U.S. Says ‘All’ Deposits at Failed Bank Will Be Available Monday

The Washington Post / Maxine Joselow, Timothy Puko

16:23 JST, March 13, 2023

The Biden administration will approve one of the largest oil developments ever on federal land Monday, according to two people familiar with the decision who spoke on the condition of anonymity to describe private deliberations, a day after announcing sweeping protections for more than 16 million acres of land and water in Alaska.

Opponents hoped Biden would reject energy giant ConocoPhillips’s multibillion-dollar drilling project, called Willow, on Alaska’s North Slope. But facing the prospect of having such a decision overturned in court, the administration plans to let the oil company build just three pads in the National Petroleum Reserve-Alaska (NPR-A), the nation’s largest expanse of public land, these two individuals said.

The decision shrinks the project from the five pads that ConocoPhillips originally proposed, but allows what company officials have described as a site large enough for them to move forward and start construction within days.

Seeking to offset concern about the development, Biden will also declare the Arctic Ocean off limits to oil and gas leasing, the Interior Department announced Sunday. The department will also write new regulations protecting nearly 13 million acres in the National Petroleum Reserve in Alaska, the nation’s largest piece of public land, including ecologically sensitive areas that provide habitat for thousands of caribou and shorebirds.

Biden’s effort to close off the spigot to future drilling in the region, even as he prepares to approve an operation that could produce between 576 million and 614 million barrels of oil over the next 30 years, highlights the challenge the president faces in delivering on his much-touted climate goals.

The conservation measures appear intended as an olive branch to environmentalists and young voters who have blasted the approval of Willow, calling it incompatible with the president’s ambitious climate goals. The approval of the project near the city of Nuiqsut would allow the construction of hundreds of miles of roads and pipelines, airstrips, a gravel mine and a processing facility.

The White House would not confirm Sunday its decision on ConocoPhillips’s plan to construct a project that would cost between $8 billion and $10 billion. White House press secretary Karine Jean-Pierre stressed on Friday that a final decision on the project had not been made.

Instead, administration officials emphasized it would take steps to limit future development. Biden would use his authority under the Outer Continental Shelf Leasing Act to withdraw roughly 2.8 million acres of the Beaufort Sea in the Arctic Ocean from future oil and gas leasing, the statement said. The withdrawal would build on President Barack Obama’s decision to put a temporary end to exploration in the Chukchi and Beaufort seas off the Alaskan coast.

The new protections on land will extend to the Teshekpuk Lake as well as the Utukok Uplands, Colville River, Kasegaluk Lagoon and Peard Bay Special Areas, according to the administration official. They will also cover more than 3 million acres in the Arctic Ocean.

A ConocoPhillips spokesman could not immediately be reached for comment.

Willow marks the culmination of years of debate over the future of drilling in the Arctic, and environmentalists have made fighting it a top priority. During the 2020 campaign, Biden had pledged to ban “new oil and gas permitting on public lands and waters,” and environmental activists argued that the project would undercut his lofty climate pledges.

“It’s a place that is critically important for the wildlife,” John D. Podesta, a top White House climate adviser, said to reporters last week at the annual Houston energy conference CERAWeek. “From the president’s perspective, conserving the natural resources, particularly in the special areas for the National Petroleum Reserve-Alaska, are top-of-mind issues.”

The U.N. Intergovernmental Panel on Climate Change, which includes hundreds of top climate and energy experts, has said that the world must zero out greenhouse gas emissions by the middle of the century to have a hope of meeting its climate goals. Any newly built fossil fuel infrastructure will have to be decommissioned before the end of its useful lifetime, the panel said, or risk pushing the planet past the threshold of catastrophic warming.

While some in the administration wanted to block the development, ConocoPhillips’s control of federal leases on the NPR-A since 1999 gives it a strong position to challenge any federal decision that impedes its ability to develop, legal experts said. The trick, experts said, will be finding the right balance.

“They have lease rights – and that can’t be ignored,” said John Leshy, a professor at University of California Hastings College of Law who served as Interior’s solicitor under President Bill Clinton. “That’s a big finger on the scale in favor of development. But they don’t have the right to do whatever they want.”

The region around Nuiqsut (pronounced noo-IK-sut) is one of the fastest-warming places on Earth. Its average temperature has risen 4 degrees Celsius above preindustrial levels – more than three times the global average, according to a Washington Post analysis of temperature data.

The thawing of permafrost has created the Teshekpuk Lake, a 22-mile-wide reservoir that lies nearly 70 miles west of Nuiqsut. The lake is home to thousands of migrating caribou and roughly 600,000 shorebirds and more than 78,000 molting geese, along with polar bears and other species.

The move to bar drilling in the Arctic Ocean comes despite little industry interest in the area. Several major oil companies have exited the region in recent years, citing economic head winds.

In September 2015, Royal Dutch Shell announced it would indefinitely suspend its drilling in the Alaskan Arctic after finding insufficient oil and gas in one of its exploratory wells to justify the costly venture. Two months later, the Norwegian oil major Statoil said it would exit 16 leases in the area under its own operation, as well as its stake in 50 leases under the operation of ConocoPhillips.

Dan Pickering, founder and chief investment officer at Pickering Energy Partners, said that while the administration is saying it will take Arctic drilling off the table, “I don’t know how much of these things were realistically on the table in the first place.”

Still, the oil industry’s top advocate in Washington said last week that oil companies would be concerned if Biden banned drilling in the Arctic, even if he approved Willow.

“We’re not going to be for . . . a one-for-one exchange here,” Mike Sommers, president of the American Petroleum Institute, said in an interview at the CERAWeek energy conference in Houston. “I mean, we want to be able to continue to develop in Alaska. And by the way, Alaskans want that too, including the native communities.”

In recent weeks, Biden administration officials had suggested to environmentalists that they might pair approval of the Willow project with new conservation measures in Alaska, but their proposals largely failed to win over leading green groups. On Sunday, the leaders of at least two environmental groups told The Washington Post the new protections were not an acceptable compromise.

“It’s tinkering around the edges,” said Abigail Dillen, president of the environmental law firm Earthjustice.

“It’s lipstick on a pig,” said Jamal Raad, co-founder and senior adviser of the climate group Evergreen Action. “This does not negate or discount the climate impacts of the Willow project in any way, shape or form.”

While environmentalists have urged the administration to reject Willow, Alaska lawmakers and oil industry groups have pressured officials to approve the project, saying it would provide desperately needed oil and cash for the region. Alaska’s economy remains heavily dependent on revenue from drilling, they said, and Russia’s invasion of Ukraine has squeezed global oil markets.

Kevin Book, managing director at the research firm ClearView Energy Partners, said the war in Ukraine has forced Biden to make tough choices about the future of fossil fuels, despite his pledge on the campaign trail to “transition from the oil industry.”

“It’s a very uncomfortable place to be pinned between campaign promises and an energy war,” he said.