The last barrel

In 1867, the U.S. purchased Alaska from the Russian Empire for $7.2 million. The 586,400-mi² acquisition was accomplished through a treaty negotiated by U.S. Secretary of State William Seward with Russian minister Eduard de Stoeckl. The agreement was ratified by the Senate and signed by President Andrew Johnson. I suspect the Russians were thinking—since you have your checkbook open, we have some swampland in Siberia we’d like to unload, too. Apparently, a faction in the U.S. had the same opinion and labeled the purchase “Seward’s Folly,” contending that the U.S. had acquired useless land. Alaska remained sparsely populated until the Klondike Gold Rush began in 1896. As of 2019, Alaska had a population of 731,550. Its three largest cities are Anchorage (288,000), Juneau (31,970) and Fairbanks (30,920).

ANWR development initiative. In August, the Trump administration authorized a plan to lease mineral rights in Alaska’s Arctic National Wildlife Refuge (ANWR), proposing an auction by the end of 2020. Congress mandated an Arctic oil and gas program three years ago, with a law requiring the Interior Department to sell drilling rights and facilitate development on the coastal plain.

The decision approves leasing across the refuge’s entire 1.56-million-acre coastal plain. Although Congress earmarked the area for possible energy development in 1980, it has remained off-limits to drilling for decades. “The establishment of this program is a major milestone,” said Interior Secretary David Bernhardt. “It’s not the end of the leasing process, but it’s a significant milestone.” The decision is anchored by congressional mandates, which Bernhardt said provide “far greater assurances to potential leaseholders” that they will have the ability to access, explore and develop operations.

The approach is meant to buttress Trump’s Arctic oil plans that environmentalists have vowed to challenge in court, while making it harder for a future administration to reverse course. “The record of decision is strong, and I think it will be a durable program,” Bernhardt said. “The law, as currently drafted, says, “thou shall act in a particular time frame irrespective of who is in the Executive Branch.” The decision sets the stage for a confrontation, if President Trump doesn’t win re-election. Joe Biden said he’s “totally opposed” to drilling in the ANWR, having called the idea a “big disaster” in a town hall meeting.

Environmentalists argue that developing ANWR imperils one of the world’s last truly wild places—populated by Arctic foxes, polar bears, caribou herds and more than 200 species of birds (but no population centers). Yet, it’s not clear how many companies will attempt to secure drilling rights, considering low demand and suppressed oil prices. And major U.S. banks have moved away from financing Arctic oil projects, in response to pressure from environmental groups.

New Mexico threatened. The Democratic ticket has made attacking the oil industry a priority. Joe Biden and Kamala Harris have both affirmed that they plan to restrict leasing and ban fracing on federal land if they are elected. This is a serious threat to our energy future, as the U.S. government owns 48% of Wyoming, 36% of Colorado and 35% of New Mexico. In addition, about 90% of all production in the New Mexico Permian was on state and federal lands last year. And the majority of rigs active in Lea and Eddy counties are on federal land. These factors have prompted a 25% surge in federal permits to drill on federal lands in New Mexico during the first nine months of 2020.

In September, the New Mexico Oil and Gas Association (NMOGA) released an analysis, warning of negative consequences for the state if a ban on federal leasing and public lands materializes. New Mexico, which accounts for 57% of federal onshore oil production and 31% of onshore natural gas output, is projected to be among the states hardest hit, losing over 62,000 jobs by 2022. With nearly 40% of the state’s budget funded by oil and gas production, a ban could put $1 billion of federal revenue sharing at risk, much of which helps support New Mexico’s education and conservation programs.

Reckless legislation. “Restricting oil and gas development on federal lands will rob New Mexico of opportunities for economic growth and hollow our schools of critical resources that put teachers in classrooms and help our young children learn,” NMOGA Executive Director Ryan Flynn said. “New Mexico has enjoyed economic success in recent years, because of investments and responsible development on federally managed lands; but changing course now will only ensure that jobs and capital stops at our state border. With vast stretches of public land, it’s impossible to divorce our economic success from land management policy to fund education, supply access to healthcare and build new infrastructure.”

API President Mike Sommers continued, saying, “banning leasing and development on federal lands and waters would derail decades of U.S. energy progress and return us to the days of relying on foreign energy sources hostile to American interests. This is ultimately a choice between American-made energy and foreign energy, a choice between American jobs and foreign jobs. It’s clear a federal leasing ban should be off the table—there’s too much at stake for American workers, local economies and our nation’s energy security.”

Sharing is a learned skill. Our national parks, wildlife refuges, forests and other public lands belong to all U.S. citizens, and should be shared equally. They should not profit the moneyed few or be horded by environmental terrorist groups acting as though these lands are their private properties. A shut-down of drilling/fracing on federal lands is in direct contradiction to the premise of shared ownership. As witnessed in New Mexico, the responsible management of federal land is benefiting many Americans, most importantly, the next generation. Let’s hope the Democrats realize this too.

About the Authors

Craig Fleming

World Oil

Craig Fleming Craig.Fleming@WorldOil.com