Upstream Intel 3/24/25
Alaskan recovery | Permitting reforms | New public land strategy triggers local fights | New Mexico raises royalties | Oxy sells DJ assets | APA cuts
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Data Drill: Durable recovery or ‘dead cat bounce’ in Alaska?
Interior Secretary Doug Burgum has announced plans to reopen 82% of Alaska's National Petroleum Reserve for leasing and development, reinstate leasing in the 1.56-million-acre Coastal Plain of the Arctic National Wildlife Refuge, and revoke restrictions on land along the Trans-Alaska Pipeline Corridor to facilitate the proposed Ambler Road and Alaska Liquified Natural Gas Pipeline projects.
The policy shift coincides with the first meaningful signs of production growth in decades. According to the Energy Information Administration's March 2025 forecast, Alaska's crude output will increase by 16,000 barrels per day in 2026 to 438,000 bpd—the first annual production increase since 2017 and the largest since 2002.
This growth stems from ConocoPhillips' December 2024 Nuna project (expected to yield 20,000 bpd at peak from 29 wells) and the Santos-Repsol Pikka development, which could deliver 80,000 bpd from 45 wells. Projected per-well production rates of 400-799 boed and 1,600-3,199 boed, respectively—far exceed the state's current average of 100-200 boed. And Apache’s recent discovery at the Sockeye-2 exploratory well further suggests untapped potential across a 25,000-30,000 acre prospect.
Despite positive indicators, any renaissance depends heavily on major infrastructure investments. Japan's reported interest in backing a $44 billion Alaska LNG pipeline project offers the most promising options, but the explicit geopolitical slant of the deal creates inherent volatility.
Even if pipeline infrastructure were to support a large expansion of activity, E&Ps remain weary of Alaska's high operational costs, environmental sensitivity, and the persistent threat of regulatory whiplash. Whether this represents a "dead cat bounce" — small, brief recovery in the price of a declining stock — or sustainable recovery hinges on stakeholders' appetite for regulatory risk.
Regardless of how supportive the regulatory environment, the oil industry has signaled it would be hesitant to rush into Alaska, despite the favorable policy environment, mindful of the "possibility of a political pendulum swing in four years."
The excitement will surely generate more headlines in the following years, and perhaps a small rebound to 2016 levels. Yet, the political volatility, challenging operational environment, and inherent financial risks that have driven the state's production declines since 1988 will prevent a full fledged renaissance.
Land Regs Move to the States
Window for permitting reform narrows
Beyond Alaska’s north slope, stable property rights and simplified permitting is at the top of E&Ps wish list from the Trump Admin. The administration's deregulatory agenda has already buoyed industry confidence, with Kinder Morgan's Allen Fore calling it "the most significant change in my lifetime" for natural gas businesses. Yet industry leaders from Exxon, Chevron, Shell and others are pressing for streamlining project approvals and ensuring regulatory durability through congressional action - rather than easily reversible executive orders.
"The permitting process takes longer than the actual building process on critical infrastructure."
— Interior Secretary Doug Burgum
The delays plaguing critical projects require congressional action to address decades-old laws like NEPA. Some energy projects like LNG terminals see half decade permitting processes, Enterprise Products' SPOT terminal saw over 30,000 pages of documentation and responses to 80,000 comments
While a bipartisan permitting bill from Senators Manchin and Barrasso advanced out of committee last year with provisions limiting legal challenges and expediting LNG project approvals, GOP gridlock prevented passage, creating what IPAA's Mallori Miller describes as a "finite" window for the GOP to act before likely midterm losses in 2026.
New Mexico raises royalty payments for core acreage
The New Mexico state Legislature has increased the top royalty rate for oil and gas development on state trust lands from 20% to 25%. The narrowly passed legislation, targets “premium acreage” in a region that generated 46% of U.S. oil production in 2023. Public Lands Commissioner Stephanie Garcia Richard, who had suspended lease sales while advocating for the increase, praised the decision as maximizing returns for educational and public institutions, noting that neighboring Texas already charges the 25% rate amid intense competition for drilling rights.
Critics warn the rate hike could penalize producers and ultimately reduce benefits to public institutions, emphasizing the industry already faces significant taxation and volatile commodity prices. The measure comes as New Mexico, the nation's second-largest oil producer behind Texas, increasingly relies on petroleum-related windfalls to fund government operations, with the state's land grant permanent fund currently distributing approximately $1.2 billion annually to schools, universities, hospitals, and the general fund.
