Allowing drilling in that corner of Arctic wilderness, Republicans say, would in theory fill government coffers with royalty payments — and, importantly, offset cuts the GOP wants to make for many taxpayers. Whether drillers actually want to come to this remote part of Alaska if permitted is another matter, some economists and environmentalists say.
This week brings the first indication during the Trump era of how interested oil and gas firms may be in drilling into the refuge.
On Wednesday, the Trump administration released bids for what Interior Secretary Ryan Zinke had billed as a “large and unprecedented” lease sale in another, developed portion of Alaska’s North Slope. There, in the National Petroleum Reserve-Alaska (NPR-A), the Interior Department put up for auction 900 tracts of land.
The results, unveiled on Wednesday: only seven bids for less than 1 percent of land offered.
“We see this as further evidence that the numbers don’t add up,” Drew McConville, who leads government relations for the Wilderness Society, said of the push by congressional Republicans to drill in the Arctic refuge.
Two Houston area oil firms, ConocoPhillips and Anadarko, jointly bid on a total of about 80,000 acres, which would garner the federal and state governments nearly $1.2 million in revenue. With the purchase, ConocoPhillips builds upon a new Willow oil discovery it made within NPR-A, announced in January.
“I really can't speculate on why interest varies from year to year,” Ted Murphy, associate state director for the Bureau of Land Management in Alaska, wrote in an email. “It is important to note that the further west you travel in the NPR-A there is currently a lack of infrastructure to support development. All of the leases sold yesterday adjoin current leases.”
With Willow, ConocoPhillips is working within the reserve. For many other petroleum producers, NPR-A is far to the west of most historic North Slope oil development closer to Prudhoe Bay, the starting point for the pipeline that conveys oil south to Valdez in southeast Alaska, where oil is then shipped to market.
"The state lease areas are mostly near existing infrastructure," said Douglas Reynolds, professor of petroleum and energy economics at the University of Alaska Fairbanks. "If it is close to infrastructure, that helps reduce costs."
Persistently low prices for crude oil, which have held below $60 per barrel for about 2.5 years, continue to dampen interest in risky Arctic plays far from refineries, analysts say.
“Even in the better-established, lower-risk areas of Alaska, current industry interest in exploring new acreage is low — hence the weak results of the lease sale,” said Pavel Molchanov, an energy analyst at Raymond James & Associates. “ANWR would suffer from much the same thing, compounded by the uncertainty of the inevitable legal challenges. In general, current industry appetite for high-risk ‘frontier’ exploration is very low.”
Democrats in Congress, who almost universally opposed Arctic refuge drilling, pounced on the weak lease sales as reason to forgo any ANWR development.
“The dismal response to this lease sale proves what we’ve been saying all along: even the small amount the GOP claims will be raised by drilling in the Arctic is a sham,” Sen. Maria Cantwell (D-Wash.), who led the effort to strip the ANWR language from the Senate tax bill, said in a statement. “Congress should strike the language turning the Arctic National Wildlife Refuge into an oilfield and start over.”
On Thursday, Rep. Raúl M. Grijalva (Ariz.), the ranking Democrat on the House Natural Resources Committee, asked the Congressional Budget Office to reassess how much revenue ANWR oil drilling could generate in light of the NPR-A lease sale. Appropriators had instructed the Senate Energy and Natural Resources Committee to raise an additional $1 billion in revenue over 10 years, and Murkowski's committee proposed trying to do so though leasing ANWR.
Despite low oil prices, interest in North Slope development is far from dead. Past NPR-A lease sales, which since 2010 have happened annually, have yielded greater returns, including the 2016 sale that earned $18.8 million for the federal and Alaskan governments. And this year, the state of Alaska received $19.9 million in bids Wednesday for state-owned lands in the North Slope. Those leased lands are not only closer to the pipeline, but allow companies to tap into two new prospects, the Nanushuk and Torok formations.
“The State has great promise based on some recent finds; the goal is to get to production,” Mead Treadwell, former Alaska lieutenant governor and president of Pt Capital, wrote in an email. “So don’t write off Alaska based on these results!”
