Scott Montgomery: Drivers in federal approval of new Alaskan drilling

For more than six decades, Alaska’s North Slope has been a focus of intense controversy over oil development and wilderness protection, with no end in sight.

Willow field, an estimated $8 billion, 600-million-barrel project recently approved by the Biden administration, over the strenuous objection of environmental and climate activists, is just the latest chapter in that long saga.

To understand why President Biden allowed the project, despite vowing “no more drilling on federal lands, period” during the campaign, some historical background is necessary. It underscores the fact that national and international fears are complicating decisions on future oil development on Alaska’s North Slope.

The Willow project lies within the 23-million-acre National Petroleum Reserve-Alaska, or NPR-A. It is one of four reserves set aside in the early 1900s to guarantee a supply of oil for the U.S. military.

Though no production was underway at the time in the NPR-A, geologic information and surface seeps suggested viable resources were available.

Proof came with the 1968 discovery of the rich Prudhoe Bay field, which began producing in 1977.

Initial exploratory programs detected no major deposits. Then, in the 2000s, new geologic understanding and advanced exploration technology led companies to lease portions of the reserve, and they soon began to make large fossil fuel discoveries.

Because NPR-A is federally owned, government approval is required for development. So far, most projects have eventually been authorized.

However, opposition from conservationists, environmental organizations and some Native communities, mainly in the interest of wildlife, habitat and climate protection, has been fierce. It began with development of the Prudhoe Bay field and construction of the Trans-Alaska Pipeline in the 1970s.

During the ensuing four decades, controversy shifted on east to the Arctic National Wildlife Refuge.

Republican presidents and congressional leaders repeatedly attempted to open the refuge to drilling, but were consistently stifled until 2017, when the Trump administration opened it to leasing. Ironically, however, no companies showed interest, as oil prices had fallen, risk ran high and reputational cost loomed large.

To the west, however, a series of new discoveries in NPR-A and adjacent state lands drew attention as a major new oil play with great potential. Oil prices had risen by then, and though they fell again in 2020, they have generally remained above $70 per barrel — high enough to encourage significant new development.

Opposition to the Willow project has been driven by concerns about the effects of drilling on wildlife and of increasing fossil fuel use on the climate.

Full consumption of Willow production would release an estimated 287 million metric tons of carbon dioxide. And it would require a pipeline extending existing infrastructure farther west, making additional development more financially viable.

But so far, resistance resting on those concerns has had little success.

Twenty miles to the south of Willow lies the Peregrine Discovery Area, projected at 1.6 billion barrels. Its development was approved by the Biden administration last year.

To the east lies the Pikka-Horseshoe Discovery Area, projected at 2 billion barrels. It’s also expected to win approval.

Still other NPR-A drilling has occurred to the southwest (Harpoon), northeast (Cassin), and southeast (Stirrup).

Legal concerns played a role in the administration’s approval of the Willow project.

ConocoPhillips holds leases giving it a legal right to drill. Canceling them would trigger a court case that could cost the government millions of dollars in fees and do nothing to stop drilling.

Instead, the government brokered a deal that shrank the total surface area to be developed at Willow by 60%, removing the sensitive Teshekpuk Lake wildlife area in the process. It also announced that it was putting 13 million acres of the NPR-A, and all federal waters of the Arctic Ocean, off limits to new leases.

That has done little to stem anger over approval of the project, however. Two groups have already sued.

To further understand Biden’s approval of the Willow project, one has to look into the future.

Discoveries in the northeastern part of the NPR-A suggest it will become a major new oil source for the U.S. While actual oil production isn’t expected for several years, its timing will coincide with a forecast plateau or decline in total U.S. production later this decade, because of what one shale company CEO described as the end of shale’s aggressive growth.

Historically, declines in domestic supply have brought higher fuel prices and imports.

High gasoline and diesel prices, with their inflationary impacts, can weaken the political party in power. While current prices and inflation haven’t damaged Biden and the Democrats too much, nothing guarantees this will remain the case.

The administration also faces geopolitical pressure right now due to Russia’s war on Ukraine.

U.S. companies ramped up exports of oil and gas over the past year to become a lifeline for Europe as the European Union uses sanctions and bans on Russian fossil fuel imports to crimp the Kremlin’s war effort. U.S. exports have served to replace a major portion of Russian supply that Europe once counted on.

Europe’s energy crisis has also led to the return of energy security as a top concern of national leaders worldwide. Without a doubt, the crisis has clarified that oil and gas are still critical to the global economy.

The Biden administration is taking the position that reducing the supply by a significant amount — necessary as it may be to avoid damaging climate change — can’t be done by prohibition alone. Halting new drilling worldwide would drive fuel prices sky high, weakening economies and undermining commitment to dealing with the climate problem.

Energy transitions depend on changes in demand, not just supply. As an energy scholar, I believe advancing electric vehicle affordability and infrastructure would do much more for reducing oil use than drilling bans.

Though it may seem counterintuitive, by aiding European economic stability, U.S. exports of fossil fuels may also help the EU plan to accelerate non-carbon energy use in the years ahead.

From The Conversation, an online repository of lay versions of academic research findings found at https://theconversation.com/us. Used with permission.


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