Updates with details throughout
President Donald Trump's administration has finalized its plan to open Alaska's Arctic National Wildlife Refuge (ANWR) to oil and gas development, the Interior Department said today.
The administration intends to offer ANWR's entire 1.56mn-acre coastal plain up for leasing. "We have taken a significant step in meeting our obligations by determining where and under what conditions the oil and gas development program will occur," interior secretary David Bernhardt said today. A record of decision issued by Bernhardt today is the last formal step before Interior can schedule two of the lease sales authorized by Congress in 2017, as part of a broader overhaul of US tax laws.
The law requires 800,000 acres in ANWR's so called "1002 area" to be offered to oil and gas companies for leasing, with half of that acreage to be offered no later than December 2021 and the other half by 2024.
Crude output from the area could peak at 560,000-880,000 b/d, depending on recoverable reserves, the US Energy Information Administration (EIA) projected in 2018. The area holds an estimated 5.7bn-10.4bn bl of recoverable crude, according to the US Geological Survey.
Production is not expected to start for at least a decade after the first lease sale.
The production projections and reserve estimates all predate the unprecedented decline in oil prices earlier this year. Economic disruptions in the wake of the Covid-19 pandemic have dampened near-term oil demand outlook globally. US crude output likely will fall by 23pc from its pre-Covid high before starting to rebound gradually, the EIA says.
Adding to uncertainty over ANWR drilling prospects, oil producers participating in the lease sale will have to rely on seismic surveying data collected more than three decades ago, when the technology for detecting potential oil deposits was far less advanced.
But the ongoing challenges facing the US oil industry have not dampened the US administration's enthusiasm for offering millions of acres in the US Gulf of Mexico, western states and the Arctic for oil and gas exploration. The administration on 14 August gave a favorable environmental review to ConocoPhillips' proposed 160,000 b/d Willow project located in the National Petroleum Reserve in Alaska.
Trump's administration may also be keen to highlight its energy record as Democrats begin their virtual national convention today. Presumptive Democratic nominee, former vice president Joe Biden, has vowed to stop new drilling on US federal lands and waters.
Alaska state officials and its representatives in Congress hailed Interior's announcement for its potential to reverse the decline in the state's oil production and in throughput on the Trans-Alaska Pipeline System.
"This is a capstone moment in our decades-long push to allow for the responsible development of a small part of Alaska's 1002 Area," US Senate Energy and Natural Resources Committee chairman Lisa Murkowski (R-Alaska) said.
Democratic lawmakers generally oppose drilling in ANWR, which they say will lock in decades of oil and gas development in a fragile ecosystem already strained from climate change.
"There is no good time to open up America's largest wildlife refuge to drilling, but it is absolutely bonkers to endanger this beautiful place during a worldwide oil glut," environmental group Center for Biological Diversity's oceans program attorney Kristen Monsell said.
Interior defended its decision as environmentally sound. Today's decision "provides protections for surface resources and other uses, including subsistence use, through a comprehensive package of lease stipulations and required operating procedures that will apply to future oil and gas activities," the agency said.
