Obama’s Trans-Alaska Oil Assault
He’s slowly starving the current pipeline so it will have to shut down.
From the Wall Street Journal
Washington’s energy debate has been focused on President Obama ’s endless opposition to the Keystone XL pipeline, but maybe that was only a warm-up. His new fossil fuel shutdown target is Alaska.
President Obama announced Sunday that he’ll use his executive authority to designate 12 million acres in Alaska’s Arctic National Wildlife Refuge (ANWR) as wilderness, walling it off from resource development. This abrogates a 1980 deal in which Congress specifically set aside some of this acreage for future oil and gas exploration. It’s also a slap at the new Republican Congress, where Alaska Sen. Lisa Murkowski has been corralling bipartisan support for more Arctic drilling.
The ANWR blockade also seems to be part of a larger strategy to starve the existing Trans-Alaska pipeline, the 800-mile system that carries oil south from state lands in Prudhoe Bay. ANWR occupies the land east of that pipeline. The Interior Department this week will release a five-year offshore drilling plan that puts vast parts of the Chukchi and Beaufort Seas—the area to the north of the pipeline—out of bounds for drilling. This follows an Administration move in 2010 to close down nearly half of the 23.5 million acre National Petroleum Reserve-Alaska (NPRA)—the area west of the pipeline.
Federal agencies have also been playing rope-a-dope with companies attempting to drill on the few lands that are still available. ConocoPhillips has been waiting years for permits to access a lease it purchased in NPRA—and the Administration is this week expected to make that process even harder. Shell has spent $6 billion on plans to drill in the Chukchi and Beaufort, only to be stymied by regulators.
The Arctic Outer Continental Shelf is estimated to hold at least 27 billion barrels of oil. ANWR is thought to have at least 10 billion more, while NPRA—designated in 1976 as a strategic petroleum stockpile—is considered equally rich. Yet not one drop of oil is flowing from these areas, and Mr. Obama seems intent on ensuring that none does.
The political prize here is the death of the Alaska oil pipeline, which in its heyday pushed some 2.2 million barrels of oil south a day, but has seen volume slow to 500,000 barrels a day as the state’s existing oil fields decline. The drop in oil prices has increased financial pressure on Arctic drillers, and any lower flow threatens the viability of the pipeline.
This is what environmentalists want because they know that if the pipeline shuts down, it must by law be dismantled. Since the pipeline is the only way to get large quantities of Alaskan oil south, shutting it down means closing to exploration one of the world’s greatest repositories of hydrocarbons.
The pity is that in his ANWR announcement Mr. Obama didn’t express as much concern for Alaskans as he did caribou. An estimated one-third of Alaskan jobs are oil-related, and the oil industry accounts for some 85% of state revenue. Shutting the pipeline would be a terrible blow to the state. New Gov. Bill Walker has said he may accelerate oil and gas permitting on state lands to compensate. Yet the vast majority of the state’s untapped reserves are below federal lands that Mr. Obama is now blocking.
The ANWR land grab is another classic of executive overreach. Congress in 1980 passed the Alaska National Interest Lands Conservation Act, a grand compromise that put vast tracts under protection, in return for a clause declaring “no more” wilderness designations in Alaska unless approved by Congress. Yet the Interior Department plans to use the President’s recommendation of a new ANWR wilderness designation as a license to lock up the land.
The decision also ignores the environmental protection that is possible in light of new drilling technology. Most of the refuge is already protected as wilderness, yet Mr. Obama’s order includes the 0.01% of barren, coastal wasteland that was up for drilling discussion. Innovations like directional drilling would allow the industry to tap those vast reserves with minimal surface impact.
In his State of the Union address, Mr. Obama again claimed credit for falling gas prices, but the truth is that every advance in oil and gas drilling has come without his help or despite his opposition. Mr. Obama may figure he can get away with this now that oil prices have fallen and the need for new oil supplies seems less urgent. His power play is nonetheless a blow to U.S. energy security, and an especially nasty blow to tens of thousands of Alaskans.