“As the Arctic warms twice as fast as the rest of the planet, it is irresponsible to permit new oil development that will only exacerbate the problem of climate change,” said Dan Ritzman, director of the Sierra Club’s Lands, Water, Wildlife Campaign. Photo: BSEE/flickr
Ignoring once more the existential necessity of keeping fossil fuels in the ground and transitioning to a global energy system powered by renewable sources, the Trump administration on Wednesday delivered another major victory for Big Oil by quietly approving a Texas company’s plan to drill in federal Arctic waters six miles off the coast of Alaska.
Kristen Monsell, ocean legal director with the Center for Biological Diversity, denounced the plan developed by Hilcorp Energy as a “disaster waiting to happen” and vowed to do everything possible to ensure that the project doesn’t move forward. Continue reading →
After decades of bitter struggle, the Arctic National Wildlife Refuge seems on the verge of being opened to the oil industry. The consensus tax bill Republicans are trying to pass retains this measure, which was added to gain the key vote of Alaska Sen. Lisa Murkowski.
This bill, however, stands no chance of being the final word. ANWR has been called America’s Serengeti and the last petroleum frontier, terms I’ve seen used over more than a decade studying this area and the politics around it. But even these titles merely hint at the multifold conflict ANWR represents – spanning politics, economics, culture and philosophy.
Differing views from the start
Little of this debate, which stretches back decades, makes sense without some background. Let’s begin with wildlife, the core of why the refuge exists.
With 45 species of land and marine mammals and over 200 species of birds from six continents, ANWR is more biodiverse than almost any area in the Arctic. This is especially true of the coastal plain portion, or 1002 Area, the area now being opened up to exploration and drilling. This has the largest number of polar bear dens in Alaska and supports muskoxen, Arctic wolves, foxes, hares and dozens of fish species. It also serves as temporary home for millions of migrating waterfowl and the Porcupine Caribou herd which has its calving ground there.
All of which merely suggests the unique concentration of life in ANWR and the opportunity it offers to scientific study. One part of the debate is therefore over how drilling might impact this diversity.
At the same time, debate over this area’s mineral resources has existed since even before Alaska’s founding. An effort by the U.S. Fish and Wildlife Service to withdraw part of northeast Alaska from mining (later drilling) was eventually passed by the House in 1960 but then killed in the Senate, on the urging of both Alaska senators. It was resurrected by President Eisenhower through an executive order establishing a wildlife range (not refuge, which requires government protection and study).
ANWR thus began as a battleground over state versus federal control of resources. Change came with the oil crises of the 1970s. After much debate, Congress passed and President Carter signed the Alaska National Interest Lands Conservation Act in 1980, increasing the size of the area to 19.4 million acres and changing it to a “refuge.” ANILCA also mandated an evaluation of wildlife, oil and natural gas resources, and impacts if drilling occurred.
Such evaluation was delivered to Congress in 1987, with three principal conclusions. First, the 1.5 million-acre 1002 Area, had “outstanding wilderness values.” Second, it also had large hydrocarbon resources, likely tens of billions of barrels. Third, oil development would bring widespread changes in habit, but adequate protection for wildlife was achievable and leasing should proceed.
Made public, these results ignited major opposition from environmental groups. However, low oil prices meant that no companies would be interested in drilling so no action toward leasing was taken. Over the next 20 years, Congress and the President traded blows over drilling, with Republicans passing or proposing legislation in favor and Democrats voting down or vetoing or the relevant bills.
Matters of wilderness
These struggles added support to a larger view: that wilderness is incompatible with any level of development. The stance is often referenced to the 1964 Wilderness Act, a venerable law protecting wildlands but one whose definition of “wilderness” is ambiguous: “an area of undeveloped Federal land retaining its primeval character…[that] generally appears to have been affected primarily by the forces of nature, with the imprint of man’s work substantially unnoticeable.” The vagueness here allows for ANILCA’s position that drilling could happen so long as protection of wildlife and reclamation of land occurred.
Saving ANWR has thus become an effort to save the very idea of wilderness, culturally and philosophically.
How much oil?
