Who Will Get the Money From Alaska’s New Willow Oil Field?

The upcoming oil run at Alaska’s Willow field has sparked a debate over who should receive the royalties. The federal law that covers oil on the National Petroleum Reserve‑Alaska splits the revenue 50/50 between the U. S. government and the state. But Alaska has not taken its half, because a 1976 agreement gave priority to five North Slope villages and the borough. The state has honored that rule for years, even though it meant no money went into the general fund. When ConocoPhillips began drilling in 1976, local Inuit communities feared that a boom would bring big rigs and pipelines across their lands. The federal government allowed leasing of the reserve, but because of those fears, a clause in the law gave the small communities first access to Alaska’s share. The result was that the state never received any of those royalties, and instead the money went to community projects. In recent years the field has produced modest amounts of oil, and Alaska’s share went to the North Slope communities. The total was about $16 million last year, but that is a fraction of what Willow will bring. State revenue officials predict that if the status quo stays, Alaska could see $1. 28 billion in royalties by 2033 and $2. 6 billion by 2043, none of which would go into the state budget.If Alaska keeps giving its share to the communities, lawmakers might try to redirect some of that money to help balance the state’s budget. The residents of the North Slope would likely protest or sue, especially if they see their funds cut. Governor Mike Dunleavy wants to stop a future fight by allocating Alaska’s portion of the royalties directly into the state budget and Permanent Fund now. The legislature is expected to approve this move. However, federal law still says Alaska must give priority to the North Slope communities. The state’s department that manages these funds has rules allowing the money to be used for many public services. When Willow’s output ramps up, the communities will have to find ways to spend it wisely, and that could lead to interesting legal battles. Some argue that the North Slope leaders have proven better at using oil money than state officials. In the 1970s, North Slope mayor Eben Hopson started a community college after the University of Alaska refused to. Ilisagvik College has grown into a tribal institution that now relies mainly on student fees and grants. That example shows local leaders can turn oil revenue into lasting benefits. Still, the question remains: should Alaska’s share of Willow royalties stay in the state budget or go to the communities that have historically received them? The decision will shape how the region benefits from this new source of wealth.