Ep.99: Trump’s Last Act: Drilling in the Arctic Refuge

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Update: After the interview was recorded, the Trump administration announced that it will conduct a lease sale on January 6 in the Arctic National Wildlife Refuge .

The outgoing president Donald Trump has a few orders of business he’d like to take care of before January 20.

Among them is a controversial plan to drill for oil in the country’s largest stretch of untouched wilderness. The Arctic National Wildlife Refuge is nearly 20 million acres of mountains, tundra and coast lands. Underneath it, there could be billions of barrels of oil. Similar plans have sparked fights for decades, so why the Trump administration push to drill there now?

Our guest for this episode is Tegan Hanlon, a public radio reporter for Alaska’s Energy Desk in Anchorage.

Listen to the full episode or read the transcript below:

Reid Frazier: A lot of people may have heard about the Arctic National Wildlife Refuge (ANWR). Where is it and what's so special about it?

Tegan Hanlon: ANWR is in northeast Alaska. It's massive and it's really remote. And the part of ANWR that they're discussing having a lease sale in is called the coastal plain. So that's about 1.5 million acres, which is about the size of Delaware. But for some perspective, it's just about 8% of the refuge. The coastal plain is thought to hold billions of barrels of oil, but it's also home to caribou, polar bears and other wildlife. And yes, it's been the subject of fights over whether to drill or not to drill for decades.

RF: I remember George W. Bush wanting to drill there, and that was a big fight then. That seemed to go away for a few years. Why is this coming up again now?

TH: The scenario that set up this fight is that in 1980, Congress passed this piece of legislation called the Alaska National Interest Lands Conservation Act, and that renamed this area in northeast Alaska. The National Arctic National Wildlife Refuge expanded it to almost 20 million acres, and designated a lot of those acres as wilderness. But it didn't designate the coastal plain as wilderness. Basically Congress, at the time, asked the Interior Department to research the possibility of oil development. [Congress] reserved for itself the power to decide whether to open that coastal plain to drilling in the refuge. So that's the scenario that set up this almost 40-year war over whether to actually open it to drilling.

Prior administrations have tried to get drill rigs on the coastal plain to hold the lease sale. It hasn't happened. Then there was this pivotal moment in 2017 when a Republican-led Congress passed the Tax Cuts and Jobs Act. That massive piece of legislation included a measure that opened up the refuge's coastal plain to oil and gas drilling. Also important about that legislation is that it mandated two lease sales in the coastal plain. One of them, it said, had to happen by the end of 2021 and the second by the end of 2024.

So then we saw the Trump administration move forward through the process and include an environmental review and public comment. It's been really controversial every step of the way with. Conservation groups call it rushed and flawed. The Trump administration says that's not true. But that piece of legislation in 2017 is really what got us here.

RF: So was this some sort of, I don't know, horse-trading with [Alaska Senator] Lisa Murkowski? That seems like such an odd thing to put in a tax cut bill?

TH: Yes, Lisa Murkowski certainly pushed to get this in the bill and has been fighting to open the refuge, the coastal plain, to drilling for a long time. There was talk that allowing drilling in the coastal plain would be good for the economy and would bring revenue to both the state and to the federal government, which I think is why it found a home in that act.

RF: Ok, that's sort of part of the process that got us here. What has happened recently after this law was passed that got us to where we are now?

TH: The big recent development came in mid-November when the Trump administration announced that it was starting its call for nominations process and that got a ton of attention. That call for nominations launches this 30-day window when oil and gas companies and other interested parties can tell the government confidentially which tracts of land they'd like included in the lease sale. It got all of that attention because it's like the big last step before a lease sale happens. The way the government's timelines work, it set up this very real possibility that the Trump administration could squeeze in a lease sale really its final days.

RF: OK, so this is a last-minute attempt to move this process forward. I mean, they could have just done nothing right, or just dragged it outright.

TH: There's still that piece of federal law in the background that says a lease sale has to happen by the end of 2021. Some industry observers have said of course the Trump administration is going to push this through. Administrations take things off the table or put things on the table in their final days. In this case, the Trump administration has been touting opening up the coastal plain, unlocking it to drilling, saying it's good for the country's energy independence, good for the economy, jobs, etc. But you're right, they could have certainly not done it and waited until next year when this 2021 deadline hits.

RF: What do we know about any potential impacts on the environment or on the native peoples who depend on the land there that oil drilling and even exploration would bring?

TH: That's really a focus of this battle between people who want drilling and people who don't want drilling in the coastal plain. Those who oppose it have argued that exploring for oil drilling will cause irreparable harm to the climate and wildlife.

There's the Porcupine caribou herd that move through the refuge and gives birth to calves in the refuge. There are Indigenous groups, specifically the Gwich'in, who depend on those caribou and have been vocal opponents of drilling in the refuge. But you have folks on the other side who say, oil and gas development can happen next to wildlife, responsibly, and not cause harm. I think some of those impacts are sort of, you know, we don't know for sure. You sort of have these two sides offering different narratives of how they think development will play out.

RF: And meanwhile what do people in Alaska or elected officials in Alaska want to have happen there? I know there are a few different factions in the state.