The most recent comprehensive assessment of oil and gas in the 1002 Area was by the U.S. Geological Survey in 1998. This work shows a mean estimate of 10.4 billion barrels of oil and 35 trillion cubic feet of natural gas, which at today’s prices ($57/bbl oil, $3/kcf) equals a total value of about $600 billion before drilling.
If well costs were $50 a barrel (low for onshore Arctic drilling today but possible with cost reductions spurred by 1002 development), the value after extraction would be $100 billion, from which a federal royalty of 12.5 percent must be subtracted, yielding $87.5 billion – a significant sum. Obviously if well costs are higher, this figure would be lower. Note that Alaska gets 90 percent of that federal royalty and pays a yearly dividend to every state resident – one reason many Alaskans favor drilling and reject the uncompromising wilderness position.
When considering how oil and gas is available, the USGS estimates should be considered low, even minimal. This is because they were made well before the current era of shale oil and gas and tight oil and gas development. New discoveries and use of fracking to the west of ANWR suggest there is more accessible petroleum. How much more? It’s impossible to say, given the many uncertainties.
Though only one well has ever been drilled in the 1002 Area, dozens have been sited in surrounding onshore and offshore areas. These have resulted in a number of limited discoveries and one substantial field, Point Thomson, which is estimated to have recoverable reserves of up to 6 trillion cubic feet of gas and 850 million barrels of oil plus condensate. It began producing in 2016, yet its reservoir is geologically complex, challenging and insufficiently understood, causing difficulties and raising costs.
But Point Thomson’s larger significance could stem from its location: Close to the northwestern margin of 1002, it has brought a pipeline connection to the Trans-Alaska Pipeline right to ANWR’s doorstep.
But will they come?
Given the substantial possible reserves and at least some pipeline access, how interested might energy companies actually be in ANWR? The answer for now seems to be: not very. This comes from my own discussions with industry personnel and from the results of a recent lease sale in NPR-A, the National Petroleum Reserve in Alaska to the west of ANWR: Out of 900 tracts offered, only seven received bids (0.008 percent). A December 7, 2017 lease sale on state lands did only somewhat better (0.04 percent), with a single company bidding on tracts near the 1002 Area, adjacent to the Point Thomson field, and in the immediate area of two small, undeveloped discoveries (Sourdough and Yukon Gold) made by BP in 1994.
If this be any indication, another multiyear period of high oil prices – in a range, say, over $80 per barrel – needs to arrive before 1002 looks attractive. Leasing and drilling in an area with extreme weather, little detailed data on the subsurface geology, no discoveries or production, and no existing infrastructure is considered high risk, all the more so in an uncertain price environment like today’s.
My own guess is that the estimated $1.1 billion revenue from an ANWR leasing program has roughly the same probability of coming true as the discovery that climate change is indeed a Chinese hoax. Similarly, we should probably view with a dash of skepticism Sen. Murkowski’s statements that opening ANWR will “create thousands of good jobs … keep energy affordable for families and businesses … reduce the federal deficit, and strengthen our national security” by reducing foreign oil. Regardless of what claims are being made now, one can say the measure would undoubtedly deliver on a long-standing promise to Alaskan voters.
Meanwhile, from an environmental perspective, climate change continues to alter and damage the Arctic, even if no development happens. As such, it is hard not to hope that we will never need the oil that lies beneath the refuge.
In the end, whichever way we turn, no stable compromise exists in this conflict. Opening the area to leasing now will not prevent a closing or ban later on. Even native voices are divided on the issue: The Inupiat who live in Kaktovik, who depend on sea life for sustenance, would welcome the work that drilling could bring, while the Gwich’in to the south, who rely on the caribou, see development as jeopardizing their culture.
Legal challenges to any level of leasing are certain, including those intended to slow the process until drilling opponents will win later elections, if they can.
The one truth all can agree on is that ANWR has never been a “refuge” in the landscape of American society.
Scientists have long understood that the Arctic is affected by mercury pollution, but know less about how it happens. Remote, cold and seemingly pristine, why is such an idyllic landscape so contaminated with this highly toxic metal?
