President Biden is finding himself in a dilemma as the need for greater oil production is clear, with global energy security under threat. But greater development poses the risk of environmental disaster. Alaska’s oil industry is fighting to stay alive, with the potential to carry out more exploration and production operations in the coming years. But local communities and environmentalists across the U.S. are pleading with Biden to stop oil operations due to their impact on the environment. Last week, the Wall Street Journal warned of a potential climate disaster of Biden’s making if a new Alaskan oil project gets underway. The ConocoPhilips’ Willow oil drilling project on Alaska’s North Slope threatens to undermine the president’s renewable energy and climate change goals. The Willow project would see an output of 160,000 bpd for the next three decades, requiring the construction of 250 wells, 37 miles of roads, 386 miles of pipelines, airstrips, and a new central processing facility The firm plans to produce around 590 million barrels by 2050. It would, according to a Center for American Progress analysis, dwarf the greenhouse gas emissions cut through Biden’s 2030 commitments.
Perhaps ironically, ConocoPhillips plans to utilize specialist technology to mitigate the threat of climate change in the region as it carries out its project. Conoco will use chillers to ensure the Arctic tundra frozen beneath its roads and oil drilling pads stays frozen. Natalie Lowman, a spokesperson for the firm, explains “Where necessary we use cooling devices (thermosyphons) that can chill the ground enough in the winter to help it remain frozen through the summer.”
Despite being approved by the Trump administration, and initially supported by Biden’s administration, the Willow project has been opposed by a federal judge in Alaska. The judge cited “serious errors” in an environmental review of the project, with inadequate analysis of the climate impact. President Biden is now expected to conduct another assessment to determine whether the project can go ahead.
Yet, Biden has already come under fire repeatedly over the last year for halting oil leases and canceling pipeline projects at a time when oil firms deem ongoing oil production necessary to meet the global demand. Since his inauguration, Biden has repeatedly placed pauses on new oil and gas leases, creating a backlash from many states who have taken legal action against these pauses in an effort to continue with their oil and gas plans.
Oil prices have been steadily rising following the 2020 pandemic, as the world returns to its normal activities. And now, in the face of war, oil prices are skyrocketing with fears of severe shortages. Some U.S. oil majors have already begun to ramp up production as fuel prices hit $4 a gallon, with Exxon Mobil and Chevron boosting their output in the Permian Basin. But based on cutbacks of oil workers during the pandemic, as well as green policies introduced by Biden, investors are reluctant to fund fossil fuel projects due to the uncertain outlook. This means that even if the U.S. ramps up its production it is unlikely to be able to fill the gap left if sanctions are imposed on Russian oil in its current state.
Some are now saying that Biden must act to encourage the U.S. oil industry to develop more projects to safeguard America’s energy security. In the face of war, many are worried about the lack of oil available to replace the global shortage that would be caused by sanctions on Russia, particularly as the U.S. continues to curb its oil operations. Despite the potential environmental impact of the Alaskan Willow project, some say that Biden should allow Alaska to sell its oil across North America and Europe to help manage this shortage.
One thing’s for sure of the Willow project, it has huge potential. The question is whether the probable environmental cost is too high. The greater Willow Area is thought to hold between 400 and 750 million barrels of oil equivalent and has the potential of producing over 100,000 bpd. In addition, the State of Alaska expects to see around 50 percent of the royalties earned from the project, an anticipated $4.8 to $12.9 billion. This means that while several local communities and environmental activists are opposed to the development, Alaska has been generally favorable to the project.
This is just one more difficult decision needed to be made as the energy sector is thrown into turmoil once again. As countries are getting on track in their green energy goals, the priority could soon shift. Biden may have to temporarily choose between his climate change targets and U.S. energy security when it comes to projects such as Willow in Alaska.
By Felicity Bradstock for Oilprice.com
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