The Biden administration is expected to support a scaled-back drilling plan at ConocoPhillips’ proposed Willow project in northwest Alaska that could yield an estimated 600 million barrels of oil. The U.S. Department of the Interior’s Bureau of Land Management (BLM) prefers an oil development plan that scales back the drilling plan to three wells at the Willow site of the National Petroleum Reserve-Alaska instead of the five that ConocoPhillips has planned. BLM’s environmental analysis is set to be released in less than 30 days. But, the final decision will be made by Interior Secretary Deb Haaland, who may impose additional conditions to further limit drilling and activity at the site such as delaying permitting decisions for one of the drill sites and planting trees. Fewer than three drilling sites could scuttle the project completely since limiting the scope that far would make the economics of the $8 billion project uneconomic because of the high cost of operations in Northern Alaska.
The Willow project could produce about 180,000 barrels of oil per day and inject more oil into the Trans-Alaska pipeline system—a system that needs more oil throughput to keep it operational. While President Biden is urging oil companies to produce more oil, so far he has done all he can to limit future production on federal lands. His limited support for the NPR-A, an Indiana-sized area which was set aside for energy development decades ago, is the first time he has strayed from the demands of environmentalists, who support the “keep it in the ground” approach to energy supplies.
The BLM’s environmental analysis includes options that range from permitting five drill sites to not allowing drilling at all. Under BLM’s preferred scenario, the project would be split into three well pads, with the fourth deferred indefinitely, reducing the amount of gravel roads, pipelines and other surface infrastructure. The agency projected that oil production would reach an estimated 614 million barrels over 31 years —a 2 to 3 percent reduction from the estimated 629 million under the ConocoPhillips’ proposal. By reducing surface infrastructure, BLM would also reduce estimated recoverable resources.
The long-delayed Willow oilfield project is vital for Alaska’s economy, for America’s energy security, and for further modernizing the North Slope region. According to Bureau of Land Management estimates, Willow could generate between $8 billion and $17 billion in new revenue for the federal government, the state of Alaska and communities and 2,500 construction jobs.
Willow is located on the ancestral lands of the Iñupiat people but is not an Iñupiat project because the federal government claimed the 23-million acre National Petroleum Reserve before Alaska’s native people had an opportunity to settle land claims. The North Slope Borough, created in 1972, gives Alaskan people the ability to tax oil and gas infrastructure and benefit from resource development on ancestral lands. More than 95 percent of the North Slope Borough’s tax revenue and a third of Alaska’s private-sector jobs come from the oil-and-gas industry, which also supports essential services including health clinics, schools, Alaska’s only tribal college, water and sewer infrastructure, fire and search-and-rescue services, and wildlife management.
ConocoPhillips bought the underlying oil leases more than two decades ago, applied to develop the project in 2018 and secured the Trump administration’s approval two years later. Environmentalists challenged that authorization in federal court and it was ultimately tossed out by a district judge who ruled that the government insufficiently analyzed the climate consequences of the development and failed to consider more protective options.
ConocoPhillips will not make a final investment decision until the issuance of the environmental impact statement and a supportive record of decision. The window for contracts and preparation for the 2023 winter work season will close within weeks, raising the prospect that even if Willow is ultimately approved by the Biden administration, initial construction will be delayed until 2024. The company has spent more than $600 million on the project, including seismic studies to map potential underground oil reservoirs and drilling 10 wells to assess the discovery.
Planning for the Willow project has spanned five presidential administrations and has been the subject of a long and rigorous environmental review. ConocoPhilips has incorporated feedback and concerns from local communities, who want the project to move forward so that the essential services mentioned above can continue to be funded. The Willow project will help to keep the Trans Alaska pipeline system flowing with oil and provide needed revenue for Alaskan communities as well as provide the nation with additional oil supplies. The pipeline is only transporting about one-quarter of its capacity, and costs increase as throughput declines.
Cutting back to two drill sites, however, would kill the Willow project and hurt the Alaskan economy and America’s energy security. Interior Secretary Deb Haaland will make the ultimate decision in about a month and will show whether the Biden Administration is finally listening to consumers, Alaskans and the Native peoples of the North Slope or whether the administration is once again bending a knee to the well-financed international Green Movement.