On Friday night, the Senate passed their version of the #GOPTaxScam. The bill, all 479 pages of it, was presented to the full Senate just hours before the vote. The vote was along party lines, with the one dissenting vote among the Republicans coming from Senator Bob Corker of Tennessee.
So, what was in this bill, and why did they vote on it before all the Senators could actually read through the bill? We’re glad you asked. First, what’s in it.
A lot of the bill is what you’d expect. For example:
The top individual rate is reduced from 39.6% to 38.5%, and the threshold at which the top rate kicks in is increased from $418,000 for a single/$480,000 for married filing jointly to $500,000/$1,000,000
The estate tax exemption is doubled, to $11 million for a single taxpayer and $22 million for married taxpayers.
The corporate rate is reduced from 35% to 20%.
The top rate on the income earned by owners of “flow through” businesses — S corporations and partnerships — is reduced from 39.6% to a shade below 30%.
Questions about these measure that we were forced to ask include; how is it that corporations are able to keep the tax deductions that have now been excluded from individual tax bases? Why is the corporate tax is now LOWER than the top individual rate? If corporations are people too, why is there ANY difference in these tax rates?
Then, there’s the “Why are these items in a tax bill, anyways?” parts. These include:
The bill repeals the Johnson Amendment, which bans non-profit groups from engaging in political activism. This would mean that churches and the like could actively engage in elections without disclosing individual donors; think of it as Citizens United on steroids. This serves the purpose of blurring the lines between the separation of church and state, allowing the churches to donate and promote individual candidates in local and national elections, all while cloaked under the donation secrecy this provision allows.
Eliminating the individual mandate of the ACA. While this actually does deal with taxes (the fine for not being insured is paid as part of your taxes), removing the mandate means that younger and healthier people won’t buy insurance until they need it. These are the people who currently offset the cost of providing healthcare to the older and sicker people. Without this in place, premiums will rise dramatically more than the anticipated 10% over the next 10 years.
Of course, the individual tax cuts are set to expire, meaning that the middle class will see a tax increase. And, what’s going to pay for these? The GOP mantra’s always been that tax cuts pay for themselves, but others, such as Marco Rubio, have already admitted that the tax reform is part one of a two-step process designed to defund and eventually dismantle Medicaid, Medicare and Social Security; the very programs designed to help the elderly, disabled and poorest members of American society.
Now obviously, a lot of these proposals don’t sit well with the electorate. So, why the rush to pass it? The GOP needs a victory. Even with controlling both houses of Congress and the White House, this administration’s been notably inept in getting meaningful things accomplished. Furthermore, the GOP donor class has stated that the campaign money will dry up if they don’t get the tax cuts they want.
We still have a chance to stop this. The House and Senate bills now go to a conference committee. The bill that comes out of that will need to be passed by both houses. The healthcare fiasco this summer proves that if we’re loud and persistent enough, our message gets through. And, with the bill only having 37% approval before the vote, there’s enough of us to make the message get through.
And what if it doesn’t? The last time that the GOP had won control of both houses and the presidency before 2016 was 1928. The new tax bill looks even more extreme than the policies put into place by the Republicans after the 1928 election. Does anybody remember what happened in 1929?
Another annoying historical factoid that you may wish to remember at a time like this: 244 years ago, a group of people decided that they weren’t going to pay taxes without proper representation, and what became known as the Boston Tea Party took place. This in turn led to a revolution, and the founding of this country.
“Those who cannot remember the past are condemned to repeat it.” – George Santayana
Arctic lands and waters hold irresistible allure for global oil companies. Despite opposition from environmental groups and President Obama’s 2016 ban on drilling in federal Arctic waters, exploration in Alaska has revealed massive new volumes of oil.
This comes at a time of low oil prices, when many observers felt the Arctic would remain off limits. Alaska has proved precisely the opposite. Although it has gone largely unnoticed outside the industry, foreign firms are partnering with American companies to pursue these new possibilities. I expect this new wave of Arctic development will help increase U.S. oil production and influence in world oil markets for at least the next several decades.
