Congress has opened a section of the Arctic National Wildlife Refuge to oil development.
Let’s say that one more time, so it sinks in.
Congress has opened a section of the Arctic National Wildlife Refuge to oil development.
Even though oil production there is likely a decade out at least, it’s a pivotal moment for Alaska. It culminates a nearly four-decade battle between environmental groups and the state’s political leaders. For years, they fought over the potential consequences of drilling in the refuge — on caribou, on the economy, on the climate and on nearby communities.
But now, everything that was hypothetical is going to get real. One of the big questions that could finally get answered is this: what oil companies, if any, are actually interested in drilling in the Refuge?
For now Alaska’s top three oil companies are keeping their cards hidden. ExxonMobil declined to comment for this story. ConocoPhillips was noncommittal, saying in a statement it will “consider it against other opportunities in our portfolio, just as we do with exploration opportunities worldwide.” BP referred reporter questions to an industry lobbying group, the Alaska Oil and Gas Association.
And Alaska Oil and Gas Association President Kara Moriarty said she has no idea which companies might bid on leases in the Arctic Refuge.
“They don’t talk about whether they’re participating in a lease sale or not because it’s a highly competitive industry,” Moriarty said.
That said, there are clues that oil companies are pretty curious about the 1002 area — the 1.5 million-acre section of the Arctic Refuge Congress just opened up for development. David Houseknecht with the U.S. Geological Survey is an expert on Alaska’s oil resources. Lately, he’s been getting a lot of calls.
“I’ve been contacted by companies as far away as Australia, asking, ‘Well it looks like the legislation might pass that would allow exploration of the 1002 area. We are interested in evaluating whether or not we would like to participate in such a lease sale,’” Houseknecht said.
Houseknecht said oil companies started asking him for information on the 1002 area’s oil potential when Senator Lisa Murkowski’s measure began moving through Congress.
There are good reasons for oil companies to be asking questions. The data on how much oil is actually in the Arctic Refuge is limited — but intriguing. USGS thinks there might be between about 4.3 and 11.8 billion barrels of oil in the 1002 area — those are huge numbers. For comparison, Alaska’s second biggest oil field, Kuparuk, has produced about 2.5 billion barrels of oil.
And that potential lies on shore, in a politically stable country. Those are big pluses for oil companies. Houseknecht said there’s not many other places on the planet like that.
“Those combinations are quite unique when you look around the world for areas where there may be billion-barrel opportunities for discovery,” Houseknecht said.
But there are also some big uncertainties. Wood Mackenzie analyst Cody Rice said thanks to improved technologies like hydraulic fracturing, oil developments in the Lower 48 are often cheaper to pursue than projects in Arctic Alaska.
“It’s clear Alaska needs more development. It’s not as clear to me that oil companies need big, complicated Arctic projects right now when you can see billions of barrels in resource being added on an annual basis in West Texas,” Rice said.
That’s not the only likely hurdle. It’s a safe bet that environmental groups are going keep fighting oil development in the Refuge any way they can — including in court. Erik Grafe, an attorney with EarthJustice, said Congress may have changed one law about drilling in the Refuge, but all other environmental laws haven’t gone away.
“If the Trump administration tries to rubber stamp oil decisions or takes shortcuts, we won’t hesitate to go to court to enforce these environmental laws,” Grafe said.
But Moriarty of the Alaska Oil and Gas Association says dealing with environmental opposition is just part of the job for oil companies.
“Alaska has been the poster child for litigation cases for any type of development on the North Slope. And so I think companies sort of factor that in, in the timing and unfortunately in budgets, to have to plan for that now,” Moriarty said.
Moriarty may be in the dark about which oil companies are interested in bidding on leases in the Refuge’s 1002 area. But just as environmental groups couldn’t stop Congress from allowing oil development in the Arctic Refuge, she’s doubtful the opposition will be able to stop that development from actually happening, either.
Elizabeth Harball is a reporter with Alaska's Energy Desk, covering Alaska’s oil and gas industry and environmental policy. She is a contributor to the Energy Desk’s Midnight Oil podcast series. Before moving to Alaska in 2016, Harball worked at E&E News in Washington, D.C., where she covered federal and state climate change policy. Originally from Kalispell, Montana, Harball is a graduate of Columbia University Graduate School of Journalism.
