OIL AND GAS
Published: Tuesday, August 18, 2020
A view of the Arctic National Wildlife Refuge. Fish and Wildlife Service/Wikipedia
The Trump administration announced yesterday that it would open nearly all of the Arctic National Wildlife Refuge’s coastal plain to oil and gas leasing.
But it didn’t say when.
Timing is just one of the major questions lingering after Interior Secretary David Bernhardt announced a record of decision authorizing the first-ever oil and gas leasing program in the refuge.
From oil prices to politics, a minerals auction in ANWR is full of uncertainties. Allowing development in the ecologically rich landscape between the Brooks mountain range and the Arctic Ocean has been a key part of President Trump’s energy dominance agenda. But with the 2020 presidential election fast approaching, many drillers are still waylaid by an oil price bust, and critics have vowed to fight the Interior approval.
The agency’s final environmental review of the leasing plan was published last fall, as Interior raced to fulfill a 2017 congressional mandate to hold an oil and gas auction in ANWR’s coastal plain.
The record of decision sets “where and under what terms and conditions” a leasing program can take place in the 1.6-million-acre region. There are multiple questions it did not answer, however, leaving the fate of drilling up in the air. Here are three of them:
When is the sale?
The looming presidential election may pressure Interior to lease the land quickly, as presumptive Democratic presidential nominee Joe Biden has voiced opposition to the prospect of drilling in the refuge.
“The Trump administration is hell bent on getting parts of ANWR leased for drilling before it leaves office on January 20,” said Robert Percival, head of the University of Maryland School of Law’s Environmental Law Program, in an email.
Percival pointed out that it is harder and potentially costlier for the federal government to revoke a lease once it is held by an oil company.
“And they would love to have the drilling start before a new administration can stop it, so that the area will no longer have a pristine character,” he added.
Bernhardt noted yesterday that the political landscape wasn’t guiding ANWR decisionmaking, but he did not specify a date for the sale beyond the congressionally mandated deadline of 2021 and the possibility of getting one in this year.
Interior staffers have said they were left out of ANWR decisions in recent weeks, with details limited to a tight political circle helming the agency (Energywire, Aug. 12).
That approach hasn’t changed with the release of the record of decision yesterday, some say.
“We have heard nothing yet on a lease sale” on the coastal plain, one senior Interior official said yesterday, noting that there has also been silence on the timeline for an anticipated 2020 sale in the National Petroleum Reserve-Alaska (NPR-A), west of ANWR.
The lack of open planning is “frustrating,” the official said.
There is also polarized but sustained political pressure on Alaska’s congressional delegation to advance an ANWR sale.
Alaska Sen. Dan Sullivan (R) is up for reelection and will likely put his weight behind the first sale, given the state’s desire for good news on the fossil fuel front, said Larry Persily, an Alaska-based oil and gas columnist and longtime observer of the state’s resource-rich North Slope.
Sen. Lisa Murkowski (R-Alaska), meanwhile, leveraged her position as chairwoman of the Energy and Natural Resources Committee to push the ANWR leasing program through Congress three years ago but has since warned that drilling might not happen until 2030. She’s “astute enough to know there are major impediments to this,” said Persily.
Murkowski said over the summer that she was “struggling” with the idea of supporting Trump in the upcoming election after a largely peaceful protest outside the White House was dispersed with tear gas.
The president responded in a series of tweets in June promising to campaign for anyone who runs against her when Murkowski comes up for reelection in 2022.
“I gave Alaska ANWR, major highways, and more. Get any candidate ready, good or bad, I don’t care, I’m endorsing. If you have a pulse, I’m with you!” Trump tweeted.
Given the political bombast surrounding ANWR, opponents of drilling say they are preparing for the administration to advance a sale soon.
“They’ve said they are going to be aggressive in their leasing and companies could try to get in, and that is very consequential,” said Brook Brisson, a senior staff attorney at Trustees for Alaska.
Carl Tobias from the University of Richmond School of Law said environmentalists could stall the administration by taking Interior to court.
“I don’t think we are going to be seeing any real leasing for a long time,” he said.
Will drillers bite?
A near-term ANWR sale would come at a poor time for the oil and gas industry, experts note, as the sector grapples with a drop in oil demand due to the coronavirus crisis.
Bernhardt said in a call with reporters yesterday that oil drillers look at long-term projections when weighing whether to bid on drilling rights.
Alaska Oil and Gas Association President Kara Moriarty also played up the coastal plain’s long-term energy potential in a statement yesterday.