TH: U.S. Senator Lisa Murkowski and the rest of the congressional delegation have long supported opening up the coastal plain to drilling. There are other politicians in Alaska who support it, too, as well as the oil and gas industry, trade groups.

It’s also important to note that the state of Alaska doesn't have a state income tax or a state sales tax. A big chunk of government is funded by oil revenue. You have many Alaskans who say ‘More oil and gas development is good. It's a way to more jobs. It's good for the economy. It's good because it pays for government.’

Also, oil development has brought critical infrastructure and cash into isolated Alaska Native villages on the North Slope. And some Alaska Native corporations stand to benefit financially from drilling in the refuge. But there are others, including environmental groups, who strongly oppose development in the refuge and who have already filed lawsuits in court and say it will cause harm to the land, the climate and the animals. It's certainly divided in terms of how people are reacting to the news.

RD: Do we know how much oil is there? I mean, is it worth the trouble drilling in this one place we said we wouldn't drill or is it there that much oil that it would actually make a difference in terms of our oil supply?

TH: What we know is based on a USGS assessment from years ago that determined there could be billions of barrels of oil in the coastal plain. Now, there has been one test well drilled on the coastal plain back in the 1980s by Chevron and BP on land and drilling rights owned by Alaska Native corporations. But the results of that have been kept secret for decades. The results are still secret. The public doesn't know. The New York Times, however, did an investigation not too long ago and found that the well may have been empty.

RF: There's been this call for nominations. Can you walk us through what the process is? And this is to see who wants to drill for oil there, is that right?

TH: The “call for nominations” is when companies will let the federal government know which tracts of land they want to see included in a lease sale. Those comments are kept confidential. They go to the federal government and they use that information to inform what tracks they will put up for bid come the date of the lease sale. It's all really confidential until that point.

One of the trade groups up here has said that they don't think the public will have a full scope of what industry interest is in a lease sale until the date of that sale when the government literally unseals the bids and we all see who bid and how much they bid. That whole process up until then is really secretive. We've called a number of oil companies just to ask them if they'd be interested in drilling in the coastal plain. They've all said variations of ‘no comment.’

RF: Would you expect big oil majors like Exxon Mobil or Chevron would be part of it or if it will be smaller companies that most people have never heard of?

TH: I don't think anyone knows for sure. But there's certainly been a lot of speculation that we might see more smaller companies bid as opposed to some of the bigger oil majors. When we talk to industry analysts and observers, they laid out that there is just this layer of risk and uncertainty now when it comes to drilling in the coastal plain, both because of the changing administration and ongoing lawsuits. So companies are considering sort of the PR of developing there.

On top of that, we've seen big banks say that they won't fund new oil and gas development in the Arctic. And those opposed to development are also now pressuring lenders to do the same. So they're all of these factors that analysts have said might limit interest in a lease sale if one is held in the next couple of months. One of those analysts from Wood Mackenzie said she expected there to be lukewarm reception to a sale.

RF: And when does the sale happen? Could the lease sale happen during the waning days of the Trump administration?

TH: It could. The way the timelines work is the call for nominations goes until December 17th. And then the federal government has to give 30 days notice of the actual lease sale. So if the government gives notice on December 17th or right afterward, we could see a lease sale just literally days before Inauguration Day.

RF: [When] Joe Biden comes in and assumes the office, what could he do to stop or slow any plans to drill there if he so chose?

TH: We've heard President-elect Biden say he opposes drilling in the refuge. It's believed there are a few ways he could intervene if a lease sale happens before Inauguration Day. It typically takes several months to finalize leases after the sale happens. If that's the case in this sale, and it leads into Biden's presidency, it's possible the administration could intervene there.

“It's possible that Biden could make that permitting process so onerous that they say this isn't worth it, we're going to invest elsewhere.”

But if leases are finalized before Biden takes office, they're a contract between the company and the government so they're more challenging to reverse. But some of those analysts we talked to had speculated that Biden could intervene during the permitting process. Oil and gas companies don't get their drilling rights and then just go drill. They have to acquire permits to build infrastructure to explore. It's possible that Biden could make that permitting process so onerous that they say this isn't worth it, we're going to invest elsewhere.

RF: And if the sale doesn't happen by the time Biden takes office on January 20th, could he just say we're not going to do the sale?

TH: That's a good question because there is that under layer to all of this. Federal law mandates a lease sale to be held by the end of 2021. So it's believed that law would have to change in order for there not to be a sale held.

Pebble Mine

RF: In another Alaska related topic, the Army Corps of Engineers just rejected a key permit for the Pebble Mine. It would be a big gold and copper mine at the headwaters of Bristol Bay, one of the largest commercial salmon fisheries in the world. It's a devastating blow for the project and a win for environmentalists and Native tribes and commercial fishing. So just real quick, what's been the reaction in Alaska to the denial of the permit for the Pebble Mine?

TH: So fishermen and tribes in Bristol Bay have been fighting this mine for more than a decade. They're celebrating the news that the Trump administration has denied a permit. On the other side, the Pebble Limited Partnership, the company trying to build the mine, has said that it will appeal the decision and has said this project could provide hundreds of jobs. So we'll see what happens with that.

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