This is a global story, spurred by continued growth in world oil demand, especially in Asia; the dynamism of the oil industry; and the fact that the United States has become a major new petroleum exporter, something that would have seemed impossible only a few years ago. Such realities imply that decisions made in Washington, D.C. are far from the only forces shaping U.S. energy and climate change policy.
Fracking comes to the Arctic
Over the past year oil companies have discovered volumes on Alaska’s North Slope totaling as much as five billion barrels or more of recoverable oil. This is a 14 percent increase in U.S. proven reserves, based on recent estimates, which is no small thing.
One discovery, “Horseshoe,” made this year by the Spanish company Repsol in partnership with Denver-based Armstrong Oil and Gas, is the largest new U.S. find in more than 30 years. It is estimated at 1.2 billion barrels, and comes just after a find by ConocoPhillips in January, called “Willow,” evaluated at 300 million barrels.
Both of these are dwarfed by “Tulimaniq,” a spectacular discovery drilled by Dallas-based Caelus Energy in the shallow state waters of Smith Bay, about 120 miles northwest of Prudhoe Bay, in October 2016. Caelus has confirmed a total accumulation of as much as 10 billion barrels of light, mobile oil, with 3-4 billion barrels possibly recoverable at current prices of about US$50 per barrel.
These new finds may only be the beginning. Tulimaniq will produce from reservoirs of the same age as Horseshoe and Willow, 75 miles to the southeast. This strongly suggests that a large new stretch of the North Slope, mostly on federal land and in state waters (within three miles of shore), has been defined for further exploration. Burgundy Xploration of Houston and Australia-based 88 Energy also have another new drilling program underway to test shale intervals known to have sourced some of the oil at Prudhoe Bay, a supergiant field that has produced some 13 billion barrels to date.
A number of these new wells will be fracked – the first use of this technique in the Arctic. One or more of the oil-bearing rock units at sites being explored on the North Slope have low permeability, meaning that oil can’t flow within them very well or at all. Company engineers expect that hydraulic fracturing will be able to free such oil so it can be produced. Such has been the result for other shales and low-permeability reservoirs in places like North Dakota and Texas.
The logistics of finding large quantities of water and sand needed for fracking in the Arctic will be challenging, and probably more expensive than similar operations in the lower 48 states. It remains to be seen whether operators will clean, reuse and carefully contain frack water.
Green lights from the Trump administration
In another significant find, Italian company Eni has developed an oil field that lies in state waters, and so is not affected by Obama’s drilling ban. But the oil reservoir extends into federal waters of the Beaufort Sea. Called the Nikaitchuq Unit, it lies just west of Prudhoe Bay and is producing around 25,000 barrels per day.
Eni developed this field between 2005 and 2015 using an artificial island to drill horizontal wells in various directions from a single site. The company stopped activity in 2015 when prices collapsed, but intends to drill up to six wells this year. Its leases, which continue north into federal waters, were not automatically canceled by the federal ban, but Eni needs a federal drilling permit and has submitted an application to the Interior Department. The company plans to run a long horizontal well to access the additional oil, thereby avoiding any need for a rig in federal waters.
The Interior Department is now reviewing Eni’s application, which I expect it will approve. Geologic studies indicate that the oil continues across the state/federal boundary, and Eni’s proposal to use a horizontal lateral from an existing drill site appears to be aimed at minimizing environmental impacts.
Moreover, the Trump administration has pledged to promote fossil fuel development. Interior Secretary Ryan Zinke is a former congressman from Montana, which produces oil, gas and coal, and Alaska senators Lisa Murkowski and Dan Sullivan are strong proponents of oil and gas development.
The oil industry’s new dynamics
Why is all of this new Arctic drilling happening at a time when oil prices are low and in a place where production costs are high? The oil price collapse that has occurred since mid-2014 is the deepest slump since 1986.
Oil companies have ways of being nimble in hard times, such as selling assets, adjusting production levels and seeking mergers. Now rapid innovations in drilling, seismic imaging and data processing enable well-run companies to cut costs in multiple areas. Some firms can make money today at prices as low as $35 to $40 per barrel or even lower. This includes drilling offshore and fracking onshore.
