Arctic oil scramble in offing after GOP tax bill
As a part of the Republican tax overhaul bill, Congress voted Dec. 20 to open Alaska's Arctic National Wildlife Refuge (ANWR) to oil and natural gas drilling, after more than four decades of contestation on the matter. The House voted 224-201 to pass the bill, mostly along party lines. This finalizes the legislation, as the Senate version was passed by a 51-48 party-line vote earlier in the day. Once President Trump signs the law, the oil industry will have finally achieved a long-sought goal. "We're going to start drilling in ANWR, one of the largest oil reserves in the world, that for 40 years this country was unable to touch. That by itself would be a massive bill," Trump boasted. "They've been trying to get that, the Bushes, everybody. All the way back to Reagan, Reagan tried to get it. Bush tried to get it. Everybody tried to get it. They couldn't get it passed. That just happens to be here."
Sen. Lisa Murkowski (R-AK) said that the ANWR "contains an estimated 10.4 billion barrels of oil." She added: "We know we that can produce it safely. We know that we are going to need this oil in the years ahead. The reality is is that world oil demand is rising, it is not falling. We need to bring more supply online, and we need to open up our most prospective areas. So, again, when we have a small area that has enormous potential, why, why would we continue to deny that opportunity?"
Countered Sen. Ed Markey (D-MA): "Drilling in the Arctic National Wildlife Refuge is nothing more than a Big Oil polar payout... We will keep fighting, because the Arctic Refuge should forever be the home of caribou, not crude; bears, not barrels of oil; sandpipers, not pipelines. We will never stop fighting."
Under the legislation, the Interior Department is directed to hold at least two auctions for drilling rights leases in the next 10 years, with a limit of 2,000 acres of development. But any lease sale or drilling is likely still years away, especially with oil prices still depressed. Federal law still mandates an extensive review process, including a detailed environmental impact statement (EIS) under the National Environmental Policy Act. (The Hill, Newsweek)
"Doing an adequate NEPA review that would need to precede any leasing decision would take a considerable amount of time," said David Hayes, an Interior Department deputy secretary under presidents Obama and Clinton and an opponent of ANWR drilling who currently heads New York University's State Energy & Environmental Impact Center. He told Axios that could take two years. "That's typical for a major EIS on a very sensitive and complex [question]. It is very hard to do in less than two years. If they try and cut corners on their NEPA analysis, there will be very strong challenges..."
And as a Barclays analysis adds: "At any point along this at-least-four-year path to the first lease sale and the subsequent 2-6 year period to the first drilled well, political winds in Congress or a new Secretary of the Interior could stop the process."
Then there is also opposition to opening the ANWR from Native Alaskans, who still depend on the caribou herds that are in turn dependent on the National Wildlife Refuge for their calving grounds. "We just want to continue to have our food security," Bernadette Demientieff, director of the Gwich'in Steering Committee, told a small rally for protection of the ANWR on the National Mall in Washington DC Dec. 6. "To have healthy land. To have healthy animals to hunt." (KTOO, Juneau) The Gwich'in Steering Committee has already brought litigation to stop seismic exploration within the ANWR.
Some Native Alaskan communities are looking to oil exploitation as a ticket out of poverty. The 12 Alaska Native Corporations established in 1971 by the Alaska Native Claims Settlement Act are already arguing among themselves as to which has rights to drilling in the ANWR—as noted by the Anchorage Daily News and eagerly seized upon by Fox News. Specifically, the Arctic Slope Regional Corp, the only Native corporation that now has recognized rights to future oil revenues from the ANWR, has issued a letter demanding that the other corporations stop lobbying Congress to require ASRC to share.
ASRC signed a lease agreement with Chevron and BP in 1984 stipulating that if the federal government allows drilling in the ANWR, they could develop an adjacent 92,000-acre area owned by Native groups. "They go to DC as if they're representing the native people of the North Slope, and the people who interview them bill them as that," Robert Thompson, a resident of the Native village of Kaktovik, told Inside Climate News. "But they're representing the interests of a for-profit corporation that's in joint venture with Chevron and BP."
And Murkowski's estimate for how much oil is under the ANWR is actually high-balled. The US Geological Survey estimates the area could contain 4.3 billion to 11.8 billion barrels of technically recoverable oil. This higher figure, which would put the ANWR in the same range as the heavily exploited Prudhoe Bay, is given only a 5% probability.
The area that now covers the ANWR was first given federal protection by order of the Interior Secretary in 1960, bringing 8.9 million acres into what was then called the Arctic National Wildlife Range. In 1980, President Carter signed the Alaska National Interest Lands Conservation Act , creating the ANWR and enlarging the protected area to over 19 million acres. This was a pay-off to environmentalists after the bitter struggle over the opening of the Trans-Alaska Pipeline, linking Prudhoe Bay to Valdez.
But only 8 million acres of the ANWR was actually designated as Federal Wilderness, meaning it is permanently off-limits to development. Section 1002 of the legislation specifically set aside 1.5 million acres on the coastal plain with the greatest hydrocarbon potential. The law authorized seismic studies in the "1002 area," but left its ultimate fate for future Congresses to decide. (Oil & Gas 360, NatGeo)
The National Petroleum Reserve-Alaska, across Prudhoe Bay from the ANWR, was opened to exploitation by Obama in 2011, and the Trump administration has been dramatically stepping up lease sales there, with nearly half of its 23 million acres now up for bid. (Bloomberg)