Oil companies that drill in Arctic refuge invite condemnation
Any oil company that bids on drilling leases offered in the Arctic National Wildlife Refuge next month will deserve relentless repudiation and infinite invective.
The world has plenty of oil available from proven reservoirs without needlessly damaging pristine land in an ecologically fragile part of the world. The lease auction is nothing more than a political stunt, and a bid would be nothing but a tribute to a lame-duck president.
Additionally, in an era when oil and gas companies are trying to demonstrate their commitment to fighting climate change to a suspicious public, any attempt to drill in the Arctic would be proof of the industry’s duplicity.
Exxon Mobil recently announced new targets for greenhouse gas emissions to appease restive investors who want the company to transition away from combustible fossil fuels. The company promised to slash the intensity of emissions during drilling by 20 percent in 2025.
Chevron has promised to reduce methane emissions by 25 percent in 2023. The French oil giant Total has pledged to supply “energy that is more affordable, more reliable, cleaner and accessible to as many people as possible.”
Once the largest oil producer in Alaska, BP sold its Prudhoe Bay operations to Houston-based Hilcorp for $5.6 billion and bought a carbon capture company. But after 60 years, those old
wells are depleting, and many Alaskans worry about losing lucrative oil field jobs and the royalties every Alaskan citizen receives.
Royal Dutch Shell has made big promises about leading the energy transition away from fossil fuels, but the supermajor cannot seem to quit the Arctic, triggering accusations of hypocrisy.
From 2012-2015, Shell spent $7 billion drilling exploratory wells in Alaska’s Chukchi Sea over the objections of environmentalists and indigenous people. The whole operation was such a disaster that Shell swore off trying again.
The company filed paperwork in September to extend 18 offshore leases in order to sell them to another oil company. No one ever has drilled in West Harrison Bay before, but engineers think it will be easier than the Chukchi Sea.
The Arctic National Wildlife Refuge is something altogether different. Set aside as part of the deal to open Alaska to drilling, the refuge is the largest wilderness area in the United States and home to polar bears, grizzly bears, wolves, moose and caribou.
Drilling in the proposed 1.6 million coastal acres of the refuge will require a massive logistical operation costing billions of dollars. By most estimates, it would take a decade to spud a well, let alone produce oil and gas for sale.
The Interior Department says the refuge would produce 10 billion barrels of oil over the project’s lifetime. But will the world need or want those barrels after 2030?
Global warming is caused by the concentration of greenhouse gases in the atmosphere, the most harmful emission being carbon dioxide produced by burning fossil fuels. Since the 1860s, scientists have understood the relationship between carbon dioxide concentrations in the air and average temperatures.
Climatologists have calculated a budget for how much carbon the world can burn and still limit warming to levels that will not permanently damage life on earth. To keep temperatures from rising no more than 2 degrees Celsius, oil companies need to slash production by 40 percent, according to Carbon Tracker, a nonprofit that monitors emissions.
To achieve that goal, the oil companies will need to leave existing proven reserves in the ground. The world never will need the oil from the refuge.
Oil companies that win the leases Jan. 6 will also find it challenging to raise money to start operations. Citi Bank, Wells Fargo, JPMorgan Chase and Goldman Sachs have promised not to finance Arctic drilling, and activists are putting pressure on other financial institutions to follow suit.
Investors also are unlikely to reward management teams that bid on Arctic leases. BlackRock, the world’s largest asset manager, has led Wall Street in calling on firms to divest from companies that are damaging the climate.
Lastly, any oil company that bids on the refuge will be taking an enormous political risk. Presidentelect Joe Biden opposes drilling in the refuge and has promised to do everything possible to stop it.
A bid at the Arctic National Wildlife Refuge auction will be a profound statement that a company does not care about climate change, public opinion or investor sentiment. Any management team that takes that fateful step will deserve the vitriol poured on them.
The Arctic is the one place where we should leave it in the ground. Why ask for trouble?