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Data: U.S. Energy Information Administration; Chart: Axios Visuals

BP's decision to offload its Alaska holdings highlights the uncertainty around whether the state — once at the heart of U.S. production — will ever regain its crude mojo.

Why it matters: Hints of the answer will come when the Interior Department sells leases in the Arctic National Wildlife Refuge as soon as this year, after a 2017 GOP tax bill opened the region following decades of political battles. It could hold over 10 billion barrels of oil in a state where the oil industry is a large part of its economic well-being. But, environmentalists strongly oppose drilling in the ecologically sensitive region.

The big question: While BP has signaled that it's done with Alaska, it's unclear how many other companies will look to buy leases in ANWR. Either way, any actual production would likely be at least a decade off.

The big picture: The state has lots of oil in other areas of the North Slope, including the National Petroleum Reserve-Alaska (NPR-A), which is one of the places where the state's biggest producer ConocoPhillips has acreage.

  • But oil companies, especially giants with deep pockets like BP, have cheaper alternatives in the lower-48 at a time of modest oil prices and uncertain future demand.

What they're saying: Axios spoke with IHS Markit analyst Kareemah Mohamed about the wildlife refuge and the wider future of Alaskan crude.

  • ANWR "would appeal to companies who are comfortable with that type of frontier exploration risk and also companies who know the Alaska north slope really well," she says.
  • One example is Hilcorp, already a big player in Alaska even before its deal this week with BP.
  • But the majors face shareholder pressure on the environment and pledges to slow emissions — a poor fit with frontier Alaskan development.
  • "While they are the ones who are capable of absorbing exploration risk on that scale, I am not sure they would be the ones to expand their presence at this time," she says.

Turning to the future of Alaska overall, she doesn't expect a return to the "golden years" of huge output.

  • But, that said, "My outlook generally isn’t negative on the North Slope."
  • She notes Alaska offers large resources, existing data and infrastructure that enables shorter cycle and less capital-intensive opportunities.

The bottom line: "We would expect to see stable production for the next decade or so," she says. After that, it's impossible to say.

Go deeper: Texas dominates U.S. oil production

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