By Horace Wang November 28, 2020 The decades-long battle over whether to open up Alaska’s Arctic National Wildlife Refuge (ANWR) to oil and gas drilling has entered a new phase. The Trump administration recently announced that it would begin the process of selling leases to oil companies in a last-minute effort to allow oil and gas drilling to take place […]
By Horace Wang
November 28, 2020
The decades-long battle over whether to open up Alaska’s Arctic National Wildlife Refuge (ANWR) to oil and gas drilling has entered a new phase. The Trump administration recently announced that it would begin the process of selling leases to oil companies in a last-minute effort to allow oil and gas drilling to take place in ANWR and set up a potential sale of leases right before President-elect Biden’s inauguration on January 20th.
ANWR is currently one of the last vast expanses of land in the United States that remains mostly untouched by people. It is also home to large populations of caribou, polar bears, and migratory birds.
Debates over whether to develop ANWR have been going on since 1977. Before 2017, Congress voted to develop ANWR’s resources almost 50 times. Supporters of developing the refuge finally authorized drilling in ANWR through the GOP’s 2017 Tax Cut and Jobs Act, which required two oil and gas lease sales in the refuge by the end of 2024.
Earlier this month, the Federal Register posted a “call for nominations” related to lease sales in about 1.5 million acres for the refuge along the coast of the Arctic Ocean from the Bureau of Land Management. A call for nominations is a request to oil companies to specify what tracts of land they would be interested in exploring and potentially drilling in for oil and gas.
The timeline for lease sales is a strict one, as the earliest they could occur is around January 17th. The call for nominations will permit comments until December 17th, after which the Bureau of Land Management could possibly issue a final notice of sales to occur as early as 30 days later. Although the bureau usually takes as much as several months to review comments and determine which tracts of land to sell before issuing the final notices of sale, they could also make the entire coastal plain available and immediately issue the notice.
A 2019 survey of registered voters revealed that there was bipartisan opposition to opening up ANWR. 67 percent of voters, including majorities of Democrats and Independents, as well as half of Republicans, opposed drilling in ANWR.
Environmentalists and other opponents to developing ANWR, including a group representing the Gwich’in, an Alaskan Native tribe who live near the refuge, have argued that the Interior Department did not sufficiently account for the impacts of oil and gas development on climate change and wildlife. The Gwich’in have also raised concerns about the populations of Porcupine Caribou because of their spiritual ties to and dependency on the animal for food, claiming that exploratory drilling and accompanying activities could affect the caribou’s survival.
Many scientists are concerned about the survival of polar bears in the area because the area’s population of polar bears is already among the most threatened in the world. Preliminary exploration through conducting seismic surveys could disturb, injure, and even kill bears. Plans for such surveys have recently resurfaced by the Bureau of Land Management and been proposed by the Kaktovik Inupiat Corporation, an Alaskan Native village corporation, using a contractor that had been part of a similar effort in 2018. If approved, the plan could begin by the end of the year.
But opinions among other Alaskans are more complicated. Alaska Governor Mike Dunleavy has vocally supported drilling in ANWR and argued that Americans from outside of Alaska should not be dictating what is best for their state. All three members of Alaska’s congressional delegation also favor drilling in ANWR. The American Petroleum Institute has endorsed the Trump administration’s actions regarding ANWR because they “will create good-paying jobs and provide a new revenue stream for the state — which is why a majority of Alaskans support it.”
While Alaskan politicians and industry groups have long supported opening up the coastal plain to drilling, whether or not such support will be accompanied by action from the relevant industries is unclear. Rowena Gunn, an analyst for the energy research firm Wood Mackenzie, expressed the view that “any response [to ANWR being opened up] will be fairly lukewarm.” Larry Persily, an oil industry observer and former federal coordinator for Alaska gas line projects, largely echoed this sentiment, noting that “even at fire-sale prices, there probably won’t be a rush of interest.”
Part of the reason why interest in drilling in ANWR will likely be limited is that the COVID-19 pandemic and ongoing oil price wars have significantly impacted oil companies. Oil prices are currently low and it is both expensive and difficult to explore the Arctic for oil. Public opposition to drilling in ANWR may also impact companies’ decision in whether or not to do so, especially among publicly-traded companies.
In the long-run, there remains a great deal of uncertainty over companies’ hypothetical plans for ANWR. While the coastal plain is believed to overlie geological formations that could hold billions of barrels of oil, that assessment is based on data from the 1980s. Only one exploratory well — the results of which were disappointing — has ever been drilled in the refuge.
Combined with the aforementioned considerations, companies may also decide that the associated difficulties and costliness outweigh the economic benefits, especially if the declining demand for oil will make their long-term plans for ANWR irrelevant. It is ultimately unclear how much interest drilling in the refuge exists among oil companies as it will take at least a decade before any oil can be extracted from ANWR.
But in the short-run, the incoming Biden administration’s opposition to drilling in ANWR is perhaps the biggest obstacle to companies who have their sights on the refuge. While the Trump administration could establish a potential sale of leases before Biden takes office, a Biden administration could delay companies’ acquisition of the required permits. Although oil companies could wait for a new administration that is more favorable to drilling in ANWR, the reality is that some companies may simply choose to prioritize investing in other areas. As Andy Mack, a former Alaska natural resources commissioner, puts it, “what [the Biden administration] would try to do is make it so difficult, so onerous, to get the array of permits that the companies just kind of say, ‘Well, we’re not going to spend 10 years just trying to get a simple permit, we’re going to put our money and our investment elsewhere.’”
The climate plan that Biden’s campaign released included a promise to “[protect] America’s natural treasures by permanently protecting the Arctic National Wildlife Refuge and other areas impacted by President Trump’s attack on federal lands and waters.” The best case scenario for a Biden administration to protect ANWR would be passing legislation that repeals the provision in the 2017 tax law that stipulated the lease sales, but the ability to do so would require Democrats to gain control of the Senate from the Georgia runoff elections.
Nonetheless, there remains multiple ways in which Biden could protect ANWR. As Mark Squillace, a natural resources law professor at the University of Colorado, notes, the Biden administration “could basically not sell any leases that they think are going to compromise in some significant way the wildlife resources on the refuge and . . . they can also impose stipulations on the lessee that will make development much harder and much more expensive, but will also be designed presumably to protect the wildlife resources that are on the refuge.”
Environmentalists have called for President-elect Biden to revisit the original environmental impact statements that led to the decision to open up the area to drilling in the first place. Environmental impact statements arguably offer the best opportunity for the Biden administration to restrict drilling even if the Trump administration completes a lease before Biden takes office. Because lessees would have to apply for drilling permits, another round of studies on environmental impacts and analysis under the National Environmental Policy Act and the Endangered Species Act would be required. Imposing said requirements on developers to mitigate adverse environmental impacts could disincentivize them from drilling due to the associated economic costs.
Beyond the incoming Biden administration, environmental and indigenous groups as well as 15 states have sued the Trump administration over its decision to open up ANWR’s coastal plain to leasing. Regardless if the leases are sold before the new administration begins, the leases may be void if a court decides that the logic to sell them was based on flawed environmental analysis. Such an outcome would not be entirely unlikely as the Trump administration has already lost a number of environmental lawsuits because it failed to properly follow procedure.