substantial energy resources. Its estimated recoverable coal reserves rank 14th among the states.¹³ Alaska's many rivers offer some of the best hydroelectric power potential in the nation.^14,15 Large swaths of the Alaskan coastline have significant wind energy resources, and the state's many volcanic areas offer geothermal energy potential.^16,17 Alaska's total energy demand is lower than more than two-thirds of the states.¹⁸ However, with its harsh winters, energy-intensive oil and natural gas industries, and small population, the state's per capita total energy consumption is the highest in the nation.¹⁹ Alaska's industrial sector accounts for 59% of the state's energy use, followed by the transportation sector at 26%, the commercial sector at 8%, and the residential sector at 7%.²⁰ Alaska has had the nation's highest transportation sector per capita energy use every year since 1969.^21,22

Petroleum

Alaska's proved crude oil reserves—almost 3.4 billion barrels at the beginning of 2023—are the fourth largest in the nation.²³ The state has been among the top oil producers for many years. The state's oil production, ranked fifth in the nation, fell in 2024, averaging 421,000 barrels per day. Alaska's oil output peaked at 2 million barrels per day in 1988 and has declined steadily since then as the state's oil fields matured.^24,25 However, two new oil developments in Alaska—the Nuna and Pikka projects—are expected to boost crude oil production in the state.²⁶ In recent decades, Alaska experienced relatively warmer temperatures for longer periods of time. Warmer temperatures reduce the amount of time energy companies can explore for onshore oil, because ice roads and drilling pads are used only during the coldest months of the year, when the frozen ground is less damaged by heavy equipment. Conversely, the warmer temperatures reduce floating ice packs, which makes it easier to ship production facilities and equipment to the North Slope oil fields.^27,28

Large areas of the state remain unexplored for oil. The 1.6 million-acre coastal plain of the Arctic National Wildlife Refuge (ANWR), located in northeastern Alaska, was opened for drilling and exploration in 2017, but was closed again in 2023.^29,30,31 In the winter of 2025, the federal government announced it will expand leasing opportunities to drill for oil in ANWR and in the separate National Petroleum Reserve, located to the west of ANWR.^32,33 The U.S. Department of the Interior approved in March 2023 a scaled-back version of Conoco Phillips' Willow oil drilling project that could produce up to 180,000 barrels per day in part of the National Petroleum Reserve. The project's first oil production is expected in 2029.^34,35

Most of Alaska's crude oil production—typically over 95%—occurs on the North Slope.³⁶ The Trans-Alaska Pipeline System, which began operating in 1977, transports crude oil 800 miles from the frozen North Slope to the ice-free port at Valdez, on Alaska's southern coast.³⁷ In 1988, the pipeline's oil throughput peaked at just over 2 million barrels per day. Since 2003, deliveries have been less than 1 million barrels per day and averaged a record low of 464,748 barrels per day in 2024.³⁸ Low volumes cause the oil to move more slowly in the pipeline, which results in colder oil. That creates challenges for the pipeline's operators, including the formation of ice and the buildup of wax that is in the oil on the inside pipeline wall. The amount of time it takes for oil to travel the 800 miles through the pipeline from the North Slope to the Valdez port increased from 4.5 days in 1988 to about 19 days in recent years.^39,40

Most of the oil produced in Alaska is sent to refineries in Washington and California.

Tankers transport most of the oil produced in Alaska to refineries in Washington and California.^41,42,43 On March 24, 1989, the Exxon Valdez tanker struck Bligh Reef and spilled approximately 257,000 barrels of crude oil into Prince William Sound, located on Alaska's southern coast.⁴⁴ The accident resulted in improvements to tanker design and construction, navigation technology, and crew training.⁴⁵

Alaska has five operating refineries, with a combined processing capacity of about 166,000 barrels of crude oil per calendar day.⁴⁶ Two of the refineries, in the Prudhoe Bay region, supply fuel for crude oil drilling operations. A refinery in Kenai, southwest of Anchorage, produces most of the state's motor gasoline as well as some distillate fuel oil. Two other refineries, located in Valdez and near Fairbanks, also produce diesel and heating fuels.^47,48 Alaska ranks 13th among the states with the lowest total petroleum demand, but it has the second-highest per capita petroleum consumption, after Louisiana.⁴⁹ Alaska is the largest jet fuel-consuming state on a per capita basis and the eighth largest in total jet fuel use.^50,51 The state is a major fueling stop for military aircraft as well as for commercial passenger and cargo flights between the United States and Asian countries.^52,53 Alaska also consumes petroleum to produce electricity. In 2024, petroleum liquids fueled 15% of the state's electricity generation at utility-scale power plants (1 megawatt or larger). Small diesel-fueled generators also produce electricity in many of the state's isolated communities.^54,55,56 Three out of 10 state households rely on fuel oil, kerosene, or propane for home heating.⁵⁷

Natural gas

Alaska’s proved natural gas reserves of 125 trillion cubic feet are the second highest in the nation.

