A week after two oil companies said they were ready to move ahead with a major oil project in northern Alaska, a third said it was ending its exploration activities, leaving only a state corporation holding leases leases issued during the first — and, to date, only — sale of drilling rights in the Alaska National Wildlife Refuge.
The decision by Knik Arm Services, a Alaska real-estate firm, follows a similar move by Regenerate Alaska, an Australia-based oil producer, earlier this year to give up the leases it won in January 2021, during the closing days of the previous White House administration. Both gave up their leases in response to a moratorium imposed by the current administration the day it took office that halts all development in the refuge.
Oil drilling in the refuge is highly controversial. It sits on perhaps billions of barrels of oil and has long been seen as a way to help Alaska revive is slumping oil and gas industry, as well as to insulate America from supply disruptions. But the refuge, as the name suggests, is a sensitive environmental area that is a crucial breeding ground for the caribou that are hunted by Gwich’in communities.
The White House’s decision is being challenged in court by the Alaska Industrial Development and Export Authority, a state agency that purchased seven leases at a cost of $14.4 million (€14.5 million) to preserve drilling rights in the event oil companies did not show any interest. Mark Graber, the owner of Knik Arm Services, said the uncertainty about the future of drilling in the refuge had prompted the company’s decision to give up the lease and request to have federal authorities return the $2.1 million it had paid — something the Bureau of Land Management has agreed to. “It’s become apparent with this stop work order that it could extend into years, especially assuming the (Alaska Industrial Development and Export Authority’s) lawsuit drags on indefinitely. It was time to move on to better opportunities.”
The sale of leases in the refuge was by all means a flop, generating only a tiny fraction of the revenue it was projected to raise, and with only half of the leases up for sale being bid on. That, combined with the quiet exit by by Chevron and Hilcorp, two big oil companies — and their payment of $10 million — to exit their leases with Arctic Slope Regional Corp, one of 13 organisations that administer the business interests of the state’s indigenous groups, that allowed them to explore for oil and gas in the Arctic Refuge in the 1980s, had long-time opponents of drilling claiming victory.
“These exits clearly demonstrate that companies recognise what we have known all along: drilling in the Arctic Refuge is not worth the economic risk and liability that results from development on sacred lands without the consent of indigenous peoples,” the Gwich’in Steering Committee, a group formed in 1988 in response to a proposed opening of the refuge to drilling on land it calls the Sacred Place Where Life Begins.
Elsewhere in the oil-rich North Slope — the northern cap of the state that extends from the northern side of the Brooks Range of mountains to the Arctic Ocean — however, two firms issued a surprise announcement that they were ready to commit to a $2.6 billion project that can be expected to produce 80,000 barrels of oil a day when it comes on line in 2026. The Pikka project, located on state land to the east of the federally controlled National Petroleum Reserve-Alaska (see map above), is described as a major oil field — containing perhaps 800 million barrels of oil, according to the state — that could significantly increase the flow of oil through the Trans-Alaska Pipeline System (or Taps), a network of pipelines that has seen the volume of oil it transports fall to worryingly low levels in recent years.
The announcement was hailed by state legislators, including the governor, Mike Dunleavy, for signalling a “renaissance” of Alaska’s northern oil province. “Americans are paying sky high energy prices right now — but it doesn’t have to be that way. Alaska has the resources and environmental safeguards in place to meet America’s energy needs today and for decades to come,” he said in a statement.
The announcement that the Pikka project will be moving ahead comes as the larger Willow project remains tangled up in litigation that is preventing its owner, ConocoPhillips, from starting production on the 180,000 barrel / day field (which makes it one of the largest oil fields ever identified on federal lands). Federal authorities have put the brakes on the project while a review of its local impact, as well as its potential to exacerbate global warming, is being conducted.
An 8 July decision to re-evaluate the environmental impact of the project lays out five possible futures for the project. One of them, a “no action” alternative, would put the kibosh on the Willow project yet allow on-going oil and gas exploration in the area to continue. That is not a likely outcome, but the fact that it is being considered at all should serve as a signal that Alaska’s oil is increasingly being seen simply as a potential energy source.
Kevin McGwin, PolarJournal
Featured image: US Fish and Wildlife Service
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