ConocoPhillips Sues Over Biden Arctic Plan That Thwarts Drilling

(Bloomberg) -- ConocoPhillips sued to block a Biden administration ban on drilling across nearly half the National Petroleum Reserve in Alaska, claiming the measure violates a federal law that compels oil development there.

The lawsuit filed Friday takes aim at an Interior Department rule that explicitly bars oil leasing on 10.6 million acres (4.3 million hectares) of the 23-million-acre reserve, while restricting future oil development in 13 million acres designated as “special areas.”

The case will test one of President Joe Biden’s biggest moves to limit oil development on federal land, amid appeals by climate activists who warn it’s incompatible with a warming world. 

Conservationists hailed the rule when it was unveiled in April, saying it rightly protected a rugged — and cherished — landscape of tundra and wetlands that teems with wildlife. Oil industry advocates that hold leases in the reserve say the Bureau of Land Management regulation unlawfully strangles development in territory set aside as a source of energy for the Navy a century ago.

The regulation will apply to existing leases within the area, though it won’t alter the terms of those contracts or directly affect currently authorized activities, such as ConocoPhillips’ 600 million-barrel Willow project. 

Nonetheless, the rule could have wide effects for companies with leases in the reserve. ConocoPhillips’ Alaska unit holds 1.8 million acres of state and federal leases in the state, including 1 million net undeveloped acres as of year-end 2023, the company said in its filing.

In establishing the reserve, Congress said it should be used for “expeditious production of oil to meet the nation’s energy needs,” ConocoPhillips said in its lawsuit, filed in a federal court in Alaska. The reserve contains an estimated 8.7 billion barrels of recoverable oil, according to a 2017 assessment by the US Geological Survey.

Congress “plainly did not authorize BLM to promulgate sweeping regulations that thwart and prevent the production of petroleum throughout the NPR-A,” ConocoPhillips said. Yet, the rule contains “numerous new provisions that elevate resource preservation over energy production and effectively turn the petroleum reserve into a de facto wilderness area in which development is outright prohibited.”

Representatives of the Interior Department declined to comment. 

The case joins earlier challenges filed by the Voice of the Arctic Iñupiat that represents North Alaska communities, the state of Alaska and oil companies North Slope Exploration LLC and North Slope Energy LLC, which together hold leases spanning more than 552,000 acres in the reserve. 

The case is ConocoPhillips v. Department of Interior, 24-cv-00142, US District Court, District of Alaska.

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