“While the industry has been hard hit by the recent pandemic and low prices, it is critical that the government continue to meet its leasing obligations — such as the statutory mandate to carry out lease sales for ANWR,” she said.
But others say persistent challenges for Alaska’s oil sector could hurt chances for a sale. Many of the deep-pocketed oil and gas producers equipped to drill in the far north have already left the state.
Earlier this year, British oil supermajor BP PLC finalized the sale of its assets to Texas-based Hilcorp Energy. That came after Chevron Corp.’s North Slope departure, leaving just ConocoPhillips remaining from the so-called Big Three operators (Energywire, Dec. 11, 2019).
ConocoPhillips is focused on the NPR-A, where it recently won approval to advance the $6 billion Willow oil project. The company has expressed interest in delving deeper into the reserve and has favored plans to open more protected areas of the NPR-A’s Teshekpuk Lake area to oil and gas production.
“That’s probably where they see their future,” Persily said. “It’s more affordable [than ANWR]. It’s less contentious, and it fully occupies Conoco’s time up here.”
Waning interest in developing big, expensive oil projects in places like the Arctic could kill the prospects for the first ANWR lease sale, said Persily.
Still, a lease sale could draw at least some interest, he said. But actual development still seems unlikely.
“The leases could be cheap if there is not a lot of interest from deep-pocketed people, but even if you get it for a dollar, why would you do it if it’s going to cost you billions before you know if there is oil there?” he said.
There are other potential pitfalls for the industry: There is a ballot measure this year that could hike taxes on oil production.
Meanwhile, environmental groups have tried to make investment in ANWR as unpalatable as possible from a public relations perspective.
The largest U.S. banks, and several in Europe, have committed to not directly fund oil and gas development in the Arctic following an extended campaign by the Sierra Club and others (Climatewire, March 4).
It’s unclear what that attempt to pressure not just banks but energy companies may have on ANWR bids, said Brisson of Trustees for Alaska.
“Is any company going to risk its reputation?” she said.
Who will sue?
Critics of BLM’s decision to allow oil and gas leasing in the Arctic refuge say it has several fatal flaws that could imperil it in court.
“The law requires the agency to carefully analyze, disclose and mitigate the numerous inherent harms that opening up this amazing place to oil drilling will cause. But the agency ignored these obligations,” said Kristen Monsell, a senior attorney at the Center for Biological Diversity, in an email.
For example, she said, the agency failed to take a “hard look” at how oil spills or seismic activity planned in the heart of polar bear habitat would affect the vulnerable species. The plan also did not take into account the increased stress on the animals from the project and how those stresses will negatively affect a species already at risk from rising global temperatures.
Monsell criticized BLM for making assumptions in its analysis that she said underestimate the climate effects of the project.
The federal agency could also face challenges over its pace for moving forward with drilling and for failing to work closely enough with the Fish and Wildlife Service in its decisionmaking.
“BLM ignored agency scientists again and again in this process, including calls by FWS for significant information gaps to be closed before a program is adopted,” Brisson said in an email. “This is only one way that BLM rushed to adopt this program.”
Additionally, the record of decision takes up the most expansive of the scenarios Interior considered in its environmental analysis by opening nearly all of the coastal plain’s acreage for drilling.
That route has already been flagged as problematic by some critics who say the administration is overstepping limitations meant to protect the refuge.
Matt Lee-Ashley, a senior fellow at the Center for American Progress, noted that the record of decision is poised to barrel past a technical 2,000-acre surface footprint limitation set up by Congress.
Similar accusations of flawed analysis were a common theme in responses to Interior’s announcement from conservationists and watchdog organizations. Autumn Hanna, vice president of Taxpayers for Common Sense, deemed the program a “fool’s errand.”
The Trump administration has lost several high-profile energy battles in the courts, from industry regulations to pipeline projects, based on failures to follow process, some observers noted yesterday. It’s a weak spot that several appeared ready to exploit.
The administration’s record of decision on the oil and gas leasing plan repeats the “the same errors” that it made before losing oil pipelines like Keystone XL, which was halted due to problems with Endangered Species Act compliance, said Jessica Girard, director of the Fairbanks Climate Action Coalition, in a statement.
“The fight is not over,” Bernadette Demientieff, executive director of the Gwich’in Steering Committee, said in a statement. “We have attorneys on this case, and the courts will get to hear about the corrupt and illegal ways the Trump administration has used to open the Sacred Place Where Life Begins for drilling.”