Biden to Signal Alaska Oil Project Support, Defying Greens

(Bloomberg) -- The Biden administration is on track to telegraph support for a scaled-back drilling plan at ConocoPhillips’s proposed Willow project in northwest Alaska, over the objections of environmentalists who say the world can’t afford to burn the estimated 600 million barrels of oil it could yield.

In a just-concluded environmental review set to be posted online Wednesday, the US Interior Department’s Bureau of Land Management says it prefers an oil development plan that limits the company to drilling from as few as three sites across the Willow site in the National Petroleum Reserve-Alaska — instead of the five ConocoPhillips previously envisioned. The bureau’s conclusion was described by people familiar with the matter who asked not to be identified because the court-ordered final supplemental environmental impact statement had not yet been made public.

The release of the environmental analysis will set the stage for a possible project approval in no fewer than 30 days. The final decision rests with Interior Secretary Deb Haaland, who could impose additional stipulations further limiting drilling and activity. 

A White House spokesman deferred to the Interior Department for comment. Representatives for the Interior Department and ConocoPhillips declined to comment. 

The study’s release is set to be a critical milestone for the $8 billion project the Interior Department says could produce some 180,000 barrels of oil per day and inject new crude into the Trans-Alaska Pipeline System. The head of ConocoPhillips’s Alaska operations has warned further restrictions that scale down drilling to just two locations, would not be economically viable. 

The initiative is politically fraught for the administration, coming as President Joe Biden charts a path away from fossil fuels and beseeches US oil companies to produce more crude in the meantime. Although the NPR-A was set aside for energy development decades ago, environmentalists say new industrial oil operations there imperil critical wildlife habitat and that the resulting crude and carbon dioxide emissions would exacerbate global warming. They’ve dubbed Willow a litmus test on climate.

The Bureau of Land Management’s final environmental impact statement tracks an earlier draft released last spring, the people said. Under its preferred scenario, the project would be pared down to three well locations, or well pads, with a fourth indefinitely deferred. The plan also would shrink the amount of necessary gravel roads, pipelines and other surface infrastructure, effectively reducing construction time and mitigating the potential impacts on caribou, yellow-billed loons and other animals. 

Even so, the agency previously estimated oil production would reach an estimated 614 million barrels over 31 years — less than a 3% reduction from the 629 million envisioned under ConocoPhillips’s bigger five-well-pad proposal. 

ConocoPhillips leadership has signaled their support for the approach, while warning further reductions could jeopardize the project. Nick Olds, the company’s executive vice president for the lower 48, called Interior’s three-site option “a good path forward” in an August earnings call, stressing that even though the approach would reduce surface infrastructure it would maintain estimated recoverable resources.

The move is set to come in the shadow of a series of Biden administration decisions to protect land. Last week, the US Forest Service banned logging and new road construction across the Tongass National Forest in Alaska, and the Interior Department forbid new mining projects near Minnesota’s Boundary Waters Canoe Area Wilderness. On Tuesday, the Environmental Protection Agency barred the disposal of mining waste near Alaska’s Bristol Bay, thwarting a long-planned project to tap a deposit of gold and copper because of potential damage to the area’s thriving sockeye salmon fishery.

If approved and ConocoPhillips were to go forward with the project, work would unfold over multiple years. The company must squeeze operations into short seasonal windows — typically from late January to late April, when a hard winter freeze allows the construction of roads and other infrastructure. 

ConocoPhillips applied to develop the project in 2018 and the Trump administration approved it two years later. But a federal district court tossed out that approval in August 2021, after concluding the government hadn’t sufficiently analyzed the climate consequences of the development and failed to consider more protective options. The Bureau of Land Management’s supplemental environmental study is an attempt to respond to the court ruling. 

Willow would be located in the northeast portion of the NPR-A, with some activities occurring near Teshekpuk Lake, which provides critical habitat for waterfowl, caribou and other wildlife. The 23-million-acre reserve, roughly the size of Indiana, was earmarked about a century ago as an emergency oil supply for the US Navy. But even when Congress compelled oil leasing in the reserve four decades ago, it said the activity should be subject to restrictions designed to limit “adverse effects.”

Environmental advocates who challenged the Trump-era project approval have pleaded with the Biden administration to forgo development altogether, arguing it would release more crude than an ever-warming planet can afford. 

“There’s no reason we should be making any multibillion-dollar investment in new oil and gas production in this fragile place in the world — or anywhere,” said Abigail Dillen, president of the environmental group Earthjustice.

Some Alaska Natives who oppose the project have encouraged the Interior Department to support no more than one well at the site. They’ve accused government officials of discounting their concerns the activity will thin caribou herds they depend on for subsistence. And they say critical public comment periods and meetings overlapped with peak hunting and whaling seasons, limiting the opportunity for meaningful engagement and project analysis. 

Supporters, including members of Alaska’s congressional delegation and labor unions, argue that Willow would bring much-needed crude to a market eager for alternatives to Russian oil while enhancing US energy security, sustaining jobs and generating revenue for the government. 

--With assistance from .

(Updates with timing, other details, from second paragraph.)

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