In order to raise $1.5 billion for the federal government, the House has hidden a proposal in its budget to open the pristine Arctic National Wildlife Refuge to oil drilling.
Environmentalists question whether opening up the refuge to drilling would even come close to generating that much revenue, and they say this is yet another giveaway to the fossil fuel industry. The 2018 House budget, released this week, calls for $5 billion in “reconciliation” from the Natural Resources Committee, and $1.5 billion of that is expected to be from oil development in the refuge, which is currently off-limits to oil companies.
“They have to find new revenue, so it has to be areas that are currently closed off,” pointed out Leah Donahey, a senior campaign director with the Alaska Wilderness League.
The Congressional Budget Office, which recently looked at revenue from the refuge in the proposed White House budget, estimated that lease sales to oil companies would bring in an additional $3 billion, split evenly between the federal government and the state of Alaska, between now and 2027. (The White House had estimated $3.6 billion.)
But the new CBO numbers are down $2 billion from 2012, the last time the nonpartisan agency analyzed drilling in the Arctic preserve. The decrease in expected revenue comes from a number of factors, including low oil prices, a more troubled long-term outlook for the industry, lower amounts of cash on hand, and the recent boom in cheap shale oil development.
But even the new numbers are incredibly iffy. Lease sales for oil development fluctuate massively. A 2016 “land rush” in the Permian Basin in Texas, where oil can be fracked cheaply, saw lease sales going for as high as $35,000 an acre, but lease sales in Alaska’s North Slope over the past couple years have been more in the range of $20 to $40 an acre. The CBO’s analysis assumes the sale of all 400,000 acres proposed for drilling in the refuge at $7,500 an acre.
The refuge is a popular target for Congress. Every year, members of Alaska’s congressional delegation introduce bills to open area 1002 of the refuge to oil drilling. Area 1002 makes up some 1.5 million acres of the refuge and is home to some of the only caribou breeding ground in the nation. When the refuge was created in 1980, this part of the coastal plain was set aside for potential oil drilling — effectively, a decision to fully protect 1002 was punted. That leaves Congress to hash out whether to drill or further protect, but the bills rarely see the light of day.
That’s where the appropriations process comes in. “It’s the only way they could likely pass this in Congress,” Doheney said. “The House could easily pass a drilling bill… but it’s much tougher for the Senate to put this through bill in regular order.”
Both President Donald Trump and Secretary of the Interior Ryan Zinke have repeatedly stressed the importance of developing the country’s fossil fuel reserves. Since neither are concerned about carbon emissions and anthropogenic climate change, there is little to stand in their way — but opening up the Arctic Refuge is not expected to be a popular move.
“If petroleum represents one resource abundant in the 1002 area of ANWR, wildlife certainly comprises another,” says a 2003 study in Oil and Gas Journal.
More than 35 species of land and marine mammals, as well as over 100 species of birds, have been identified in its borders. It is used as a calving ground for caribou, a denning area for polar bears, a year-round habitat for muskoxen, and a major migration route for several kinds of waterfowl. While none of these animals is listed as endangered, some have undergone cycles of increase and decline in recent decades, posing the question of their vulnerability to changes in habitat.
Biological diversity in the 1002 Area and adjacent waters is considered very high, ecologically intact to a large degree, and valuable as a scientific resource. Much opportunity remains to advance understanding of caribou, polar bear, and muskoxen, for example.
In other words, the refuge is a pristine habitat. What’s more, the caribou that calve in the area are “a crucial source of nutrition and culture for the Gwitch’in native peoples, who inhabit villages along the southern part of ANWR and in adjacent Canadian territory,” the study says.
The potential downsides of opening up the refuge to drilling are much steeper than the potential benefit, said Franz Matzner, deputy director of federal campaigns for the Natural Resources Defense Council. “Perhaps the first step before irrevocably scarring our lands and undoing or threatening centuries-old way of life might be to take away some of the subsidies… for wealthy oil companies,” he told ThinkProgress.
“Let’s remember that as a backdrop to all of this, the administration is actively reducing royalty rates that companies have to pay,” he said. “We’re going to balance the budget by reducing the revenue stream?”
“The idea that the only way to govern is on the backs of taxpayers, and at the expense of our most pristine, most iconic, treasured national heritage, flies in the face” of good governance, Matzner said. He questioned the CBO analysis, as well, saying “the scoring of refuge alone doesn’t add up, but that’s not the point. There are many different ways to raise revenue that would be more fiscally responsible and would be more in keeping with what the public wants on their land.”
Polling on opening up the Arctic refuge has been inconclusive, but it seems to be one of the least popular places for potential drilling. Alaska has struggled with a budget shortfall in recent years, and at one point, the governor pushed to open the area to drilling. Locally, the idea has gotten support, but even that has waned in recent years.
“It is also laughable that time and again our conservative, Republican leadership goes straight for the jugular of our national parks, forests, monuments, that belong to the public, and these — at minimum, totally outdated — incentives to the wealthiest companies in the world are a third rail,” Matzner said.
Trump’s director of the Office of Management and Budget, Mick Mulvaney, said opening the refuge “is entirely consistent with, and in fact a central part of, the president’s desire to be not only energy independent, but energy dominant. We want to dominate that space.”
Just last week, the government approved an Italian oil company, ENI, to conduct additional exploratory drilling on the North Slope, part of the NPRA. But, overall, oil production in Alaska has fallen in recent years, and there are significant questions about how much interest the refuge will hold for oil developers.
Scott Jepson, an executive at ConocoPhillips, Alaska’s largest oil producer, testified Tuesday that his company would consider drilling in the refuge, but that it was focused on already-developed areas of the state.
“If the 1002 area was authorized for leasing, we would consider it against other opportunities in our portfolio, just as we do with exploration opportunities worldwide,” Jepson said. “That being said, we see tremendous potential in [the National Petroleum Reserve-Alaska] and remain focused on our projects and exploration plans in the reserve.”