The U.S. Geological Survey most recently estimated the Arctic refuge's "1002 area," where drilling would take place, contains between 4.3 and 11.8 billion barrels of "technically recoverable" oil — a windfall that could fuel another Alaska oil boom if companies can get to it. In May, Zinke asked USGS for an updated assessment of oil in the "1002" area.
But even if oil is technically recoverable, that doesn't mean it is economically advisable to tap it when prices are so low.
There is another factor unique to ANWR that might shrivel corporate interest in drilling there: politics. Since the 1980s, environmentally minded lawmakers of both parties have blocked Congress from approving drilling there, which they argue is too environmentally sensitive to develop. Some companies may end up being spooked by that scrutiny.
“If you’re a big oil company," said Lois Epstein, Arctic program director at the Wilderness Society, "you’re going to be aware of that."
|You are reading The Energy 202, our must-read tipsheet on energy and the environment.|
|Not a regular subscriber?|
-- Pruitt on Capitol Hill: Environmental Protection Agency head Scott Pruitt Scott Pruitt testified before a House Energy and Commerce subcommittee on the environment on Thursday — his first time back in Congress since his confirmation hearing in February. Here are the highlights:
- The EPA plans not only to repeal but to replace the Clean Power Plan. “We are going to be introducing a replacement rule, too,” Pruitt said in response to a question from Rep. Raul Ruiz (D-Calif.) on repealing CPP. The agency announced it intends to hold additional listening sessions on repeal following two days of hearings last week in West Virginia.
- Pruitt got challenged generally about his “back to basics” approach. “Back to basics doesn’t mean starving the agency of resources and personnel it needs to do its job,” said Rep. Paul Tonko (D-N.Y.). Other Democrats criticized what they called an “unprecedented assault” on science at the EPA. “It is the mission of the EPA to protect public health and the environment, not attack it,” said Rep. Frank Pallone (D-N.J.), the committee's top Democrat.
- Pruitt criticized the agency's 2009 endangerment finding, the foundation for the agency's rules to combat greenhouse gas emissions under the Clean Air Act. He said the process was rushed under President Barack Obama. “In fact, there was something done in 2009 that in my estimation has never been done since and has not been before that event. There was a breach of process that occurred in 2009."
- The administrator’s long-anticipated “red team, blue team” exercise could be launched publicly as soon as January. "That's an ongoing review internally, and it's something we hope to do," Pruitt told lawmakers.
- Pruitt was grilled about the use of a $25,000 soundproof booth in his office, which The Post revealed in September. “I believe that there are secure conversations that need to take place that I didn’t have access to,” Pruitt said. When pressed by Rep. Diana DeGette (D-Colo.) how often plans to use the secure line in the future, Pruitt responded, “It’s hard to predict in the future, Congresswoman."
- He was also grilled about both the private and military aircraft he has used occasionally, with costs totaling about $58,000, as well as his frequent trips back to Oklahoma. “I would just say to you, every trip I’ve taken to Oklahoma … has been business-related,” Pruitt said. “When I’ve traveled back to Oklahoma for personal reasons, I’ve paid for it."
- It wasn’t all criticism. “Thank you for going to Oklahoma and North Dakota and other states in the middle of real America that are affected by what has been, for the last 8 years, has simply been a dictatorship by the EPA,” said Rep. Kevin Cramer (R-N.D.). “I have to say, I’ve been extremely impressed and supportive of the EPA thus far under the Trump administration and under your leadership,” Rep. Jeff Duncan (R-S.C.). “Y’all understand what the intended role of the agency is and have effectively worked to roll back the bureaucratic overreach and power abuses of the agency under the previous administration.”
Brady Dennis contributed reporting.
-- The national monuments debated, mapped: The areas that have been cut out of the two massive monuments in Utah are rich with deposits of coal, uranium, oil and gas, The Washington Post's Post’s Laris Karklis, Bonnie Berkowitz and Tim Meko report. The reduction of land from the Bears Ears and Grand Staircase-Escalante national monuments could potentially open up about 2 million acres of public land to mineral extraction.