Innovation and cost-cutting have made U.S. firms a potent global force and eroded OPEC’s dominance by keeping oil supplies high, despite a significant production cut by the cartel and many non-OPEC producers, including Russia. In this new era, smaller companies are making inroads in areas once reserved for giants like BP and Exxon. This shift is significant because smaller, independent companies, for whom new discoveries are especially important, tend to be aggressive explorers.
Oil remains our one unreplaceable energy source. Global mobility and a modern military are, as yet, inconceivable without it. Growth in global demand, centered in developing Asia, will continue for some time, as it did even from 2010 through 2014 when prices were above $90 per barrel.
The United States now exports around 5.7 million barrels per day of crude oil and refined petroleum products, double the level of five years ago and by far the largest volume in our nation’s history, thanks to major increases in sales to Japan, South Korea, India, Taiwan, Singapore and China. In short, we would be expanding fossil fuel production even without a Trump administration.
If these new discoveries become producing fields, the Alaskan Arctic will write a new chapter in the U.S. oil industry’s dramatic ascent. It will increase our leverage over OPEC and may help to counter Russia’s geopolitical influence. This prospect raises a new question: How will we will use our clout as the world’s most important new oil power?
In response to the announcement that Shell will cease drilling operations in the Arctic for the “foreseeable future,” Greenpeace produced this image to offer their sentiments of farewell. (Image: Greenpeace/Twitter)
In what environmental campaigners are calling “a huge break” for the Arctic region and by extension the world’s climate, the Royal Dutch Shell oil company announced on Monday it would end exploratory drilling in the Chukchi Sea after disappointing results from its controversial operations in the Alaskan waters that took place this summer.
In a corporate press statement released Monday, the company said that its drilling vessel—located approximately 150 miles offshore and in about 150 feet of water—had “successfully” drilled an exploratory well to the depth of 6800 feet. Though the company claimed it “found indications of oil and gas,” it said the amount was “insufficient to warrant further exploration” and said the prospected site will now be “sealed and abandoned.” Continue reading →
Though President Obama made headlines Sunday night by signing an executive order that officially renames Alaska’s Mt. McKinley to Denali—the name used by Indigenous people and most Alaskan residents—his visit to the country’s most northern state remains clouded for many by a contradictory stance in which he calls for strong climate action on one hand while simultaneously championing offshore Arctic drilling with the other.
In restoring Mt. McKinely’s name as Denali—which at 20,320 feet is North America’s tallest mountain—Obama was instating, as the Associated Pressnotes, a moniker Alaskans have informally used for centuries. The name means “the high one” in Athabascan. Continue reading →
A 2013 action in Jerusalem calling on Obama to reject Arctic drilling proposals. (Photo: Greenpeace Nederland)
“Alaskans are on the front lines of one of the greatest challenges we face this century: climate change,” President Barack Obama said in a video posted on the White House website Thursday, in which he announced an upcoming trip to the state to highlight the crisis of global warming. “Climate change once seemed like a problem for future generations. But for most Americans, it’s already a reality.”
The words are nice. But some environmentalists have seized on the hypocrisy of Obama’s rhetoric, given that he recently gave the final go-ahead for Royal Dutch Shell to drill for Arctic offshore oil in the Chukchi Sea near Alaska.
Climate activists and scientists alike have warned that Shell’s spotty safety record, combined with carbon that would be unlocked through drilling and extraction, pose severe danger to the ocean ecosystem, climate, and frontline communities.
The Exxon Valdez oil tanker after it had run aground. Source:NOAA via Wikimedia Commons.
March 24, 1989: Prince William Sound, Alaska – The Exxon Valdez runs aground Bligh Reef under the supervision of the third mate, while her captain was below deck indulging in liberal libations. Spilling 11 million gallons of crude oil, the disaster was the largest oil spill in American history until the Deep Water Horizon explosion and leak in the Gulf of Mexico in 2010.
In 1995, this writer examined Exxon Mobil’s response to the disaster while in college, presenting a paper documenting the accident in Prince William Sound as also the biggest public relations debacle of its day. When asking Exxon Mobil for their statement, the company provided me with beautiful pictures of Alaska and stated the cleanup was complete with no long term effects to the environment.
