The giant Alaskan oil project that the Biden administration approved Monday won’t be its last contentious fossil fuel decision, but it might be the last megaproject of its kind for years.
The administration signaled it had few legal options but to approve Willow, given that the oil giant ConocoPhillips has lease rights for the region that date back to the late 1990s.
But the project’s sheer size has made it a top target of the environmental movement: At a time when scientists say emissions must start to drop to address climate change, Willow would lock in an estimated 9.2 million metric tons of carbon dioxide a year — equal to driving nearly 2 million gas-powered cars — for potentially 30 years.
Those numbers and the political pressure created by climate change — alongside broader industry trends — mean that few companies are likely to propose U.S. megaprojects in coming years. While the administration may be forced to approve regular permits for drilling in some hot spots, such as New Mexico’s Permian Basin, analysts say major developments beyond that should not be expected.
The administration appears poised to restrict new federal leasing as much as possible as part of its climate agenda, reducing the number of wells in years to come, if not immediately. And that will make things especially difficult for larger oil developments more common in federal waters and in Alaska, at a time when U.S. industry is investing in shale drilling, which features many smaller wells sprinkled across onshore basins.
Robert McNally, president of the consulting firm Rapidan Energy Group, said he wasn’t aware of any onshore oil or gas exploration projects the size of Willow, though there are still large liquefied natural gas, or LNG, terminals under construction.
Others noted that Willow is an oil development that is unique in many ways and not easily replicated.
“This was an existing project and the U.S. government had already given ConocoPhillips the rights to the reserves, and they would have lost in court if they had been sued and forced to greenlight this project,” said Amy Myers Jaffe, director of the Energy, Climate Justice and Sustainability Lab at New York University’s School of Professional Studies.
“Given the cards that were on the table, I think it’s interesting that the administration tried to negotiate a solution that could both stand up in court and would minimize the impact on places that are very sensitive,” she said.
In its decision Monday, the administration said it is shrinking Willow from the five pads that ConocoPhillips originally proposed to three. And as part of the deal, the Interior Department negotiated with ConocoPhillips to relinquish oil rights for roughly 68,000 acres on leases it currently holds in the National Petroleum Reserve-Alaska (NPR-A), about 60,000 in the Teshekpuk Lake Special Area, the department said Monday.
The day before, the White House rolled out several other efforts to give sweeping protections to another 16 million acres of land and water in Alaska. That includes putting the Arctic Ocean off-limits to U.S. oil and gas leasing and new Interior regulations to protect nearly 13 million acres in the NPR-A, including ecologically sensitive areas that provide habitat for thousands of caribou and shorebirds.
Alaskan officials — while celebratory Monday over a big political win for their state’s economy — were fearful those conservation moves will put a chill on other investments coming to their state. While industry executives are hopeful, they say it probably will be years before it becomes clear whether infrastructure put in by ConocoPhillips might make further development more economically viable.
In a call Monday, Sen. Lisa Murkowski (R-Alaska) said it was clear that White House officials “are not anxious to be doing a lot more in the NPR-A.”
She also noted that the state has faced an exodus of other major oil companies with the capital to do these types of projects and that, overall, production in Alaska has declined over the years. Shell Oil, for example, spent about $7 billion in a fruitless nine-year search for oil in northern Alaska and the Chukchi Sea that ended in 2015, and the company has since retreated from the state along with European rival BP.
Outside of ConocoPhillips, “who else has the resources to do this type of an investment? No one,” Murkowski said. “That has been my fear all along.”
In a statement Monday, the company said it will start construction immediately on at least one gravel road and move toward a final investment decision on the full project.
The high-stakes project has been challenging for White House officials, prompting weeks of agonizing meetings with advocates on both sides of the issue. Willow marks the culmination of years of debate over the future of drilling in the Arctic. Environmentalists have made fighting it a top priority, and in recent weeks young activists have launched a #StopWillow TikTok campaign to apply further pressure.
During the 2020 campaign, Biden had pledged to ban “new oil and gas permitting on public lands and waters,” and environmental activists argued that the project would undercut his lofty climate pledges.
In a statement Monday, the Interior Department highlighted its decision to reject approvals for two of the five proposed drilling sites and to pursue other conservation measures for the region that it announced late Sunday.
“The actions will create an additional buffer from exploration and development activities near the calving grounds and migratory routes for the Teshekpuk Lake caribou herd, an important subsistence resource for nearby Alaska Native communities,” the department said.
“This was the right decision for Alaska and our nation,” Ryan Lance, chief executive of ConocoPhillips, said in a statement. “Willow fits within the Biden Administration’s priorities on environmental and social justice, facilitating the energy transition and enhancing our energy security, all while creating good union jobs and providing benefits to Alaska Native communities.”
But the decision to allow three pads will also enable the construction of hundreds of miles of roads and pipelines, airstrips, a gravel mine and a large processing facility on near-pristine tundra and wetlands in the reserve. While originally set aside for oil production 100 years ago, only two sites produce oil there now — both run by ConocoPhillips — and the expanse provides important habitat for migrating caribou, waterfowl and other wildlife.
Few drilling projects rival Willow in size, according to the energy consulting firm Wood Mackenzie; ConocoPhillips estimates that Willow will operate for the next 30 years. The firm’s other two projects producing oil on the reserve, Alpine and Greater Mooses Tooth, have smaller reserves. The last time the federal government approved such a large operation was nearly eight years ago, when it signed off on BP’s Mad Dog Phase 2 in the Gulf of Mexico.
The U.N. Intergovernmental Panel on Climate Change, which includes hundreds of top climate and energy experts, has said that the world must zero out greenhouse gas emissions by the middle of the century to have a hope of meeting its climate goals and avoiding catastrophic warming.
While some in the administration wanted to block the development, ConocoPhillips’s control of federal leases on the NPR-A since 1999 gives it a strong position to challenge any federal decision that impedes its ability to develop, legal experts said. Allowing three pads protects the administration from a costly legal battle. It also relieves the administration of political fallout from allies in Alaska — including Rep. Mary Peltola, the first Democrat from Alaska elected to the House since 1972 — who say the project will boost the state’s faltering economy.
Environmentalists say the proposed conservation measures won’t come close to offsetting the damage Willow will cause the planet. They had pushed the White House to block the project despite the cost, saying anything less would betray Biden’s promise to cut national emissions at least in half by 2030 compared with 2005 levels.
Environmental groups possibly will sue to block Willow, another reason oil companies will be reluctant to attempt further megaprojects.
“We will consider every appropriate tool in our continuing fight to stop the Willow climate bomb,” Christy Goldfuss, chief policy impact officer at the Natural Resources Defense Council, said in a statement. “Willow is a project out of time. With science demanding an end to fossil fuels, this locks in decades more dependence on oil.”
Dino Grandoni and Sarah Kaplan contributed to this report.