Utah leaders say the changes weren't made at the behest of energy developers. Rep. Rob Bishop (R-Utah), the chairman of the House Natural Resources Committee, said the “idea that we’re going to give these over to oil and gas companies is a false narrative." To drive home that point, his committee introduced legislation this week blocking oil and gas development in what Obama had designated as Bears Ears.
The Post team’s maps of the area with energy potential reveal that most of the land thought to have the highest level of oil and gas are outside the new boundaries of the monument. Check out all of the visuals in The Post’s full report.
-- Zinke defends decision: In an op-ed for CNN, Interior Secretary Ryan Zinke writes that Trump “was absolutely right to order this review” of all the national monument designations under the 1906 Antiquities Act.
Zinke writes: “The Antiquities Act is not a weapon for presidents to arbitrarily restrict the uses of hundreds of thousands of acres of land to prevent uses like timber harvesting and cattle grazing -- ways of life for many American families and the lifeblood of many local economies. It is also not a tool for presidents to use to restrict access for outdoor recreation on land that belongs to all of us. I highlighted Bears Ears and the Grand Staircase-Escalante in my recommendations to the President, suggesting a new way forward, an approach in which we listen to the voices of the people, not Washington, D.C., special interests. This week, I was honored to join President Trump as he traveled to Utah and signed new proclamations that conform to the spirit and letter of the Antiquities Act.”
-- More Zinke travel under scrutiny: Zinke spent more than $14,000 on government helicopters to travel to events near Washington this summer, according to a new report from Politico's Ben Lefebvre. According to travel logs released via a Freedom of Information Act request, Zinke used taxpayer-funded vehicles from the U.S. Park police, which his staff says was necessary as official business would have prevented him from making an emergency management exercise in West Virginia on time.
The event in Washington that prevented Zinke from leaving on time was a swearing-in ceremony for Rep. Greg Gianforte (R-Mont.), who won a special election for his Montana seat. Politico noted that Gianforte’s wife contributed to Zinke’s two congressional campaigns. Zinke also used a Park Police helicopter to take a $6,250 trip from Yorktown, Va. to Washington in July in order to go on a horseback ride with Vice President Pence. Zinke is already under investigation by the department’s inspector general and independent Office of Special Counsel for using official travel to attend political events.
-- And then there were five: Kevin McIntyre was sworn-in Thursday as the chairman of the Federal Energy Regulatory Commission after being confirmed by the Senate on Nov. 2. After some hand-wringing over the delay, McIntyre’s swearing-in as brings the commission to full staffing for the first time in two years.
On the commission’s agenda will be Energy Secretary Rick Perry’s proposed rule to bolster nuclear and coal plants by changing how they are compensated for the electricity they provide. One of McIntyre's first actions was to ask Perry for an extension in responding to the Energy Department's request. FERC "has sworn in two new members within the last two weeks," McIntyre wrote in a letter to Perry on Thursday. "The proposed extension is critical to afford adequate time for the new Commissioners to consider the voluminous record and engage fully in deliberations."
-- California is on fire: For a fourth day, flames ravaged several communities in Southern California. And officials continued to warn about the threat of new fires. Another blaze erupted Thursday in San Diego County, dubbed the Lilac fire, and had already grown to 2,500 acres in a few hours, The Post’s Scott Wilson, Mark Berman and Eli Rosenberg report. The Lilac fire is one of half a dozen raging through the southern part of the state.
As of Thursday evening, the largest fire in Ventura County had grown to 115,000 acres. The Thomas fire had destroyed 439 structures, and forced 50,000 people to evacuate, according to the Los Angeles Times. The Thomas fire is just 5 percent contained. The Creek fire, which is 10 percent contained in Sylmar, Calif., had forced 110,000 people to evacuate as it raged across more than 12,000. Interstate 405, which was shut down in stretches on Wednesday due to the Skirball fire, was reopened in both directions. That fire, which has scorched 475 acres, is 20 percent contained. Evacuations orders were lifted near the Rye Fire in Santa Clarita, which has destroyed 7,000 acres and is 15 percent contained. And the Liberty fire in Riverside County has burned through 300 acres and is 5 percent contained.
