The U.S. Energy Information Administration (EIA) recently issued a bullish forecast for Alaska, predicting that the state’s crude oil production will surge 13% in 2026. This increase is expected to bring the state’s output to the highest level recorded since 2018 and the most significant annual growth rate since the 1980s.
For the major oil players in the region — including ConocoPhillips COP and ExxonMobil XOM — this volume increase translates directly into higher revenues and stronger cash flows. Since these oil majors often have the biggest weightage in broad energy exchange-traded funds (ETFs), their rising fortunes provide a direct tailwind.
The Catalysts Driving Alaska’s Oil Rebound
The projected boom in Alaska’s oil production next year is not a coincidence but the direct result of specific, large-scale developments moving from planning to production.
Two major projects on Alaska's North Slope are the primary engines of this growth. The first one, ConocoPhillips' Nuna project, began production in late 2024. It offsets declines from older fields and is ramping up toward a peak capacity of 20,000 bpd.
The second and the larger driver is the Pikka Phase 1 project, operated by Santos with partner Repsol. Slated to start in early 2026, it is expected to reach a peak of 80,000 bpd by mid-year. To this end, the EIA states that Pikka alone would represent nearly 20% of the state's total 2025 production.
An even larger oil project on Alaska’s North Slope, ConocoPhillips' Willow development, is on track to begin production in 2029. This project is expected to sustain oil production growth from the state into the next decade.
How Will this Boost Energy ETFs?
This production surge directly translates to higher revenue and improved financial outlooks for the key companies operating in Alaska. As the state's dominant producer, ConocoPhillips stands to gain substantially from its multiple projects (Nuna, legacy fields, and the future Willow).
Major integrated players like ExxonMobil, with significant legacy positions and resource holdings in the state, are also positioned to capitalize on the rising tide of activity and improved economics. Notably, XOM is one of the top three producers of oil on Alaska’s North Slope.
The forecasted 13% jump in Alaska's oil production provides a tangible, near-term catalyst for the U.S. energy sector. The success of the Alaska projects can boost the overall earnings and share prices of these companies.
For investors, targeting these individual stocks can carry company-specific risks. A more strategic and diversified approach to capturing this regional growth can thus be through energy ETFs, particularly those with heavy exposure to COP and XOM.
These funds hold baskets of energy stocks, providing built-in exposure to the major Alaskan producers alongside other integrated, exploration, and service companies.
Thus, for investors looking to capitalize on this upswing, the following energy ETFs may offer a way to participate in Alaska's renaissance while mitigating the risk associated with any single project or company.
State Street Energy Select Sector SPDR ETF XLE
This fund, with assets under management (AUM) worth $27.87 billion, offers exposure to 22 companies from the oil, gas and consumable fuel, energy equipment and services industries. XOM holds the first spot in this fund, with 23.21% weightage, while COP holds the third spot with 6.77% weightage.
XLE has risen 9.8% year to date. The fund charges 8 basis points (bps) as fees. It traded at a good volume of 15.1 million in the last trading session.
Vanguard Energy ETF VDE
This fund, with net assets worth $7.1 billion, offers exposure to 110 energy stocks. XOM holds the first spot in this fund, with 23.01% weightage, while COP holds the third spot with 5.52% weightage.
VDE has gained 9.5% year to date. The fund charges 9 bps as fees. It traded at a volume of 0.4 million in the last trading session.
Fidelity MSCI Energy Index ETF FENY
This fund, with net assets worth $1.3 billion, offers exposure to 102 energy companies. XOM holds the first spot in this fund, with 21.9% weightage, while COP holds the third spot with 5.70% weightage.
FENY has rallied 9.7% year to date. The fund charges 8 bps as fees. Its trading volume was 2.9 million in the last trading session.
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Exxon Mobil Corporation (XOM): Free Stock Analysis Report ConocoPhillips (COP): Free Stock Analysis Report Energy Select Sector SPDR ETF (XLE): ETF Research Reports Vanguard Energy ETF (VDE): ETF Research Reports Fidelity MSCI Energy Index ETF (FENY): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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