Birds killed as a result of oil from the Exxon Valdez spill. Photo courtesy of the Exxon Valdez Oil Spill Trustee Council via Wikimedia Commons.
Nothing could be further from the truth.
Scientists are still discovering the full impact of this disaster. 25 years later, Prince William Sound is still not even close to being the “pristine” environment it once was. In a comprehensive report from NPR, long term effects are being studied revealing alterations in the hearts of fish, reduced survival of marine organisms and disrupted life cycles of sea otters, killer whales and other larger species.
And, 25 years later, the oil industry is no better prepared to deal with the impact of oil spilling ships, ruptured pipelines or other means of transporting crude oil to the market place. The rush is to get the oil out of the ground while drilling the next productive well, raking in billions of profits while investing virtually nothing toward disaster response and cleanup. When all else fails, the oil industry bribes lobbies government representatives and stalls any court settlements through appeals.
During the first few days of the spill, heavy sheens of oil, such as the sheen visible in this photograph, covered large areas of the surface of Prince William Sound. NOAA photo and text (Public Domain) via Wikimedia Commons.
Don’t be discouraged – Exxon Mobil is the world’s largest corporation. They are strategically positioning themselves to continue to swell the size of their profits through an agreement with the Russian oil industry to drill in the oil-rich areas of the arctic. Once those reserves have been depleted, we predict Exxon will force their way back into the Alaskan National Wildlife Refuge (ANWR) by using international agreements such as TPP and TTIP. That is why these agreements are being so vigorously rushed before publics like you and I can object to them.
After all, this is the same corporation that brought us the Mayflower, Arkansas pipeline rupture.
U.S. Navy Mechanized Landing Craft (LCMs) are anchored along the shoreline as Navy and civilian personnel position hoses during oil clean-up efforts on Smith island. Photo by PH2 POCHE [Public domain], via Wikimedia Commons
25 years ago, the oil industry assured the American public that environmental safety and protection were top priorities. They said they would always clean up any spills, even though they claimed the possibility of those spills were not significant or likely. The Exxon Valdez taught us how negligent these promises were in actual application. When the disaster occurred, most ships used for cleanup were either out of service for maintenance or were totally encased in ice. Supplies and equipment were flown in from Arizona and Texas, since nothing was available in any area close to the spill. The best technologies offered were booms, skimming and shovels or paper towel dabbing on the beaches where oil had soaked the shorelines.
Fire boat response crews battle the blazing remnants of the offshore oil rig Deepwater Horizon. A Coast Guard MH-65C dolphin rescue helicopter and crew document the fire while searching for survivors. Multiple Coast Guard helicopters, planes and cutters responded to rescue the Deepwater Horizon’s 126 person crew. Photo courtesy US Coast Guard (public Domain) via Wikimedia Commons.
25 years later, the best technology for cleaning up spills consists of booms, skimming and shovels or paper towel dabbing on the beaches where oil has soaked the shoreline. Disaster plans presented by all oil companies seeking drilling in the Gulf contained references to protection of wildlife species, such as walruses, needing protection in the Caribbean.
There is not a problem when these corporate giants invest billions into developing better drilling technologies, pipeline building shortcuts and expedition, or lobbying to open public land, national parks and wildlife preserves for oil exploitation. They think nothing of investing funds to secure government inspectors to look the other way while they violate regulations. They have funded the push to abolish the EPA, deregulate the industry and give unrestricted access to federal land.
How can we hold oil and energy companies accountable? When will they take safety seriously? When it impacts their bottom line. When we have the will to pass laws that require these corporations that place our land and water at risk to deposit double the value of their shipments into a superfund used for cleanup – they get it back only after shipments are delivered safely – they might pay closer attention. If they deposit double the cost of a new drill or pipeline project that is held until that well or pipeline is taken out of service, they might care more about leaks and spills.
Until that day arrives, it is cheaper for them to pay insignificant fines and stall litigation than it is for them to act with social and environmental responsibility.
Excited scientists are looking for a species of Caribbean walruses, still undiscovered to this day.