Alaska's proved natural gas reserves—about 125 trillion cubic feet—rank second among the states, after Texas.⁵⁸ Alaska's natural gas withdrawals totaled more than 3.5 trillion cubic feet in 2024, the fifth largest in the nation after Texas, Pennsylvania, New Mexico, and Louisiana.⁵⁹ Most of the state's natural gas production is not brought to market. Natural gas volumes from the North Slope far exceed local demand, with no pipeline to transport the natural gas to consumers in the southern part of the state.^60,61 Instead, operators reinject most of the state's natural gas withdrawals back into oil reservoirs to help maintain crude oil production rates.⁶² The industrial sector accounts for the largest share of Alaska's natural gas delivered to consumers, 50% of the state's total. The electric power sector makes up 21% of the state's natural gas consumption, as natural gas-fired generators provide more than two-fifths of Alaska's utility-scale electricity. The residential sector accounts for 16% of state natural gas use. Nearly half of Alaskan households, most of which are located in the state's three biggest cities, heat with natural gas. The commercial sector accounts for 13% of the state's natural gas consumption. A small amount of natural gas is also used in the state's transportation sector as vehicle fuel.^63,64,65

The Alaska government created a state-owned corporation to build an 800-mile pipeline that would bring the North Slope's natural gas to Asian markets. As part of the pipeline project, a liquefied natural gas (LNG) export terminal would be built near Anchorage. The terminal would receive North Slope natural gas via the pipeline that could transport up to 3.3 billion cubic feet of natural gas a day.^66,67 In 2020, the Federal Energy Regulatory Commission (FERC) authorized the LNG project, and in 2023 the U.S. Department of Energy approved a permit for the project's LNG exports. The project has a price tag of around $44 billion and would be operational in 2030 or 2031.^68,69 In early 2025, the federal government said it would prioritize developing Alaska's LNG. Asian countries have expressed interest in investing in the LNG project and importing the state's super-cooled natural gas.^70,71,72,73

Alaska has an LNG liquefaction and terminal complex, located in Kenai on Cook Inlet, which began operating in 1969. Until 2012, it was the only facility in the United States authorized to export LNG produced from domestic natural gas. The terminal has the capacity to liquefy up to 200 million cubic feet of natural gas per day and it was used to export LNG to Asia.^74,75 However, LNG shipments declined, and the terminal's owner sold the facility in early 2018. The new owners received approval from FERC in 2020 to modify the terminal so it can receive LNG imports. In August 2022, FERC approved a request from the terminal's owners for more time, until the end of December 2025, to convert the terminal to handle LNG imports. The terminal was sold again in February 2025, and its new owners plan to start importing LNG in 2026 and have the terminal fully operational in 2029.^{76,77,78,79,80}

Electricity

Alaska ranked second, after Hawaii, for the largest share of petroleum-fired electricity generation in 2024.

In 2024, natural gas fueled 44% of Alaska's total electricity net generation and hydroelectric power generated 27%. Petroleum accounted for 15%, coal fueled 12%, and other renewables—mostly wind, biomass, and solar—accounted for about 3% of Alaska's generation.⁸¹ Alaska generated the second-highest share of its electricity from petroleum of any state after Hawaii.⁸² In February 2020, the most recent new utility-scale coal-fired power plant built in the United States began operating in Alaska. The plant, constructed at the University of Alaska's Fairbanks campus, has a generating capacity of 17 megawatts.^83,84,85

Alaska's electricity infrastructure differs from that in the Lower 48 states because Alaskans are not linked to large, interconnected grids through transmission and distribution lines. Instead, an electric grid called the Railbelt serves an area that stretches from Fairbanks to Anchorage and down to the Kenai Peninsula, where about three-fourths of the state's population lives. However, the Railbelt grid is isolated from the electric grids in Canada and the Lower 48 states.⁸⁶ In 2020, Alaska's governor signed legislation into law to create an electric reliability organization to develop grid reliability standards among the six Railbelt utilities. In March 2022, the Railbelt utilities submitted to state regulators their proposal for an organization to manage and review improvements to the grid.^87,88,89

