New Arctic Drilling May Now Be Possible, But It’s Still Bad for Business

It’s official: The Arctic National Wildlife Refuge, often just called ANWR, is available for oil leasing. U.S. Secretary of Interior David L. Bernhardt signed a record of decision (ROD) last Monday that approves the Coastal Plain Oil and Gas Leasing Program, opening 1.6 million acres of the Alaska wilderness’s coastal plain to drilling. The administration could set up an auction for new Arctic drilling by the end of 2020.

More Arctic drilling is now on the table

When Congress passed the 2017 Tax Cuts and Jobs Act, it required the administration to pursue this Arctic drilling lease program, citing reasons such as protecting national energy security and supporting the Alaskan economy and job production.

In the days following the ROD, there has been backlash and threats of lawsuits. Environmental organizations including the Sierra Club, the Natural Resources Defense Council (NRDC) and Earth Justice have published statements denouncing the action to move forward with new Arctic drilling as irresponsible and reckless toward fragile ecosystems and Indigenous Peoples.

“This is an egregious intrusion into the sacred lands of the Gwich’in and other Indigenous People,” reads a statement from NRDC President Gina McCarthy. “It threatens the heart of the largest pristine wildland left in America — the birthing grounds and nursery for the Porcupine Caribou Herd, and home to polar bears, musk oxen, migratory birds and other precious wildlife.

“The administration’s reckless, relentless boosting of the oil industry will irrevocably damage this cherished place and compound the global climate crisis," she continued. "We will not let it stand.”

An odd time to invest in oil

Oil drilling activities would threaten the wellbeing of the largest wildlife refuge in the U.S., including habitats for shorebirds, polar bears and caribou — on whom the native Gwich’in rely. But drilling in the Arctic National Wildlife Refuge wouldn’t necessarily be a bust for the environment and a boom for industry. Evidence points toward oil faring poorly across this wildlife refuge.

For one, a 2017 auction for drilling on the Alaskan North Slope only sold 80,000 acres out of 10 million available. Tina Casey noted in a 2017 article on TriplePundit that if companies lack interest in established oil fields, it’s unlikely they’ll grab land where information and infrastructure are scarce and negative publicity runs high.

Oil is not on the up and up these days. With global COVID-19 quarantines keeping people at home and on the ground, oil companies are facing the lowest lows in demand. In April, oil prices fell below zero for the first time in history. There just wasn’t enough storage for the amount of oil coming out of the ground. In July, the online oil and gas rig count fell to an all-time low.

The climate action movement's opposition to big oil shows little sign of yielding

Even after the conditions of the pandemic wear off, the long-term humming of popular opinion will continue to wear away at the feasibility of the fossil fuel industry. According to last week’s statement from the Sierra Club, over the past year, five of six major U.S. banks joined more than two dozen worldwide financial institutions in excluding funds for new Arctic drilling from their lending policies.

Any company that bids for land in the Arctic National Wildlife Refuge is rowing against a powerful tide. In 2018, over 100 investors representing more than $2.5 trillion in managed assets published a letter urging banks and oil and gas companies to refuse involvement in developing the ANWR, noting the financial risk of developing fossil fuels during a global warming crisis, a reputational risk while 70 percent of American voters oppose new Arctic drilling and associated human rights and ecological impacts.

Jason Bordoff, founding director of Columbia University's Center on Global Energy Policy, summarized the situation this way in an email to CNN Business: “Even if Trump can overcome legal challenges to offer lease sales in ANWR, that doesn't mean anyone will show up given the rising social and environmental pressures, low oil prices and uncertainty about oil demand.”

At a time when even oil companies are going so far as to seek net-zero emissions, steamrolling into a pristine and fragile refuge to extract crude oil would simply be unsound business. The Trump administration may have made ANWR drilling available to any company interested, but all signs are pointing to an unsuccessful auction.

Image credit: Jared Evans/Unsplash