BLM’s energy land availability push triggers state and local fights
President Trump's Bureau of Land Management under energy lobbyist Kathleen Sgamma is leading an aggressive shift from conservation to energy production across the agency's 256 million acres of public lands. The Bureau has begun systematically dismantling Biden-era land management plans in its "obligation to develop vast oil and gas and coal resources."
Yet the push is triggering a chain of state and local fighting over land availability. Wyoming representatives have submitted legislation to replace Biden's conservation-minded Rock Springs Resource Management Plan, with policies prioritizing energy development across 3.6 million acres in Wyoming. Next door in Colorado, Routt County commissioners have sent multiple letters opposing BLM oil and gas leasing of 6,700 acres are exploring other options to procedurally block leases.
Read more: South Dakota Stops Massive Green Energy Land Grab In Its Tracks. (MSN)
While some political strategists argue Democrats should embrace "energy abundance" rather than appear to support higher gas prices, local conservation organizations are mounting coordinated resistance. Nearly twenty environmental groups have formally challenged the BLM's Q4 2025 lease sale, urging compliance with environmental protection laws and consideration of deferring parcels where conflicts exist.
In Other News:
Commodity traders use trading profits to purchase real upstream assets
Vitol's $2.7 billion acquisition of African upstream assets from Eni marks the latest strategic pivot by commodity trading heavyweights toward physical upstream assets. Like last week’s deal by hedge fund giant Citadel, commodity traders are rapidly deploying windfall profits from post-Covid energy trading into physical assets. The purchase follows similar plays by competitors Gunvor and Mercuria—with the former actively pursuing additional U.S. gas production holdings, and the latter recently investing in Louisiana's Black Bayou Energy Hub facility. Vertical integration plays show a growing appetite for direct ownership in the extraction phase, adding a new level of financial savvy, and deep pocked players, beyond traditional PE firms.
Oxy divests Denver-Julesburg acreage
Occidental has sold 250,000 net royalty acres in the Denver-Julesburg Basin to Elk Range Royalties for $905 million, marking another in a rapid series of asset sales in the company's aggressive post-CrownRock debt reduction campaign. The transaction, which had been rumored since February's NAPE Summit, helps Oxy advance toward its target of repaying at least $4.5 billion in debt within a year of the CrownRock deal closing. For Elk Range, which has deployed over $1.2 billion in acquisitions since its 2020 launch, the purchase delivers a portfolio operated by Chevron and Civitas with current production, DUCs, and development upside in what CEO Charlie Shufeldt described as "some of the best operator economics in the U.S."
APA cuts 15% of workforce
APA has eliminated 300 jobs globally as it implements cost-cutting measures amid concerns it's overextended geographically, with operations from the Permian Basin to Egypt. The January-February layoffs follow November's announced closure of North Sea operations and target of $350 million in annual savings by 2027. Wall Street’s response was muted, with analysts describing both the scale and timing of cost reductions as "disappointing" after APA notched the worst performance of all S&P 500 energy stocks in 2024. The cuts mirror similar workforce reductions at majors including Chevron, BP, Pioneer and Marathon.
Quote of the Week:
20.1 million acres
The amount of federal land in Alaska the Trump Administration is set to reopen for oil and gas leasing
What We’re Reading:
Chevron buys about 5% of Hess stock in show of confidence in delayed merger. (Reuters)
PE Firm Voyager to Merge Haynesville OFS Firm with Permian’s Tejas. (Hart Energy)
Harold Hamm: ‘Drill, Baby, Drill’ Needs $80 Oil. (Oilprice.com)
EOG Ramps Gassy Dorado, Oily Utica, Slows Delaware, Eagle Ford D&C. (Hart Energy)
With uncertainty surrounding federal aid, Texas explores its own incentive system to plug wells. (Hart Energy)
Oil Firms Seize Chance to Fight State Climate Laws—With Trump’s Help. (Wall Street Journal)
Permian Drilling Enters a New Phase of Scale. (Hart Energy)
AIQ, SLB Collaborate to Speed Up Autonomous Energy Operations. (Hart Energy)
GeoComputing and Leostream geotechnical computing platforms to boost oil and gas workflows. (Offshore Technology)