The Pipeline goes underground in the Copper Valley. (Photo, Country Journal)

Alaska uses less electricity than all other states except Vermont, and is among the 10 states with the lowest per capita electricity sales.⁹⁰ In 2024, the commercial sector accounted for 43% of Alaska's electricity sales, followed by the residential sector at 34%, and the industrial sector at 23%.⁹¹ About one out of seven Alaskan households use electricity for their primary heating source.⁹² Electricity prices in the state's rural areas can be three to five times higher than the rates in the urban areas, so the state provides financial assistance to 82,000 residents in 188 local communities to help cover the cost of electricity.^93,94 Most of the state's rural communities do not have grid access and rely on consumer-owned electric cooperatives for their power. Many of those rural power providers use diesel-fueled electricity generators for some or all of their power supplies.^95,96,97 Alaska is building a nearly 400-mile alternative fuel corridor between Anchorage and Fairbanks to provide charging stations for electric vehicles. In September 2023, the first phase of the project provided $8 million in government funding and private investment to install, own, and operate new EV charging stations in nine communities.^98,99

Coal

Alaska's recoverable coal reserves are estimated at 2.8 billion tons, about 1% of the U.S. total.¹⁰⁰ Coal mines have operated in Alaska since 1855.¹⁰¹Substantial deposits of bituminous coal, subbituminous coal, and lignite are found in the north, south, and central portions of the state, but most of Alaska's coal remains unmined.^102,103 Alaska has one operating surface coal mine, the Usibelli mine, which produces about 1 million tons of coal per year.^104,105 None of Alaska's mined coal is exported. Instead, it is used in the state at coal-fired power plants and by commercial and institutional users.¹⁰⁶

Renewable energy

In 2024, hydropower supplied 90% of Alaska’s renewable electricity.

In 2010, the Alaska legislature enacted a non-binding goal for 50% of the state's electricity to be generated from renewable and alternative energy sources by 2025.^107,108 In 2024, renewable energy accounted for 30% of Alaska's total electricity generation. Hydropower provided nine-tenths of that renewable electricity, with smaller amounts from wind energy, biomass, and solar energy.¹⁰⁹ Utility-scale hydropower facilities are concentrated in southern Alaska, where there are mountainous regions with high annual rainfalls. Smaller run-of-river projects—which do not use dams—produce power in some rural communities. Alaska is also exploring tidal and ocean technologies that could supply renewable energy to coastal communities.^110,111 Small wind and solar power generation projects are located in many of the state's remote communities to reduce the use of petroleum products, which have high delivery costs, to generate electricity.^112,113

Wind energy resources are abundant along Alaska's coastline.¹¹⁴ In 2024, wind power supplied about 6% of Alaska's renewable electricity from 59 megawatts of utility-scale generating capacity at seven wind farms, located mostly along the state's southern and western coasts and on the Railbelt grid.^115,116,117 Increasing numbers of small wind energy facilities, including some wind-diesel hybrid systems, provide power to rural communities throughout the state that are off the main grid.¹¹⁸

Biomass fuels, which include wood, sawmill wastes, fish byproducts, and municipal waste, generated about 2% of Alaska's renewable power in 2024.¹¹⁹ Alaska has one utility-scale biomass-fueled generating plant, a 7-megawatt facility located at a landfill in Anchorage.¹²⁰ Wood is an important renewable energy resource for Alaskans, with more than 100,000 cords burned every year for residential space heating in one out of every 20 Alaskan households.^121,122

Despite Alaska's high latitudes and long winter nights, solar energy plays a role in off-grid applications, especially during summer in remote locations. Solar thermal technologies for water and space heating and customer-sited, small-scale (less than 1 megawatt capacity) solar photovoltaic panels are used for electricity generation throughout the state.^123,124,125 Solar power accounted for almost 2% of the state's renewable electricity in 2024.¹²⁶Alaska's largest solar farm, with 6 megawatts of capacity located about 30 miles north of Anchorage, came online in September 2023.¹²⁷ At the end of 2024, total generating capacity of small-scale solar panel generating systems in Alaska was nearly three times greater than the capacity from utility-scale solar installations at commercial sites.¹²⁸

