Trump Greenlights Drilling in the Arctic National Wildlife Refuge, but Will Oil Companies Show Up?
By Scott L. Montgomery
The Trump administration has announced that it is opening up the Arctic National Wildlife Refuge to oil and gas development – the latest twist in a decades-long battle over the fate of this remote area. Its timing is truly terrible.
Low oil prices, a pandemic-driven recession and looming elections add up to highly unfavorable conditions for launching expensive drilling operations. In the longer term, the climate crisis and an ongoing shift to a lower-carbon economy raise big questions about future oil demand.
I've researched the U.S. energy industry for more than 20 years. As I see it, conservative Republicans have backed oil and gas production in ANWR since the 1980s for two overriding reasons. First, to increase domestic oil production and reduce dependence on "foreign oil," a euphemism for imports from OPEC countries. This argument now is largely dead, thanks to the fracking revolution, which has greatly expanded U.S. oil and gas production.
The other motive for drilling in ANWR, I believe, is to score a major, precedent-setting victory over government policies that prioritize conservation over energy production and environmental advocacy groups that have fought for years to protect ANWR as "one of the finest examples of wilderness left on Earth." Capturing ANWR and transforming it into a locus of fossil fuel extraction would be a massive physical and symbolic triumph for politicians who believe that resource extraction is the highest use of public lands.
President Trump seems to understand this, based on his recent comment that "ANWR is a big deal that Ronald Reagan couldn't get done and nobody could get done." But global, national and oil industry circumstances are overwhelmingly arrayed against Trump getting it done.
Years of Debate
ANWR is inarguably an ecological treasure. With 45 species of mammals and over 200 species of birds from six continents, the refuge is more biodiverse than almost any area in the Arctic.
This is especially true of the 1002 coastal plain portion, which has the largest number of polar bear dens in Alaska. It also supports muskoxen, Arctic wolves, foxes, hares, migrating waterfowl and Porcupine caribou, which calve there. Most of ANWR is designated as wilderness, which puts it off-limits for development. But this does not include the 1002 Area, which was recognized as a promising area for energy development when the refuge was created in 1980 and left that way after a 1987 study confirmed its potential.
Climate change is causing especially rapid warming in the Arctic, with probable negative effects for many of these species. Environmental advocates argue that fossil fuel production in ANWR will add to this process, damaging habitat and impacting the Indigenous people who rely on the wildlife for subsistence. But the situation is complex: There are also Indigenous groups who support ANWR development for the jobs and income it would bring.
Energy companies' interest in ANWR, meanwhile, has risen and fallen over time. The discovery of oil at Prudhoe Bay in 1968, followed by two oil shocks in the 1970s, sparked support for exploration and production in the region. But this enthusiasm faded in the late 1980s and '90s in the face of fierce political and legal opposition and years of low oil prices.
A majority of Americas of all political leanings believe the U.S. should develop alternative energy sources rather than expanding production of oil, coal and natural gas. Pew Research Center, CC BY-ND
Scientists performed two major assessments of oil reserves in the 1002 Area in 1987 and 1998. The latter study concluded that ANWR contained up to 11 billion barrels of oil that could be profitably recovered if prices were consistently high. But when prices rose between 2010 and late 2014, companies chose to focus instead on areas to the west of the refuge, where new discoveries had been made.
In the Tax Cuts and Jobs Act of 2017, a Republican-controlled Congress directed the Trump administration to open the 1002 Area to leasing. The bill required one lease sale within four years, and at least two sales within a decade. But as the Interior Department tried to comply, it was hampered by political controversies and environmental assessment requirements.
The new Record of Decision, released on Aug. 17, 2020, determines where and how leasing will occur. It represents the Trump administration's last chance to bring forward a well-designed leasing plan, and is certain to spark legal challenges from environmental and wildlife organizations.
Is ANWR Oil Worth It?
Today the oil industry is facing its greatest set of challenges in modern history. They include:
- A collapse in oil demand and prices due to the global pandemic, with a sluggish and uncertain recovery
- Companies canceling and reducing activity worldwide, with bankruptcies in the U.S. shale industry and drilling rig counts falling back to 1940 levels
- New uncertainty about future global oil demand as climate concerns push public interest and government policy toward electric vehicles, and automakers respond with new EV designs
- The growing possibility of Democratic victories in the November 2020 elections, which would likely lead to policies reducing fossil fuel use
- Increasing investor pressure on banks and investment firms to reduce or eliminate support for fossil fuel projects.
All of these factors compound the challenges of leasing and drilling in ANWR. Well costs there would be among the highest anywhere onshore in the U.S. Only one well has ever been drilled in the area, so new drilling would be purely exploratory and have a lower chance of success than in better-studied areas. Under these conditions, it would make more sense for companies that are active on Alaska's North Slope to pursue sites they currently have under lease, which pose much lower risk.
Alaska's North Slope outside of ANWR remains rich in oil, according to the latest U.S. Geological Survey assessment. USGS
What's more, as I have argued previously, it's not clear that there's a need to drill in ANWR. Energy companies have made new discoveries elsewhere south and west of Prudhoe Bay – most recently, the Talitha Field, which could yield 500 million barrels or more.
