Biden Backs $8 Billion Alaska Oil Project at Odds with Climate Agenda

FILE PHOTO: U.S. President Joe Biden speaks during the UN Climate Change Conference (COP26) in Glasgow, Scotland, Britain, November 2, 2021. Erin Schaff/Pool via REUTERS/File Photo

Biden Backs $8 Billion Alaska Oil Project at Odds with Climate Agenda

Bloomberg
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March 13, 2023

By Jennifer A. Dlouhy (Bloomberg) —

President Joe Biden authorized a giant ConocoPhillips oil project in northwest Alaska that environmentalists argue has no place in a warming world, even as he sought to bar future drilling across US Arctic waters and lands.

The approach represents Biden’s bid for a middle ground, as he seeks to accelerate the transition away from fossil fuels while bound by the legal decisions of past administrations. ConocoPhillips has held some leases underpinning its roughly 600-million-barrel Willow oil development since 1999, and the project was already approved once under former President Donald Trump.

With the Interior Department’s new authorization, the company will be permitted to drill from three locations across its Willow site in the National Petroleum Reserve-Alaska. ConocoPhillips, which originally sought to drill from five well pads at Willow, had said anything short of three would not be viable. But Biden’s conservation moves mean oil companies also will have far fewer opportunities to find and develop prospects north of the Arctic Circle. 

The authorization represents one of the most significant climate decisions yet for Biden, who campaigned on a pledge to block new drilling on public lands and presided over sweeping government investments in clean energy. Yet he’s also implored oil companies to boost output to tame prices and address market disruptions spurred by Russia’s invasion of Ukraine. The Willow project created additional political challenges, as Biden faced intense pressure from unions and some indigenous groups in Alaska who argued the development would provide an economic lifeline to the region.

Environmentalists excoriated the approval of what is set to become one of the largest oil-and-gas-extraction projects on public lands — and vowed to keep fighting it. 

“We are too late in the climate crisis to approve massive oil and gas projects,” said Abigail Dillen, head of the advocacy group Earthjustice. “We know President Biden understands the existential threat of climate, but he is approving a project that derails his own climate goals.”

ConocoPhillips and lawmakers from Alaska cast the approval as a victory for the state as well as the nation. 

“Willow fits within the Biden administration’s priorities on environmental and social justice, facilitating the energy transition and enhancing our energy security, all while creating good union jobs and providing benefits to Alaska Native communities,” Chief Executive Officer Ryan Lance said in a news release.

ConocoPhillips shares were down 1.5% at 11:19 a.m. in New York trading, trading weaker amid a broader selloff in the wake of Silicon Valley Bank’s collapse. 

The $8 billion development is at the forefront of pending US oil projects. The 180,000 daily barrels of crude it’s projected to eventually supply represents roughly 1.6% of current US production. Over 30 years, it could yield some 240 million tons of carbon dioxide emissions, the Interior Department said in its record of decision Monday.

Conservationists argued Willow is incompatible with the International Energy Agency’s warningsthat the world must forsake developing new oil and gas fields to avert the most catastrophic consequences of global warming and reach net zero emissions by 2050. Some Alaska Natives who oppose Willow said new industrial operations there threaten caribou herds they depend on for subsistence. 

The final approval represents a reduction from ConocoPhillips’s initial ambitions to drill across five locations. With fewer wells, roads and surface development, the smaller footprint will yield slightly less oil — approximately 576 million barrels over the project’s 30-year life, the Interior Department said Monday. And the Biden administration won some key concessions to protect Teshekpuk Lake, which provides habitat for caribou that nearby Alaska Native communities subsist on. 

For instance, ConocoPhillips agreed to relinquish rights to approximately 68,000 acres of existing leases in the NPR-A, a move the Interior Department said “will create an additional buffer from exploration and development activities near the calving grounds and migratory routes for the Teshekpuk Lake caribou herd.”

However, the agency rejected other steps environmentalists encouraged, including a proposed requirement for ConocoPhillips to offset half of the projected net greenhouse gas emissions associated with the development. Another rejected option would have forced the company to halt crude production at the site after 20 years.

New Drilling Restrictions

Even as Willow got a green light, the Biden administration is moving to limit future oil development across the 23 million-acre (93,000 square-kilometer) NPR-A, which was set aside for energy supply needs roughly a century ago. The Interior Department said it soon will propose a rule that could prevent future oil and gas leasing across more than 13 million acres of the Indiana-sized reserve.

Biden also invoked provisions of a 1953 law to prevent future oil and gas leasing across 2.8 million acres of the Beaufort Sea north of Alaska, expanding on restrictions former President Barack Obama imposed in 2016.

Environmentalists hailed the protections but said they did nothing to offset the climate damage from approving the Willow project.

“Biden approved Willow knowing full well that it’ll cause massive and irreversible destruction, which is appalling,” said Kristen Monsell, a senior attorney at the Center for Biological Diversity. “New Arctic drilling makes no sense, and we’ll fight hard to keep ConocoPhillips from breaking ground.”

Oil industry advocates argued the president’s Arctic conservation moves conflicted with his push for domestic energy security. The Biden administration is impeding “responsible development of federal lands and waters,” said Frank Macchiarola, senior vice president of policy for the American Petroleum Institute. Senator Dan Sullivan, a Republican from Alaska, called the restrictions “infuriating.”

Willow’s supporters have argued that oil extracted from the site would be produced under more stringent environmental protections than elsewhere in the world, while helping bolster US energy security and providing an alternative to Russian supplies. 

Environmental groups are expected to challenge the approval in federal court, opening new legal risk the project is further delayed or derailed.

ConocoPhillips applied to develop the project in 2018 and the Trump administration approved it two years later. But a federal district court tossed out that approval in August 2021, after concluding the government hadn’t sufficiently analyzed the climate consequences of the development and failed to consider more protective options. 

–With assistance from Jennifer Jacobs.

© 2023 Bloomberg L.P.

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