Alaska has geothermal potential, but little commercial development.^129,130 While Alaska is one of eight states generating electricity from geothermal energy, its only geothermal power plant, the 400-kilowatt geothermal power facility at Chena Hot Springs, was built in 2006.^131,132,133 The fishing town of Unalaska, located on one of the more western Aleutian Islands, is seeking to build a geothermal power plant on the slopes of a nearby volcano.^134,135 In the spring of 2025, the Alaskan government leased tracts at the Augustine Volcano on an island in the southern part of Cook Inlet for energy companies to explore for geothermal energy resources.¹³⁶ A major challenge in developing more geothermal power projects in the state is that much of Alaska's geothermal resources are located in remote areas, far from population centers that would use the electricity generated.^137,138

Energy on tribal lands

Alaska has more territory held as tribal lands—over 44 million acres or nearly 11% of Alaska's total land area—than any other state.¹³⁹ The tribal communities account for about 15% of the state's population. A total of 12 regional native corporations encompassing 229 tribal groups own almost all of Alaska's tribal land.¹⁴⁰ The Alaska Native Claims Settlement Act, passed by the U.S. Congress in 1971, divided Alaska into 12 geographic regions of common heritage and interests. Under the Act, tribal lands do not have the sovereign status of reservations, as most of the Native American reservations do in the Lower 48 states. Instead, Native Alaskans corporately own the land, allowing each native corporation to benefit from resources on their lands. In 1975, a 13th regional corporation was created to represent the interests of Native Alaskans who live in the Lower 48 states.^141,142 The Metlakatla Indian Community on the Annette Island Reserve at the bottom tip of Alaska's southeastern panhandle, about 20 miles from the Canadian border, is the only native reservation in Alaska. The reservation was created by Congress in 1891. The Metlakatla community voted not to be part of the 1971 Alaska Native Claims Settlement Act and chose to retain rights to their land.¹⁴³ The native corporations hold most subsurface mineral rights on native lands and are among the largest private businesses in the state.¹⁴⁴

Alaska's tribal lands contain oil and natural gas resources on the North Slope and along the southern coast, as well as Alaska's largest bituminous coal deposit, which is also located on the North Slope. The state's tribal lands also have renewable energy resources.^145,146 Native corporations control about one-fourth of Alaska's 129 million acres of forested land, which provides the tribes with vast biomass resources. More than half of the timber harvested in Alaska comes from native corporations' land.¹⁴⁷ The native corporations share about 70% of the revenue earned from timber, oil, natural gas, coal, minerals, and other natural resources in proportion to their native populations. A significant portion of each corporation's revenue is then redistributed to village corporations within each region.^148,149 The corporations have many business subsidiaries that involve Native Alaskans in the development of their energy resources, including oil and natural gas field services, oil refining, and real estate and financial services. One corporation manages a utility-scale wind farm and is a shareholder in Alaska's first underground natural gas storage facility, Cook Inlet, which is the second largest of the state's five underground natural gas storage sites. It can hold about 11 billion cubic feet of working natural gas.^150,151,152 Another native corporation controls the only Alaskan-owned petroleum refining and fuel marketing operation, which runs two refineries in the state.¹⁵³

Several energy projects undertaken by Alaska Native corporations or on tribal lands have received federal funding in recent years, many of which reduced the use of diesel fuel in generating electricity. In 2023, the U.S. Department of Energy (DOE) provided $4.5 million to the Metlakatla Indian Community on Annette Islands Reserve to help pay for a 1.5-megawatt wind turbine to replace diesel-fueled generation.¹⁵⁴ DOE awarded $1.7 million in 2022 to fund a 65-kilowatt geothermal-fueled power plant to provide electricity and heat to 18 tribal buildings at Pilgrim Hot Springs in remote northwestern Alaska.¹⁵⁵ A separate $674,000 grant from DOE in 2022 helped pay for 200 kilowatts of solar photovoltaic generating capacity to provide supplemental power to the 440 residents of the Yup'ik Eskimo community located in Kongiganak on the southwestern coast of Alaska.¹⁵⁶ In 2021, DOE awarded an $856,000 grant to a tribal-owned utility in the Native village of Kipnuk near the Bering Sea in southwestern Alaska to integrate a 500-kilowatt battery energy storage system into the village's wind-powered and diesel-fueled grid. The battery storage system will displace more than 34,000 gallons of diesel fuel used annually by the utility to generate electricity.¹⁵⁷