20 ALASKA RESOURCE REVIEW WINTER 2025 West Coast states now required to document carbon intensity of oil BY TIM BRADNER DESPITE A NEW PRO-DEVELOPMENT U.S. PRESIDENT, ALASKA CRUDE OIL IS FACING CHALLENGES IN ITS KEY WEST COAST MARKETS DUE TO CARBON RULES IN CALIFORNIA, OREGON AND WASHINGTON. Alaska crude oil production is set to increase with new projects under construction. However, there are questions as to where the new oil will go and whether new clean fuel standards in West Coast states are devaluing Alaska crude oil. California and Washington state refineries are now required to calculate the carbon intensity of crude oil they purchase. “Alaska oil could be competitively disadvantaged,” said Nicholas Fulford, an analyst with Gaffney Cline, a consulting firm. The calculation includes the complete production cycle from production operations, pipelines and tanker shipments, all which put Alaska crude at a disadvantage compared with conventional crudes and shale oil from western states and Canada. Alaska scores at 15.9 in the Washington carbon intensity rankings compared with 8.4 for western Canadian crude oil and 9.3 for North Dakota oil, said Anthony Pennino, an Anchorage-based energy consultant. Canadian oil sands crude has the worst ranking at 23. These rankings measure carbon emissions along the production and supply chain and shouldn’t be confused with quality measures of the oil itself, such as the API gravity. Much of Alaska’s disadvantage in the carbon ranking comes from the emissions from North Slope production plants, Pennino said. When they buy crude oil with higher carbon intensity scores, like from Alaska, the new rules require refiners to purchase offsets to reduce the carbon intensity of the supply chain, which imposes a financial penalty. The Washington standards will tighten under legislation passed in 2021. Fuel suppliers will have to show a 20% decrease in carbon intensity below 2017 in the supply chain by 2037, using 2017 as a base year under the Washington statute. “As these standards become more stringent, they will significantly affect the value of Alaska’s crude oil,” said Frank Paskan, an affiliate professor with the University of Alaska Fairbanks, who is advising on carbon capture projects. The California and Washington state carbon rules aren’t the only challenge facing Alaska producers. Recent closings of refineries in California and the shift of demand for lighter-grade crude oil have knocked Alaska out of a market it once dominated. In the Pacific Northwest, where Alaska is still the main supplier, refineries have access to increasing volumes of shale oil, which have lower carbon intensity scores than Alaska crude. All this means more North Slope oil ALASKA CRUDE OIL SEES ALTERATIONS IN MARKETS In the 1980s and 1990s, Alaska supplied almost all crude oil imported into California and the Pacific Northwest. CONTINUED ON PAGE 22
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