Obama weighs big Arctic decision


Activists and industry are lining up for what will likely be the last major battle over Arctic drilling during the Obama administration. 

With the Interior Department set to finalize a five-year offshore drilling plan later this year, environmentalists are pushing President Obama to follow through on his recent climate work and prevent new drilling in the Arctic Ocean. 

{mosads}But the oil industry, while limiting its activity in the Arctic now, says it wants the option to explore for drilling sites in the future. Industry officials argue that blocking drilling would hurt the local economy and could curb American energy production down the road.

The stakes are high ecologically, economically and for Obama’s legacy. 

Environmentalists say the president has a spotty record on offshore drilling, but argue he can stick the landing by blocking the Arctic on his way out of the White House. 

“It’s our hope that, now that companies have left the Arctic and there is a substantial international commitment to addressing emissions coming out of the Paris [climate] agreement, that the president will view stewardship and planning for the Arctic region as part of his legacy,” said Michael LeVine, the Pacific senior counsel at Oceana. 

The Obama administration in March proposed an offshore drilling plan for 2017-2022 that would see two drilling lease auctions in the Arctic Ocean. Obama’s decision on drilling this year is especially important because it is the only chance to schedule lease sales for the next half-decade: if he blocks Arctic leases now, his successor cannot revive them before writing a new five-year plan.

That fact alone worries Alaskan drilling interests, who say unilaterally blocking drilling in the American Arctic could drive companies to invest in countries with fewer restrictions.  

“The risk of not having it included now is that the investment would go away permanently,” said Rebecca Logan, the general manager for the Alaska Support Industry Alliance.  

“It’s pretty challenging for that investment to return.”

Arctic drilling has long been an aspiration of the oil industry.  

Companies, looking to tap one of the largest untouched reserves of oil in the world, bought up hundreds of leases in federal waters when the government auctioned them off in the mid-2000s.

Few companies did anything with those leases. Most notably, Royal Dutch Shell attempted to explore for oil in 2012, but when it finally put bit to the earth last year, its well came up dry, and the company cancelled future operations there.

It’s expensive to drill in the Arctic, and with crude oil prices down, companies have little financial incentive to try. Drillers have relinquished more than 600 of their leases in the Chukchi and Beaufort Seas, according to Oceana research. There are about 70 leases left, and no immediate plans to explore for oil.

Environmentalists have long warned a drilling accident in the Arctic could produce an ecological calamity, but with a five-year drilling plan under consideration now, they have another argument: that drilling there is so expensive — and the return so little in a low-priced crude oil environment — that it’s not worth even auctioning leases again in the first place.   

“It does appear that there’s a lot of fear in the industry that sales won’t be scheduled,” LeVine said. “It’s less clear whether those companies expressing those fears would even want to purchase leases if the sales were to be held.” 

But oil interests say the light demand won’t last, and that it’s only a matter of time before crude oil prices rebound and companies return to the Arctic.

Logan noted that companies have invested about $7 billion into potential Arctic operations, and, “world-class companies don’t spend money like that without being pretty sure there will be a return at some point.” 

“The prices will rebound, and they will come back up, and [companies] are going to have cash again, and they’re going to want to invest again,” said Tom Walsh, the owner of Petrotechnical Resources of Alaska, an oil industry consulting firm. “Alaska is a great place to invest. There’s no doubt in my mind that there will be interest going forward.” 

Those competing interests — oil companies, who want to at least stake a claim on future drilling rights in the Arctic, versus environmentalists, who see too many risks to let it move forward — were evident in the drilling plan comments filed with the Interior Department this year.  

The fight over Arctic drilling has spilled into Congress, where Alaska members, led by Energy and Natural Resources Committee Chair Sen. Lisa Murkowski (R-Alaska), have openly worried Obama will move to block the lease sales this year. 

“We are worried that Interior now plans to hit this delete button on both the Beaufort and the Chukchi sales,” Murkowski said at an event sponsored by CQ Roll Call on Wednesday. The plan, in its current form, is “bare minimum effort, and it’s a far cry from the area-wide sales that Alaskans have been asking for.” 

She and other Alaskans warn that blocking Arctic drilling will have a major impact on the state’s economy, which is heavily dependent on the practice for tax revenue and employment. 

But environmentalists argue the safety and preservation of the Arctic ecosystem should be paramount. 

A group of 66 House members, led by Rep. Jared Huffman (D-Calif.), pushed the Interior Department in May to stand firm on Arctic drilling.

“We urge the administration to once again set the pace in the fight against global climate change by ensuring these vital and unique waters are permanently taken off the table from any future oil and gas development,” the group wrote in a letter to Interior Secretary Sally Jewell.

If Murkowski’s prediction is right, Obama will leave office with a flourish on Arctic drilling matters. 

The Obama administration angered environmentalists when it allowed Shell last year to drill its exploratory well in the Chukchi. But shortly after the company pulled out of the Arctic last fall, the Interior Department cancelled new lease sales there.  

Activists say they’ve seen swelling opposition to drilling in the region, starting with protests against Shell and continuing through the nascent movement to keep fossil fuels in the ground. Presumptive Democratic presidential nominee Hillary Clinton also opposes Arctic drilling.  

Taken together, greens see a chance for Obama to leave his mark on another major environmental issue in the waning months of his presidency.

“We think that he should take this opportunity to not continue down the same course that they’ve been going, to take the step back, take the leases out of the five-year plan and hopefully protect more areas in the Arctic from future leasing,” said Leah Donahey, the senior campaign director at the Alaska Wilderness League.  

“I think the president has made an effort to really look at the Arctic and look at protection as a legacy issue.” 


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