Biden backs scaled-down drilling plan for ConocoPhillips’ Alaska oil project

(Bloomberg) — The Biden administration telegraphed it could support a scaled-back drilling plan at ConocoPhillips’s proposed Willow project in northwest Alaska, even as it cited “substantial concerns” with the oil development and warned of further restrictions to limit its impact on wildlife and the climate.

In an environmental review released Wednesday, the US Interior Department says it prefers an oil development plan that limits the company to drilling from as few as three sites across the company’s leases in the National Petroleum Reserve-Alaska — instead of the five ConocoPhillips previously envisioned.

The agency stressed project approval was far from guaranteed and drilling could be further pared down, potentially to levels the oil giant has said would not be economically viable. 

“The department has substantial concerns about the Willow project and the preferred alternative as presented in the final supplemental environmental impact statement, including direct and indirect greenhouse gas emissions and impacts to wildlife and Alaska Native subsistence,” the agency said in an emailed statement.

The final decision on whether to authorize Willow, expected in March, rests with Interior Secretary Deb Haaland, who could limit drilling at the site or rule out the project altogether. 

The study’s release is 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 restrictions that scale down drilling to just two locations could jeopardize the project. 

The project 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, environmental advocates 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.

Environmental advocates and Alaska Natives who oppose the project vowed to keep fighting. “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. The environmental analysis reveals “some of what their thinking is, but the final decision is where it happens, and that will be a really important 30 days.”

Under the preferred scenario outlined by Interior’s Bureau of Land Management, the project would be pared down to three well locations, or well pads, with a fourth indefinitely deferred. In addition, the plan 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 has 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. The pared-down plan would generate some 254 million metric tons of indirect greenhouse gas emissions.

ConocoPhillips reiterated its support for that approach Wednesday. “We believe Willow will benefit local communities and enhance American energy security while producing oil in an environmentally and socially responsible manner,” Erec Isaacson, president of ConocoPhillips Alaska, said in an emailed statement. The company “is ready to begin construction immediately after receiving a viable record of decision and full authorization from all permitting agencies.”

The study release follows a series of Biden administration moves 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 ConocoPhillips wins approval and goes 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 rejected 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 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. 

Approving Willow would be “an unconscionable decision,” said Karlin Itchoak, Alaska senior regional director for The Wilderness Society. “No other oil and gas project has greater potential to undermine the Biden administration’s climate goals.”

Some Alaska Natives who oppose the project have encouraged the Interior Department to support no more than one well pad 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.