ConocoPhillips Warns Further US Cuts to Alaska Plan Would End Project

The leader of ConocoPhillips's Alaska division indicated that the company would abandon an $8 billion oil project in the Arctic if the US government required them to reduce drilling to only two sites, asserting that it would no longer be profitable.

Environmentalists are urging President Joe Biden to prevent the Willow project in Alaska from going forward, citing the estimated 600 million barrels of crude it could yield as too much of a burden on a world already facing the effects of climate change.

ConocoPhillips initially proposed to drill across five different areas, known as pads, at the site in the northeast corner of the National Petroleum Reserve-Alaska. The Interior Department has since suggested an alternative plan that would only allow three pads. Some environmental activists have now proposed an even smaller option, which would involve two pads.

Erec Isaacson, President of ConocoPhillips Alaska, stated in an interview that a project would be denied if it did not receive a three-pad authorization. He explained that the high cost of operations in northern Alaska would make it an unviable project.

The Biden administration is still considering the project, with only a few weeks left before the three-month period for construction on frozen tundra begins.

The Biden administration's initiative is politically sensitive, as it moves away from fossil fuels while still asking US oil companies to produce more crude. The 23-million-acre NPR-A was designated for energy development many years ago, but environmentalists are concerned that new industrial oil operations could harm wildlife, such as caribou that calve in the area. They also argue that the Willow project would release so much greenhouse gas over its potential decades-long life that it would cancel out the administration's efforts to promote renewable energy projects on other federal lands.

Last week, members of Alaska's congressional delegation had a meeting with Labor Secretary Marty Walsh and White House representatives to advocate for the approval of Willow. They warned that if the project is not approved, it could result in the loss of 2,500 construction jobs and up to $17 billion in revenue for the federal government, the state, and North Slope Borough communities. According to two people familiar with the situation who asked to remain anonymous due to the confidential nature of the talks, a follow-up session is scheduled to take place this week.

In September, newly elected Democratic Representative Mary Peltola, the first Alaska Native to be elected to Congress, joined forces with the state's Republican senators, Lisa Murkowski and Dan Sullivan, to emphasize that the approval of a project would show that the administration was devoted to tackling inflation and energy-security requirements.

ConocoPhillips acquired the oil leases more than two decades ago and submitted a request to develop the project in 2018. The Trump administration granted approval two years later, but environmentalists contested it in federal court. Initially, the Biden administration defended the approval, but a district judge ruled against it, citing inadequate analysis of the climate impacts of the development and the lack of consideration of more protective alternatives.

The Bureau of Land Management, which is part of the Interior Department, is currently conducting an additional environmental assessment of Willow. A draft of the analysis was presented in July, and it is expected that a final version will be released in the near future. A decision on the project will be made no earlier than 30 days after the final version is released.

Sullivan and other proponents of the project are warning that time is quickly running out. ConocoPhillips has stated that they will not make a final decision until the environmental impact statement and record of decision are released. If the contracts and preparations for the 2023 winter work season are not completed in the coming weeks, the approval of the Willow project may be delayed until 2024.

Isaacson emphasized the importance of finishing the record of decision in order to start the winter construction season and progress with the major contracting.

Environmental activists are urging the government not to give in to the demands.

Jenny Rowland-Shea, the director for public lands at the Center for American Progress, stated that the Biden administration should not feel obligated to rush their decision-making process and should take all available information into consideration.

The organization has already invested over $600 million in the venture - including seismic examinations to chart potential subterranean crude reservoirs and drilling 10 wells to evaluate the discovery.

Isaacson argued that any further postponement or obstruction of the project would not be beneficial to the public or US energy security, as the barrels would be replaced by someone who does not have the same environmental safeguards.