The Polar Discovery recently transported 784,000 barrels of Alaskan crude oil South Korea. Image: ShipSpotting.

As Domestic Demand Falls, Alaskan Crude Oil Heads to South Korea


For the first time in a decade, Alaskan North Slope crude oil is headed overseas, with a shipment of 784,000 barrels recently sent to Yeosu, South Korea. Alaskan oil production currently has excess capacity due to a fall in domestic demand. As a result, Alaska began looking to export oil, which it did from the port of Valdez on September 26 aboard The Polar Discovery, an oil tanker owned by ConocoPhillips.

In 1996, Alaska received an exemption to the long standing ban on crude oil exports, put in place during the Oil Crisis of the 1970s. The Clinton administration allowed the state to export crude oil from the North Slope which traveled along the Trans-Alaska Pipeline system to Valdez. Despite this allowance, from 1996 to 2004, only 2.7% of Alaska’s oil production was sent overseas, much of which ended up in South Korea, Japan, and China. Before the shipment this September, no oil had been exported from the state for ten years.

Restrictions on US oil exports have loosened in recent years, particularly in regards to exports to South Korea. In 2006, a limited shipment of 24,000 barrels was sent to the port at Yeosu, and in July this year $40 million worth of crude oil left a Texas port headed in the same direction. The easing of export restrictions are the result of declining domestic demand, brought about by the proliferation of new energy sources, from techniques such as horizontal drilling and hydraulic fracturing.

Falling domestic demand coincides with a period of increasing demand abroad, especially in Asia. California was once the largest market for North Slope crude, but Alaska’s share of that market has since fallen to 11% from 41% in 1996, according to the California Energy Commission. Meanwhile, demand for both US oil and gas in Asia, particularly in Japan, China and South Korea, has reached record heights. Japan and the US recently signed a joint memorandum of understanding (MOU) to secure stable, low-cost LNG from the North Slope.

The energy industry is of great importance to the Alaskan economy, employing over 110,000 people, and accounting for 93% of all unrestricted state revenue in 2012. As domestic demand continues to decline, the Asian export market will become increasingly important.

Jonathan Gordon recently graduated from the University of Sydney and is a Research Intern at the East-West Center in Washington, D.C.