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

The upcoming oil run at Alaska’s Willow field has sparked a heated debate over who should receive the royalties.
Federal law splits revenue 50/50 between the U.S. government and the state, but 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.

Historical Context

• 1976: ConocoPhillips began drilling.
  Local Inuit communities feared a boom would bring big rigs and pipelines across their lands.
• The federal government allowed leasing of the reserve, but a clause in the law gave small communities first access to Alaska’s share.
• As a result, the state never received any of those royalties; instead, money went to community projects.

Current Revenue

• In recent years the field produced modest amounts of oil.
  Alaska’s share went to North Slope communities, totaling about $16 million last year—a fraction of what Willow will bring.
• State revenue officials predict:
• $1.28 billion in royalties by 2033
• $2.6 billion by 2043
  None of which would enter the state budget under the status quo.

Potential Legislative Action

• If Alaska continues giving its share to communities, lawmakers may redirect some money to balance the state’s budget.
  Residents of the North Slope would likely protest or sue if their funds are cut.
• Governor Mike Dunleavy wants to allocate Alaska’s portion of the royalties directly into the state budget and Permanent Fund now, aiming to preempt a future fight.
  The legislature is expected to approve this move.

Legal and Policy Constraints

• Federal law still mandates Alaska give priority to 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, communities will need to spend it wisely—potentially leading to legal battles.

Lessons from the Past

• Some argue North Slope leaders have better used 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 grew into a tribal institution now relying mainly on student fees and grants—showing local leaders can turn oil revenue into lasting benefits.

The Big Question

Should Alaska’s share of Willow royalties stay in the state budget or remain with the communities that have historically received them? The decision will shape how the region benefits from this new source of wealth.