Oil companies have sought access to ANWR for decades, but the official decision to open it comes at a time when few in the industry are expected to take a risk on unexplored properties with little data on the oil resources beneath the surface. But Bernhardt said despite the absence of seismic data that companies use to map out oil reservoirs before drilling, he expected interest to be strong.
“I think a lot of people will bid without seismic data,” he told reporters.
But David Hayes, a former Obama administration Interior official and now the head of the State Energy & Environmental Impact Center at New York University School of Law, said the lack of geological data and Interior’s failure to assess how seismic testing itself could impact the area were two major shortfalls that could doom Interior’s efforts to open the area to drilling.
Environmental groups could exploit Interior’s contention that oil production would affect only 2,000 acres of land, even though the agency’s own review shows drilling wells would be widely dispersed and have to be connected with many miles pipelines, Hayes added.
“They tried to use creative accounting to suggest this will only impact 2,000 acres,” Hayes said in an interview. “But they don’t fully analyze the impact of a full 1.5 million acres crisscrossed by pipelines out the wazoo. … There are tripwires they have right out of the box.”
President Donald Trump, who has previously boasted about opening ANWR, indicated in an interview early Monday that no final decision had been made on opening the area.
“We may or may not do it,” he said. “Well no, we are looking at it.”
Bernhardt declined to comment on Trump’s comments, saying, “I’m not aware of what the President specifically said.”
Oil companies have been leaving Alaska because of the high cost of drilling and shipping oil from such a remote area compared to the relatively quick and cheap oil wells they can drill in Texas, North Dakota and other states already equipped with pipelines. British oil giant BP last month completed a sale of its extensive Alaska operations to the smaller Hilcorp, and ConocoPhillips remains one of the only major oil companies still drilling in Alaska. Shell dropped its offshore Alaska interest in 2015 after failing to find oil in an expensive exploration effort.
Oil trade association American Petroleum Institute cheered Bernhardt‘s announcement, saying in a press release the industry has “a well-established record of safe and environmentally responsible development of Alaska’s energy resources and has been recognized for its success in being respectful of Alaska’s wildlife and surrounding communities.“
But others in the industry were less confident that opening up ANWR this year would trigger a rush to the area, and the possibility that Alaskan voters would back a November ballot referendum that would raise taxes on oil production was adding to the uncertainty.
“There may be a few players looking at this but it will be far from a Gold Rush,” said one industry official who requested anonymity to speak frankly. “In the current and near term energy market, the costs of development is significantly higher than for the Permian Shale [in Texas] and in some cases Gulf of Mexico development.“
Even industry officials who supported the move in principal said there may be limited interest in the area for now.
“We may not need those resources today but we will eventually,” said Dan Eberhart, chief executive of oil services company Canary LLC and a major Republican donor.
Environmental groups also said tapping the resources from the area will exacerbate climate change in a region that is already seeing a loss of permafrost and, in some cases, villages on the coastline in danger of sliding into the sea.
“This plan will not only harm caribou, polar bears, and other wildlife, it is foolish in the face of rapidly advancing climate change,” said Center for Western Priorities Executive Director Jennifer Rokala. “Oil companies will have to harden their infrastructure to withstand melting permafrost and rising seas, leading to an even greater impact.”
Center for Biological Diversity attorney Kristen Monsell said her group would challenge Interior’s decision in court, noting that the department’s environmental review was “fundamentally flawed” in its downplaying or dismissal of climate science.
“The administration’s narrow focus ignores both the science and the agency’s legal obligations,” Monsell said. “This move is both reckless and unlawful and we’ll continue to fight it using all the tools we have, including litigation.“
Democrats, native tribes in the area and environmental groups have long opposed Interior’s efforts to open ANWR. They said drilling in the area would negatively impact caribou herds in the area that are an important food source for tribes, and point to Interior’s own environmental impact review that says drilling in the area would harm polar bears.
A number of major global banks, including JPMorgan Chase, Wells Fargo, Morgan Stanley, Citigroup and Goldman Sachs, have said they won’t provide financing for drilling in ANWR. Environmental activists have suggested the reputational risks to companies operating in ANWR would be severe.
Those announcements from the banks have prompted the Trump administration to explore whether they were discriminating against the project, which was first reported by POLITICO.