The U.S. Department of the Interior on Monday signed off on a plan that would allow oil and gas leasing in a swath of the Arctic National Wildlife Refuge (ANWR) in Alaska, a move that invited praise from proponents but swift vows of legal action from environmentalists.
Interior Secretary David Bernhardt said officials were acting on a directive approved by Congress in 2017. The Interior’s Bureau of Land Management (BLM) in late 2018 determined that drilling could be conducted within the refuge’s coastal plain without hurting wildlife. The refuge is home to polar bears, foxes, caribou herds and a range of other species.
Bernhardt said the plan represented a big step toward energy development in a sprawling region that had been off limits for more than 30 years despite energy companies and Alaska political leaders pushing to drill. The 19 million-acre wilderness, whose vast tundra and mountains lie between the Arctic Ocean to the north and the Yukon in Canada to the east, is largely undeveloped.
The Interior’s move opens the door to oil and gas auctions before the end of the year. However, legal challenges and the uncertainty imposed by the coronavirus on the oil and gas sector will delay development. Under the 2017 law, Interior is mandated to hold at least one auction of coastal plain oil leases before Dec. 22, 2021 and a second before Dec. 22, 2024. Interior is also required to issue rights-of-way and easements needed to support exploration and production.
Alaska’s congressional delegation extolled the decision. Alaska Republicans led by Sens. Lisa Murkowski and Dan Sullivan, along with Rep. Don Young, trumpeted the economic benefits of what is billed as the Willow Master Development Plan.
The Willow project was proposed by ConocoPhillips in the National Petroleum Reserve-Alaska (NPR-A), which is administered by the BLM. In 2017, the U.S. Geological Survey estimated that NPR-A contains an estimated 8.7 billion bbl of undiscovered, technically recoverable oil.
“Willow could generate hundreds of jobs, substantial revenues, and more than 100,000 barrels of needed throughput per day for the Trans-Alaska Pipeline System,” said Murkowski, who chairs the Senate Energy and Natural Resources Committee. “This project is an important part of our state’s economic future.”
Drilling in the refuge holds tremendous potential, said Young.
“We must continue making progress on projects like Willow that could bring good-paying jobs, significant revenue, and the resources we need to make America energy independent,” said Young. “This milestone is an important one, not only for Alaska but for the countless families who depend on the oil and gas industry to make a living.”
Environmental groups, meanwhile, vowed to sue. The Trump administration “continues its race to liquidate our nation’s last great wilderness, putting at risk the indigenous peoples and iconic wildlife that depend on it,” said Alaska Wilderness League’s Adam Kolton, executive director.
Some Alaska Natives who live near the refuge depend on hunting the caribou that migrate through the territory. Environmentalists said drilling could interrupt migration patterns and intensify adverse impacts of climate change.
“We will continue to fight this at every turn, in the courts, in Congress and in the corporate boardrooms,” Kolton said.
Sierra Club’s Lena Moffitt, senior director of the Our Wild America campaign, said the administration’s “so-called review process for their shameless sell-off of the Arctic Refuge has been a sham from the start. We’ll see them in court.”
Aside from legal threats, the pace of any development in the refuge will also be affected by current oil supply/demand imbalances, uncertainty by financial institutions to back drilling in the wilderness, and energy operator reservations.
Amid the pandemic and a global supply glut, many oil companies have scaled back on spending and drilling. Oil companies also have pulled out of Alaska in recent years because of high drilling and shipping costs from the remote state. Environmental concerns and related financing challenges also serve as roadblocks. Wells Fargo & Co. and Goldman Sachs Group Inc., two of the biggest U.S. banks, have said they would not fund drilling in the ANWR.
ConocoPhillips, which did not immediately comment on Interior’s announcement Monday, is among a shrinking number of major energy companies in Alaska. BP plc, for example, sold its legacy Alaska operations to Houston-based Hilcorp Energy Co. earlier this summer.
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