Companies that pursue leases in ANWR also will have to weigh the prospects of litigation, investor anger and a tarnished brand – especially large firms with public name recognition. Shell's experience in 2015, when it abandoned plans to drill offshore in the Arctic under heavy pressure, indicate what other companies can expect.
If Trump is voted out of office, I expect that a Biden administration would quickly move to reverse the directive for leasing in ANWR. In my view, this contested area will have far more meaning and value as a wildlife refuge in a warming world that is starting to seriously move away from hydrocarbon energy.
Scott L. Montgomery is a Lecturer, Jackson School of International Studies, University of Washington.
Disclosure statement: Scott L. Montgomery does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
Reposted with permission from The Conversation.
California Governor Gavin Newsom signed an executive order Wednesday that would ban the sale of new cars in California that run only on gasoline by the year 2035. The bid to reduce emissions and combat the climate crisis would make California the first state to ban the sale of new cars with internal combustion engines, according to POLITICO.
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By Harry Kretchmer
By 2030, almost a third of all the energy consumed in the European Union must come from renewable sources, according to binding targets agreed in 2018. Sweden is helping lead the way.
Sweden is a world leader in renewable energy consumption. Swedish Institute/World Bank
Naturally Warm<p>54% of Sweden's power comes from renewables, and is helped by its geography. With plenty of moving water and 63% forest cover, it's no surprise the <a href="https://sweden.se/nature/energy-use-in-sweden/#" target="_blank">two largest renewable power sources</a> are hydropower and biomass. And that biomass is helping support a local energy boom.</p><p>Heating is a key use of energy in a cold country like Sweden. In recent decades, as fuel oil taxes have increased, the country's power companies have turned to renewables, like biomass, to fuel local 'district heating' plants.</p><p>In Sweden these trace their <a href="https://www.sciencedirect.com/science/article/pii/S0360544217304140#fig3" target="_blank">origins back to 1948</a>, when a power station's excess heat was first used to heat nearby buildings: steam is <a href="https://www.sciencedirect.com/topics/engineering/district-heating-system" target="_blank">forced along a network of pipes</a> to wherever it's needed. Today, there are around 500 district heating systems across the country, from major cities to small villages, providing heat to homes and businesses.</p><p>District heating used to be fueled mainly from the <a href="https://www.sciencedirect.com/science/article/pii/S0360544217304140" target="_blank">by-products of power plants</a>, waste-to-energy plants and industrial processes. These days, however, Sweden is bringing more renewable sources into the mix. And as a result of competition, this localized form of power is now the country's<a href="https://www.sciencedirect.com/science/article/pii/S0360544217304140#fig3" target="_blank" rel="noopener noreferrer"> home-heating market leader.</a></p>
Sweden is using smart grids to turn buildings into energy producers. Huang et al/Elsevier
Energy ‘Prosumers’<p>But Sweden doesn't stop at village-level heating solutions. Its new breed of energy-generation takes hyper-local to the next level.</p><p>One example is in the city of Ludivika where 1970s flats <a href="https://www.buildup.eu/sites/default/files/content/transforming-a-residential-building-cluster-into-electricity-prosumers-in-sweden.pdf" target="_blank">have recently been retrofitted with the latest smart energy technology</a>.</p><p>48 family apartments spread across 3 buildings have been given photovoltaic solar panels, thermal energy storage and heat pump systems. A micro energy grid connects it all, and helps charge electric cars overnight.</p><p>The result is a cluster of 'prosumer' buildings, producing rather than consuming enough power for 77% of residents' needs. With <a href="http://www.diva-portal.org/smash/get/diva2:1232060/FULLTEXT01.pdf" target="_blank" rel="noopener noreferrer">high levels of smart meter usage</a>, it's a model that looks set to spread across Sweden.</p>
<div id="d7bf9" class="rm-shortcode" data-rm-shortcode-id="8757b138d5570bec9d6aad18074a429a"><blockquote class="twitter-tweet twitter-custom-tweet" data-twitter-tweet-id="1273556364263071744" data-partner="rebelmouse"><div style="margin:1em 0">Read more about Western Harbour and book a visit: https://t.co/ujSmVs9rNK 🏡🌳🌊 https://t.co/C5PuPziqIM</div> — Smart City Sweden (@Smart City Sweden)<a href="https://twitter.com/SmartCitySweden/statuses/1273556364263071744">1592474473.0</a></blockquote></div>
Scaling Up<p>A recent development by E.ON in Hyllie, a district on the outskirts of Malmö, southern Sweden, <a href="https://www.eonenergy.com/blog/2019/February/sweden-smart-city" target="_blank">has scaled up the smart grid principle</a>. Energy generation comes from local wind, solar, biomass and waste sources.</p><p>Smart grids then balance the power, react to the weather, deploying extra power when it's colder or putting excess into battery storage when it's warm. The system is not only more efficient, but bills have fallen.</p><p>Smart energy developments like those in Hyllie, Ludivika, and renewable-driven district heating, offer a radical alternative to the centralized energy systems many countries rely on today.</p><p>The EU's leaders have a challenge: how to generate 32% of energy from renewables by 2030. Sweden offers a vision of how technology and local solutions can turn a goal into a reality.</p>
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