Key Highlights

  • Exxon, Shell and Repsol bid a record $163mn on Alaskan leases in March 2026
  • Industry Capital-expenditure/">Capital Expenditure in Alaska hit a decade high of $5bn in 2025
  • Santos and Repsol's Pikka project begins production this month at up to 80,000 barrels per day
  • ConocoPhillips' $9bn Willow project targets 180,000 barrels per day by 2029
  • Wood Mackenzie forecasts Alaskan output rising to 750,000 barrels per day by 2030

The Return Nobody Expected

For nearly a decade, Alaska was written off. Shell (NYSE:SHEL) walked away in 2015 after losing $7bn on a failed offshore campaign. Exxon (NYSE:XOM) directed its exploration capital toward Guyana, where a major discovery in 2015 reshaped its reserve outlook. The North Slope, once the backbone of American oil production at over two million barrels a day in 1988, had fallen to just 475,000 barrels a day in 2024, a near 50-year low.

The Reversal, when it came, was sharp. In March 2026, a record $163mn was bid on leases in the National Petroleum Reserve of Alaska. ExxonMobil and Shell were among the bidders, returning to a state they had each abandoned for the better part of a decade. Repsol, ConocoPhillips and Australia's Santos also secured acreage across more than one million acres on the North Slope. Industry capital expenditure in the state reached a decade high of $5bn in 2025, up from $4.1bn the year prior.

The scale of the commitment surprised even seasoned industry observers. What changed?

Projects That Proved the Basin

The catalyst was not a single discovery but an accumulating body of evidence that the North Slope's geology had been underestimated. Much of that evidence was assembled not by a major but by Bill Armstrong, an independent US wildcatter whose firm discovered the Pikka field in 2013.

Armstrong's record since that discovery is stark. Across 35 exploration and appraisal wells drilled in the basin since 2013, the industry has hit 33 times, a success rate of 94 per cent. His conclusion is that once the geological signatures are understood, the North Slope delivers with unusual consistency.

Two projects sit at the centre of the basin's revival. Santos and Repsol's $4.5bn Pikka development begins production this month, with output capacity of up to 80,000 barrels per day. ConocoPhillips (NYSE:COP) $9bn Willow project, the largest approved oil development in the United States in years, is expected to come online in 2029 targeting 180,000 barrels per day. Together, Wood Mackenzie forecasts these will drive Alaskan production to nearly 750,000 barrels a day by 2030.

Armstrong himself has placed Alaska's long-term reserve potential above Guyana, where Exxon has booked 11bn barrels of oil-equivalent. That comparison, if it holds, would represent one of the more significant reserve reratings in the global Upstream industry in years.

Why the Majors Came Back

Shell chief executive Wael Sawan was direct in separating the current opportunity from the company's prior Alaskan experience. The failed 2015 campaign was offshore, technically demanding, and operationally isolated. The current leases are onshore, in a well-established producing basin with existing infrastructure, a materially different risk profile.

Repsol's head of upstream Francisco Gea framed the commercial logic around both the basin's productivity and its Pacific-facing geography. With Pikka nearing first oil, the reversal of Alaska's long production decline is now within reach, adding Supply to Pacific markets at a moment of elevated Demand uncertainty.

For Exxon, the return is an extension of an existing Alaskan footprint. The company owns pipeline infrastructure in the state and holds minority interests in several producing fields. Returning to active exploration builds on Assets already on its books rather than entering unfamiliar territory.

The regulatory environment has also shifted. The current US administration has relaxed environmental approvals, expanded Lease sale acreage, and positioned Alaskan development explicitly within its energy dominance agenda. Industry executive Jarrod Agen, of the administration's energy dominance council, described the record lease auction as evidence that the policy framework is delivering tangible results.

The Geopolitical Dimension

The Iran war and sustained Strait of Hormuz disruption have added a supply-security argument that sits alongside the commercial case. Santos chief executive Kevin Gallagher pointed to Alaska's location as a genuine strategic asset, offering a route into Japanese and Korean energy markets that bypasses Middle Eastern chokepoints entirely.

The energy crisis triggered by the conflict has underlined for buyers and producers alike that geographic Diversification of supply is not a theoretical preference but an operational necessity. Alaska, positioned on the Pacific rim with existing export infrastructure, fits that calculus precisely. Two recent discoveries by Santos, named Quokka and Horseshoe, have further reinforced the North Slope's position as an active frontier rather than a mature basin in managed decline.

The Risks That Remain

Alaska's revival is not without material risks. Conservation groups have mounted sustained opposition to expanded drilling, with Sierra Club director Athan Manuel describing the return of Shell and Exxon as a strategic miscalculation. His argument centres on political risk: projects approved under the current administration could face reversal under a future one, turning long-lead capital commitments into stranded assets.

That risk is not abstract. The Willow project, for example, requires consistent regulatory support across a development timeline stretching to 2029 and beyond. A change in federal policy at any point in that window could disrupt permitting, infrastructure access, or export approvals. The capital already committed may be difficult to recover if the framework shifts.

Environmental litigation also remains an active constraint. Legal challenges to Alaskan oil development have historically added cost and delay even when they have not ultimately blocked projects.

A Basin Repriced

What the first quarter of 2026 has established is that Alaska is no longer a marginal consideration in global upstream capital allocation. Record lease spending, two transformational projects nearing or entering production, a 94 per cent exploration success rate, and a geopolitical environment that rewards supply diversification have collectively repriced the basin's strategic value.

Wood Mackenzie's head of Americas upstream research, Mark Oberstoetter, described Pikka and Willow as transformational for the state, with further discoveries expected to add production through the following decade. The exploration boom, in his assessment, is genuine rather than promotional.

Whether that momentum is sustainable depends on factors beyond geology. Policy continuity, Commodity prices, and the trajectory of the Iran conflict will each shape how much of Alaska's potential is ultimately converted into production. For now, the world's largest oil companies have delivered their verdict with capital. After a decade away, they are back.