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Alaska

Economics

Oil has been known to exist in Alaska since Russian explorers first noted oil seeps in Cook Inlet in 1853. Recognizing the importance of oil to the future of the United States at the end of World War I, in 1923 President Harding designated 23 million acres of wilderness in northern Alaska thought to contain extensive oil deposits as the Naval Petroleum Reserve Number Four (now known as the National Petroleum Reserve-Alaska, or NPR-A). Though some drilling began in the area after World War II, the true potential of Alaska's oil reserves wasn't revealed until Atlantic Richfield Company (ARCO) and Humble Oil (now ExxonMobil) confirmed the existence of a vast oil field in Prudhoe Bay in 1968. Estimated to contain nearly 10 billion barrels of recoverable oil, Prudhoe Bay was soon named the largest oil field in North America and Alaska became a focal point for new oil exploration and development in North America.

Photo of tanker
This tanker delivers oil from the port of Valdez.
Tapping the oil riches of Prudhoe Bay posed significant challenges to any company willing to undertake the task. Located inside the Arctic Circle along Alaska's rugged North Slope, Prudhoe Bay's long winters and icy waters made it a non-negotiable destination for large oil tankers. Though ice-breaking tankers and an extended railroad line were considered as possible ways to transport Prudhoe Bay crude to U.S. markets, in 1970 a consortium of oil companies helmed by BP formed under the name Alyeska to design, build, and operate a mammoth pipeline across the state to the southern port of Valdez.

Apart from navigating Alaska's foreboding North Slope, other issues soon arose to confront the construction of the proposed pipeline. Native American groups challenged the pipeline's path over their lands, and nascent environmental groups -- galvanized by the Santa Barbara oil spill in 1969 and the first Earth Day in 1970 -- began to voice their concerns in U.S. courts. But in the end the mounting pressure to decrease the U.S.'s dependence on Middle Eastern oil would prevail. In 1971 the Alaska Native Claims Settlement Act set aside 44 million acres and nearly $1 billion for indigenous Alaskans in order to secure the pipeline's path over native lands.

But the pipeline project remained tied up in U.S. courts until an OPEC oil embargo put new pressure on the government to exploit domestic oil reserves in late 1973. In November of that year, President Nixon signed the Trans-Alaska Pipeline Authorization Act to further "the national interest in early development of North Slope oil to domestic markets." The act sparked an outcry from activists who claimed that the government's environmental impact assessment was flawed and that the pipeline's approval process had run roughshod over 1969's National Environmental Policy Act (NEPA).

Goto Alaska: Politics
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