Feb 1, 2023
Battle Intensifies Over $8 Billion Alaska Oil Project Dubbed ‘Carbon Bomb’
(Bloomberg) -- It’s been called a “carbon bomb” and a caribou killer. Now, climate activists have one final, brief window of opportunity to quash ConocoPhillips’s proposed $8 billion oil development in Alaska.
In an unexpected twist, some opponents are quietly encouraging President Joe Biden’s administration to actually approve the project, but in such a scaled-back way that it no longer makes economic sense. They’re moving fast, before the Interior Department is set to issue its final ruling in about a month.
This “will be a really important 30 days,” said Abigail Dillen, president of the environmental group Earthjustice.
Foes of the venture see the latest Interior Department analysis released Wednesday as an opening. While the report endorsed a plan to drill wells at three to four locations across the Willow prospect in the National Petroleum Reserve-Alaska, the agency also made clear the ultimate decision could take the form of an outright denial or an approval with new strings attached.
What’s more: The Interior Department also made it “crystal clear” that the administration has concerns about the project’s “outsize climate impacts and the impacts to Alaska Natives who rely on subsistence hunting to survive,” Dillen said.
But rather than ask Biden to kill the project altogether, some activists are pushing a plan they think will have more political appeal. If the administration approves a smaller project, that could be seen as a compromise between the president’s climate ambitions and his exhortations for the oil industry to crank out more crude to lower energy costs.
In reality, though, ConocoPhillips has already said further reductions to the drilling project would jeopardize the venture. If the government limits drilling to two locations, or well pads, Willow would no longer be viable, Erec Isaacson, the president of ConocoPhillips Alaska, told Bloomberg in December.
By limiting the project, the administration could, in effect, be killing it.
The Willow venture has been a lightning rod of controversy because of the 614 million barrels of crude and 254 million metric tons of greenhouse gas emissions it could release. Indigenous groups have also said that the project would imperil the health and subsistence lifestyles of Alaska Natives whose cultures and existence depend on the caribou that migrate through the region.
Read more: Alaska oil project’s fate unclear
But supporters argue that misses a bigger picture. Oil extracted at Willow would have some of the lowest greenhouse gas emissions in the world, ConocoPhillips Chief Executive Officer Ryan Lance said on an earnings call Thursday. “We believe it’s what the world needs right now as we go through this energy transition,” he said. “There’s full alignment behind what we’re trying to go do there. It’s just the politics in D.C.”
In its report Wednesday, the Interior Department’s Bureau of Land Management highlighted a preferred option for the project that would already be pared down to three well pads, with a fourth indefinitely put off. ConocoPhillips had pursued five.
ConocoPhillips on Wednesday said the three drilling sites “reflect an integrated design concept and provide a viable path forward for development of our leasehold.”
Jeremy Lieb, an Anchorage-based senior attorney with Earthjustice, said the administration has the authority to defer another well pad through its record of decision.
But some experts say there’s some legal risk to that strategy. It could lead to a run in with federal law that requires the government to fully study the economic and environmental consequences of major decisions.
If the Interior Department were to in the end authorize a two- or even one-well-pad project, it could prompt new construction plans, roadway configurations and other infrastructure, with very different environmental and economic consequences than the government initially analyzed.
‘Too Much Risk’
Leaders from Nuiqsut, Alaska, a village about 36 miles from the proposed development, have asked regulators to at least limit activities to a single well pad. That would still allow ConocoPhillips to tap 48% of oil at the site, while minimizing road construction and operations that could disturb the migration patterns of caribou critical to Alaska Natives’ subsistence culture, they said in a Jan. 25 letter to federal regulators.
If caribou migration patterns are disturbed, “it’s just too much of a risk for us,” said Rosemary Ahtuangaruak, mayor of Nuiqsut. While she said she’d rather not see the project approved at all, she added that the one-pad option “would be less impactful.”
Industry advocates warn against more well deferrals in the final hour.
“We are concerned by the suggestion that the administration could potentially deny this project through deferring or delaying some of the drilling locations,” said Holly Hopkins, vice president of upstream policy at the American Petroleum Institute. “Companies can’t make multibillion dollar investment decisions based on what might come down the road.”
Some regulatory lawyers also say that the administration actually doesn’t have much latitude when it comes to veering from the current proposal, because of Congress’ nearly half-century-old mandate for the government to conduct an “expeditious program of competitive leasing” in the National Petroleum Reserve-Alaska. Although the law doesn’t explicitly force the government to authorize drilling on leases in the reserve, they argue not doing so runs counter to Congress’ intent in compelling oil leasing.
However, environmental advocates contend the law also obligates the Interior Department to protect the surface resources of the reserve, and “it can’t do that by allowing new oil drilling when the surface is literally melting away,” said Kristen Monsell, a senior attorney at the Center for Biological Diversity. Monsell doesn’t support the reduced-plan approach and is encouraging the Interior Department to deny it altogether. “No amount of mitigation or attempts to scale back the project can change the fact it’s a massively destructive one,” she said.
Still, Willow has drawn support from state leaders, labor unions and more than a dozen indigenous organizations on the North Slope, including the village corporation for Nuiqsut, who say it will foster high-paying jobs, deliver much-needed crude and enhance US energy security. And industry allies are planning to keep the pressure on the administration as well.
Senator Dan Sullivan, a Republican from Alaska, said it was critical for Alaska Native communities, labor unions and others who back the project to “amplify our voices in support.”
“We know radical far-left environmental groups, their allies in the White House, and adversaries like Russia, China and Venezuela, do not want to see this project happen,” Sullivan said in an emailed statement. “For the good of Alaska and our country, we must continue to keep the pressure on this administration to produce a final record of decision that ensures this project remains economically viable with at least three drilling pads.”
It promises to be a bruising battle.
“Interior has broad authority to reject this project,” said Monsell, of the Center for Biological Diversity. “We’ll keep fighting it until it’s scrapped.”
--With assistance from Mitchell Ferman.
(Updates with comment from ConocoPhillips CEO in 10th paragraph. A previous version of the story was corrected to fix city’s name in 16th paragraph.)
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