Washington — Congressional Democrats and environmentalists are preparing for a legislativeand legal fight against oil and natural gas drilling in Alaska's ArcticNational Wildlife Refuge after Congress this week approved drilling there forthe first time in decades.
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* Lease sales included in tax bill
* Midterm elections could reverse
"The new phase of this fight has begun," Adam Kolton, a senior director withthe Alaska Wilderness League, said Wednesday.
"It's a disgrace, it's an abomination and we are going to fight it,"Massachusetts Senator Ed Markey, a Democrat, said during a call withreporters.
On Tuesday, the House and Senate approved a $1.5 trillion tax reform packagethat includes a provision requiring the US Interior Department to hold atleast two lease sales in the Coastal Plain of ANWR, offering a minimum of400,000 acres each within 10 years. The House made technical fixes to thelegislation Wednesday and President Donald Trump is expected to sign it intolaw early next month.
What the fight against ANWR drilling will look like going forward wasuncertain Wednesday and will depend largely on the partisan makeup of Congressin coming years.
Markey, for example, said Congress could pass a bill to permanently bardrilling in ANWR, voiding the pending federal lease sales, if Democrats shiftthe balance of political power in Washington in upcoming elections.
Environmental groups are also expected to sue to block ANWR development,challenging potentially inadequate environmental reviews.
"We are going to do everything in our power to defend [ANWR]," Collin O'Mara,president and CEO of National Wildlife Federation, said Wednesday. "It's noteconomical, it's not safe and the environmental impacts are too great."O'Mara pointed to a growing argument against drilling in ANWR: lack ofcommercial interest in drilling there.
"It may be legal, but that doesn't mean it'll happen," Kolton said.In a note Wednesday, analysts with Barclays said the decision to lift ANWRdrilling prohibitions put in place during the Carter administration may neverresult in additional drilling there.
"Although the economic benefits of developing a potentially prolific regionsuch as ANWR may be attractive, companies will have to consider the potentialreputational risks of investing in such a project," the analysts wrote. "Inthe current climate of environmental conservation, companies investing in ANWRoil and gas developments may be looked upon unfavorably."
A potential ANWR producer would risk "significant backlash," amplifying theoperational risk of drilling there.
"Lawsuits could result in response to any operational errors, which couldresult in closure of facilities and shutting-in of production until legalissues are resolved," they wrote.
But Sam Ori, executive director of the University of Chicago's Becker FriedmanInstitute for Research in Economics, said critics of ANWR drilling may beoverstating the economic risks of drilling there and understating the lack ofinterest in oil and gas development there.
"ANWR will have its own set of challenges, but it is a stable operatingenvironment with a transparent fiscal regime. And it's onshore," Ori said. "Mybet is that if there is a commercial discovery, companies will eagerly developit."
Drilling in ANWR may currently offer more risk than drilling in a US shaleplay, such as the Permian, but likely poses less risk than other plays, suchas Nigeria.
In a recent interview with the Platts Capitol Crude podcast, ChristopherGuith, a senior vice president for policy at the US Chamber of Commerce'sGlobal Energy Institute, said he has heard from several companies interestedin drilling in ANWR.
"I have got several members who would absolutely participate in lease sales,"he said.
Alaskan oil production has fallen from about 530,000 b/d in 2012 to 490,000b/d in 2017, according to the Energy Information Administration. Production isexpected to continue to fall to 480,000 b/d in 2018, EIA projects.
A 1998 US Geological Survey report estimated that there are between 4.3billion barrels and 11.8 billion barrels of technically recoverable oil withinANWR, excluding state and native areas. The survey found a mean value of 7.7billion barrels.
These estimates are expected to be updated before the first leases in ANWR areoffered.
--Brian Scheid, email@example.com