Interior completes legal steps to allow oil leasing in Arctic Refuge

The Interior Department has taken its final step in preparation for holding a lease sale for oil exploration on the coastal plain of the Arctic National Wildlife Refuge (ANWR).

Interior Secretary David Bernhardt signed a record of decision Aug. 17 on the leasing plan. The Tax Cuts and Jobs Act of 2017 mandated the leasing plan, and Interior completed a final environmental impact statement in September 2019.

“Today we’re not laying out the timing of the lease sale,” Bernhardt said. But he added, “I do believe there certainly could be a lease sale by the end of the year.”

The plan makes available about 1.56 million acres available for leasing within the 19.3 million acres of ANWR. If oil were to be found, it might require a pipeline little more than 60 miles in length to reach another line starting at Point Thomson that connects with the Trans-Alaska Pipeline, the only route to markets for Alaska North Slope oil.

Current oil prices appear too low for profits from North Slope oil, where $50/bbl has at times been cited as a ballpark estimate for breaking even on North Slope oil sales. Bernhardt noted that investors do not look at spot prices for long-term projects.

It typically has been taking 10 years to get from the start of exploration to the start of production, and Bernhardt offered a similar estimate, saying it might take about 8 years to reach production after oil is discovered, if it is discovered.

Environmental safeguards

Environmental activists promise they will sue to block drilling in ANWR. Bernhardt said the 2017 law includes provisions to reduce the potential for setbacks in court.

The law did not give Interior discretion on whether to hold lease sales, and it specified minimum acreage, deadlines for two lease sales, and the obligation for rights-of-way to be granted. Those are potential lawsuit issues swept off the table.

The secretary said Interior had approached the subject of environmental protection and mitigation carefully. Leases will have stipulations for various things, such as restrictions on activity during the Porcupine caribou herd’s calving season in the spring, and restrictions on work in riparian habitats and areas needed for subsistence activities by local native Inupiats.

With an election approaching, there is the potential for a reluctant new administration to resist permitting of exploration in ANWR. But absent a change in the law, a new president probably would lack the legal ability to stop the program after leasing has taken place, Bernhardt said.

Rep. Raul Grijalva (D-Ariz.), chairman of the House Natural Resources Committee, strongly opposes ANWR leasing. He released a statement Aug. 17 drawing attention to the Arctic Cultural and Coastal Plain Protection Act, a bill to reverse the 2017 mandate for ANWR drilling. The bill was passed in September 2019 by the Democrat-controlled House but never touched by the Republican-controlled Senate.

If the Nov. 3 elections shift control of both the White House and the Senate, the bill could be put forward again, though as proposed it could face a filibuster in the Senate. The 2017 ANWR provisions were not filibustered because they were added to a budget bill, and Senate rules specify simple majority votes for such bills.

Opposition and support

The lines have been drawn on ANWR for some time, and reactions to the Interior record of decision followed those lines.

The Wilderness Society issued a statement from Karlin Itchoak, the group’s Alaska state director, saying the Trump administration was acting “in an irresponsible rush to help oil companies secure leases on the coastal plain before the 2020 presidential election.”

“The Trump administration never stops pushing to drill in the Arctic Refuge—and we will never stop suing them,” said Gina McCarthy, president of the Natural Resources Defense Council, in a statement released in response to the record of decision.

Industry groups issued statements stressing their position that oil development can be done in an environmentally responsible manner, and that it has state and local support.

The American Petroleum Institute offered some numbers to highlight reasons for that support. In 2019, nearly 104,000 Alaska jobs were attributable to oil and gas investment and activity, a number amounting to 32% of all Alaska jobs, the trade group said. The oil and gas industry has contributed more than $150 billion to the state through royalties and taxes, the group said.

The Inupiat natives on the North Slope especially support oil development, given the lack of other notable sources of income for them. Recreation has not proved to be a valuable source of income for ANWR. The US Fish and Wildlife Service, manager of national wildlife refuges, has reported that 53.6 million people visited national wildlife refuges in 2017, but the annual visitors to ANWR are only 1,200-1,500.