FT: Energy giants bet big on Alaska’s Arctic oil reserves

Major international oil companies are returning to explore in Alaska’s Arctic, as they seek to replenish reserves, diversify portfolios, and take advantage of US policy shifts under President Donald Trump that favor fossil-fuel development, Financial Times (FT) reports.

ExxonMobil, Shell, and Repsol were among the producers that bid a record $163 million in March to secure leases in the National Petroleum Reserve of Alaska. The area, considered under-explored, is estimated by the US Geological Survey to hold 8.8 million barrels of recoverable oil.

ConocoPhillips and Australia’s Santos also participated in the auction, acquiring leases covering more than one million acres on Alaska’s North Slope — a remote, oil-rich region known for its harsh Arctic conditions and high operating costs.

The return of Exxon and Shell after nearly a decade marks a policy success for the White House, which has rolled back environmental regulations and expanded lease sales. Industry capital expenditure in Alaska reached a decade high of $5 billion last year, up from $4.1 billion in 2024, according to Wood Mackenzie.

“Alaska is a fantastic opportunity,” said Francisco Gea, head of upstream at Repsol. “With the imminent start-up of the Pikka project on the North Slope, the reversal in the decline of oil production in the great state of Alaska is going to help put more oil in the Pacific area at an important moment.”

Shell chief executive Wael Sawan said the company’s return reflects a shift in strategy. “It is a very, very, very different part of Alaska that we have gone to,” he said. “This is an onshore exploration opportunity in a very well-established basin that has been producing for some time . . . So this is not offshore Alaska where we have had the challenges in the past.”

Shell previously exited Alaska exploration in 2015 after losing $7 billion in a failed drilling campaign. Exxon, while retaining infrastructure stakes, had focused elsewhere, including major discoveries in Guyana.

The $4.5 billion Pikka project, led by Santos and Repsol, is expected to begin production this month, while ConocoPhillips’ $9 billion Willow project is scheduled for 2029. Armstrong Oil & Gas founder Doug Armstrong highlighted high exploration success rates, saying: “This is the hottest play in the world right now.”

US officials also backed the expansion. Jarrod Agen said: “Drill, baby, drill is in action and is delivering real results for Americans.”

However, environmental groups warn of risks to one of the world’s most fragile ecosystems. Athan Manuel of the Sierra Club called the expansion “a fool’s errand,” warning projects could become stranded under future administrations.

By Vafa Guliyeva