The California National Guard said It has mobilized more than 1,300 personnel to help fight the fires.
Wilson, Berman and Rosenberg note officials at Thursday’s afternoon news conference “sounded a more optimistic note than recent days.” Most of the residents who had been evacuated from the three fires would soon be allowed to return home. Los Angeles Mayor Eric Garcetti, however, warned that winds could pick up at any time.
They note that severe winds are expected to lessen Friday and Saturday, but the National Weather Service warned the risk of fires will remain high through Sunday as conditions remain abnormally dry and breezy.
In this video from the Los Angeles Times’s Jaclyn Cosgrove, a helicopter is seen flying toward a lake to pick up water:
From the Los Angeles Times’s Sarah Parvini:
From Cal Fire:
From NASA Earth:
The New York Times’s Henry Fountain writes scientists are warning about even more critical fire seasons like this year’s in California as a result of the changing climate.
The reason? “Increasing year-to-year variability in temperature and precipitation that will create greater contrast between drought years and wet years,” Fountain explains.
Although it’s too early to know what role climate change played this year, he notes research has found that human-driven warming has contributed to the drought across the state.
Wildfires in California are common, though the fire season usually ends in October when rains arrive to alleviate the threatening conditions. But this year, the rains have yet to come. And while this season’s late rain may not be directly the result of global warming, climate change forecasts overall signal there will be less rain ahead in the autumn in Southern California and more rain in December and January — making for a longer wildfire season.
Finally, here are some of the best longreads from this week for you to bookmark for the weekend:
-- The New York Times on melting Greenland ice: The newspaper's Henry Fountain and Derek Watkins report that Greenland loses about 270 billion tons of ice as the planet warms in this wonderful article mixing graphics and text. “A key finding — that not as much meltwater flows immediately through the ice sheet and drains to the ocean as previously estimated — may have implications for sea-level rise, one of the major effects of climate change," they write. "The scientists say it appears that some of the meltwater is retained in porous ice instead of flowing to the bottom of the ice sheet and out to sea.”
-- Quartz on world’s first zero-emissions fossil fuel power plant: “Ever-growing carbon emissions fuel the ever-growing risk of catastrophic climate change," writes the online business publication's Akshat Rathi. "The trouble is that, like a smoker to his cigarettes, humans are addicted to the luxuries fossil fuels have brought to our lives. The International Energy Association, an intergovernmental think tank, believes we’ll keep burning these fossil fuels for decades to come. Net Power, a North Carolina-based energy start-up, is betting on that prediction. At its pilot plant in Houston, the company is making a $150 million investment in a new approach to deploy carbon-capture technology that it believes could completely change the way we use natural gas to generate electricity.” Earlier this week, The Energy 202 discussed the impact the GOP's tax plan might have on Net Power.
-- Outside Magazine on Ryan Zinke: Here's just an excerpt of this colorful profile in Outside on the interior secretary, who reporter Elliott D. Woods called “Trump’s attack dog on the environment:" “Zinke’s moderate-by-Montana-standards position on guns and a handful of other issues, including climate change, annoyed the right wing of the state’s Republican Party. That Zinke was a fifth-generation native son, had been a starter on the University of Oregon’s football team, and had served two tours in Iraq with the SEALs somehow made things worse: Here was a Republican who didn’t need to swagger around Helena behind the wheel of a lifted dualie. Zinke drove a Toyota Prius, which, outside liberal havens like Bozeman, Missoula, and Helena, is the vehicular way of saying ‘I’m from California, I’m a communist, and I love wolves.’ " However, the best anecdote comes at the end of Woods piece — so read the whole thing.
Satellite images show smoke rising from California wildfires:
How Santa Ana winds are fueling Southern California wildfires:
Watch a widely-shared video of a drive who pulled over to save a rabbit from the Thomas Fire in Ventura County:
Stephen Colbert talks about Donald Trump Jr.'s testimony in the Russia investigation: