Russia Will Regret Selling Alaska If Biden Unleashes Its Energy Potential

• Alaska is one of the most resource-rich states in the United States, will billions of barrels of recoverable oil reserves.
• Russia, which sold Alaska to the United States in 1867, is currently benefitting from sky-high oil prices, prices which would drop if Alaskan production were to soar.
• When it comes to oil, natural gas, and even mining for renewable energy minerals, the battle in Alaska is one between the environment and the growing demand for energy.

Alaska has the potential to provide the US with more oil, but it all boils down to one question: what’s more important, energy security or the environment? This issue is currently being toiled over by Biden’s administration and the Alaskan state government. As oil firms are committed to continuing major oil and gas operations in Alaska, will they be allowed to support the growing North American energy demand or will the U.S. government halt operations in favor of progressing climate policy? 

Several discoveries last year showed that Alaska still has huge oil potential. As well as major investments from Australian firm 88 Energy, American major ConocoPhillips has a major stake in Alaskan oil. If it can develop its delayed $8 billion Willow project in the state, it can expect to provide around 160,000 bpd for the next three decades, with a total output of 590 million barrels by 2050. But Conoco has been back and forth with the project, lobbying for the development – which was approved near the end of President Trump’s time in office – to get off the ground. 

Thanks to improvements in drilling technology and innovations in oil recovery through gas injection, further exploration could allow oil and gas companies to pump billions more barrels of oil in Alaska. This would add to the projects that are already underway on Alaska’s North Slope, with the average daily output totaling nearly 500,000 bpd.  Ironically, the arctic state that holds the potential to help North America ensure its energy security was sold to the U.S. by Russia in 1867 for $7.2 million. The discovery of gold in the late 1800s and, later, black gold has put Alaska on the map. At the beginning of 2021, Alaska had around 2.4 billion barrels of proven oil reserves, as well as nearly 37 trillion cubic feet of natural gas. 

However, much of Alaska’s untapped oil is likely located in national parks and unexploited federal land, leading environmentalists to campaign strongly over further exploration. This has been supported by President Biden’s Green New Deal, which strives for an energy transition away from fossil fuels to renewable alternatives. 

This was largely the reason for Biden’s announcement for the cancellation of Alaska’s oil and gas lease sale in May. Despite calls on the American president to boost U.S. oil production to meet energy needs, Biden decided to halt the leasing of a 1-million-acre area in the Cook Inlet in Alaska. The government cited a lack of industry interest in the area as the reason for stopping the lease. This comes after the cancellation of two other leases in the Gulf of Mexico due to conflicting court rulings. 

But Biden has been criticized by opponents for suggesting there is a lack of interest in the site. Republican Alaska Senator Lisa Murkowski explained, “Cook Inlet is the sole source of the natural gas that more than 400,000 people in Southcentral Alaska—and significant military bases that are critical to our national security—depend on… Alaska's industry does have interest in lease sales in Cook Inlet. To claim otherwise is simply false, not to mention stunningly short-sighted.”

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Experts question whether the Biden administration cited the lack of interest to avoid entering into a discussion on climate change, at a time when oil and gas prices are soaring, and global shortages are leading to rapidly rising consumer energy costs. But environmentalists are praising the move which will prevent underwater pipelines and platforms from being constructed, which could have caused damage to the environment in the area. 

A week after Biden canceled the lease, his administration announced a move to ban the disposal of mining waste in Alaska’s Bristol Bay watershed. This could delay the Pebble Mine project, a mining development for copper, gold, and other metals, which has been in the works for around a decade. The ban would help protect one of the world’s largest salmon fisheries. 

The global demand for metals, such as copper, has increased significantly over the last year as energy firms require these materials to develop renewable energy projects and batteries. Alaskan energy is an increasingly complicated issue for a U.S. government that is balancing the development of renewable energy projects with the task of not causing damage to the environment. 

John Shively, CEO of the mine’s developed Pebble Limited Partnership, stated “I find it ironic that the President is using the Defense Production Act to get more renewable energy minerals such as copper into production while others in the administration seek political ways to stop domestic mining projects such as ours.”

Going forward, Biden must consider how to boost U.S. energy security while considering the detrimental impact on the environment. To meet his climate change goals, he must reduce America’s reliance on oil and gas. But at a time when the world is facing severe energy shortages, the cancellation of leases and, in addition, the halting of renewable energy projects will not be a popular decision for many. 

By Felicity Bradstock for Oilprice.com

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