Biden backs $8 billion Alaska oil project at odds with climate agenda Ship’s crew

By Jennifer A. Dlouhy (Bloomberg) —

President Joe Biden approved a huge ConocoPhillips oil project in northwestern Alaska that environmentalists claim has no place in a warming world, even as he sought to discourage future drilling in Arctic waters and US lands.

The approach represents Biden’s offer of a middle ground as he seeks to accelerate the transition away from fossil fuels while being bound by the legal decisions of previous administrations. ConocoPhillips has held a number of leases underpinning its approximately 600 million barrel Willow oil development since 1999, and the project has been approved once before under former President Donald Trump.

with the Ministry of the Interior new approvalthe Company will be permitted to drill in three locations at its Willow site in the United States National Petroleum Reserve-Alaska. ConocoPhillips, which initially intended to drill from five wells at Willow, had said fewer than three would not be profitable. But Biden’s Conservation moves mean oil companies will also have far fewer opportunities to find and develop prospects north of the Arctic Circle.

The approval represents one of the most significant climate decisions to date for Biden, who championed the pledge to block new drilling on public lands and has chaired sweeping government investments in clean energy. However, he has also begged oil companies to increase production to tame prices and address market disruptions sparked by Russia’s invasion of Ukraine. The Willow project created additional policy challenges that faced Biden intense pressure by unions and some Alaskan indigenous groups who argued that development would provide an economic lifeline for the region.

Environmentalists have criticized the approval of one of the largest oil and gas exploration projects on public land – and vowed to keep fighting it.

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

ConocoPhillips and Alaskan lawmakers see the approval as a state and nation victory.

“Willow aligns with the Biden administration’s priorities of environmental and social justice, facilitating the energy transition and improving our energy security while creating good union jobs and providing benefits to Alaska Natives,” said Chief Executive Officer Ryan Lance in a press release.

Shares of ConocoPhillips are down 1.5% as of 11:19 am in New York trading, trading weaker amid a broader sell-off following the collapse of the Silicon Valley bank.

The $8 billion development is at the forefront of pending US oil projects. The 180,000 daily barrels of crude oil forecast accounts for about 1.6% of current US production. Around 240 million tons of carbon dioxide emissions could arise over 30 years, the Interior Ministry announced in its decision minutes on Monday.

Conservationists argued that Willow was inconsistent with those of the International Energy Agency warningsthat the world must stop developing new oil and gas fields in order to avert the most catastrophic consequences of global warming and achieve net-zero emissions by 2050. Some Alaska Natives who oppose Willow said new industries there threaten the caribou herds they depend on for their livelihoods.

The final permit represents a reduction in ConocoPhillips’ initial ambition to drill at five locations. With fewer wells, roads and surface development, the smaller footprint will yield slightly less oil — about 576 million barrels over the project’s 30-year lifespan, the Home Office said Monday. And the Biden administration won some important concessions to protect Lake Teshekpuk, which provides habitat for caribou that feed nearby Alaskan Native communities.

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

But the agency rejected other moves encouraged by environmentalists, including a proposed obligation for ConocoPhillips to offset half of projected net greenhouse gas emissions related to the development. Another rejected option would have forced the company to end crude oil production at the site after 20 years.

New drilling restrictions

Even with Willow getting the green light, the Biden administration is scrambling to limit future oil production on the 23-million-acre (93,000-square-kilometer) NPR-A, which was set aside for power supplies about a century ago. The Interior Department said it will soon propose a rule that could prevent future oil and gas leases on more than 13 million acres of the Indiana-sized reservation.

Biden too called provisions of a Act of 1953 to prevent and further expand future oil and gas leases on 2.8 million acres of the Beaufort Sea north of Alaska restrictions Former President Barack Obama was impeached in 2016.

Environmentalists welcomed the protective measures but said they had done nothing to offset the climate damage caused by the Willow project’s approval.

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

Oil industry advocates argued that the president’s efforts to protect the Arctic conflicted with his quest for domestic energy security. The Biden administration is impeding “the responsible development of state lands and waters,” said Frank Macchiarola, senior vice president of policy for the American Petroleum Institute. Senator Dan Sullivan, an Alaskan Republican, called the restrictions “annoying.”

Willow’s supporters have argued that the oil produced there would be produced under stricter environmental regulations than anywhere else in the world, while also helping to strengthen US energy security and provide an alternative to Russian supplies.

Environmental groups are expected to challenge the permit in federal court, opening up new legal risks and further delaying or derailing the project.

ConocoPhillips applied to develop the project in 2018, and the Trump administration approved it two years later. But a federal district court threw out that permit in August 2021 after concluding that the government had failed to adequately analyze the development’s climate impacts and consider further protection options.

–With support from Jennifer Jacobs.

© 2023 Bloomberg LP

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