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On Trump Administration's Push to Drill in Arctic Refuge

On Trump Administration's Push to Drill in Arctic Refuge

 

“We know our lands have now become more valuable. The white people think we do not know their value, but we know that the land is everlasting, and the few goods we receive for it are soon worn out and gone.” 

— Canassatego ( c. 1684–1750), a leader of the Onondaga nation and spokesman of the Iroquois Confederacy

Sale of Oil and Gas Leases in Alaska

Last week the Trump administration announced through The Bureau of Land Management that it will sell oil and gas leases on nearly 1.8 million acres of land (about the size of Deleware) in northeastern Alaska.

But looking at the history of the area and the projected leasing revenue and estimated oil and gas deposits, I’ll be frank with you: this project just doesn’t make any goddamn sense.

To quickly set the scene here: This land the administration is leasing (1.8 million acres named the 1002 Area) is part of the Arctic National Wildlife Refuge (ANWR), 20 million acres of land, protected since 1960 by order of the Secretary of the Interior under U.S. President Dwight D. Eisenhower. That other bit, 100 miles west of the ANWR? That’s the National Petroleum Reserve in Alaska (NPRA), established in 1923 by President Warren G. Harding when the United States was converting its Navy to run on oil rather than coal.

 

Looking at this map, I think it’s pretty clear that we have one area of land that is protected wilderness (ANWR) and one larger area of land (NPRA, the nation’s largest single block of public land) that is owned by the federal government and leased to gas and oil companies generating $56 million in revenue in 2019, which is split evenly between the federal government and the state of Alaska.

And I hear you, $56 million doesn’t seem like all that much money here. Well, only about 7% of the NPRA is actively leased. And year-to-year corporate interest in leasing tracts has decidedly declined. This map represents the active leases (purple) and expired or relinquished leases (crosshatched) as of April 24, 2020.

Why is this land not being leased and drilled for oil as intended? There’s just not as much oil there as initially reported. In 2010, the United States Geological Survey (USGS) estimated that the amount of oil yet to be discovered in the NPRA is only 10% of what was first believed to be there. 

In the NPRA over 130 abandoned oil wells, interconnected by intrusive and permanent infrastructure, have needed to be addressed since 1981. Between 2002 and 2015 the Bureau of Land Management and the U.S Army Corps of Engineers spent $90 million to plug and remedy just 18 abandoned legacy wells. In 2013, with $50 million in funding from the Helium Stewardship Act, the Bureau “made progress” on plugging 50 additional legacy wells. So the math on that works out to something like $1-$5 million to remedy each abandoned well. And let’s not forget that the total leasing revenue of the NPRA for 2019 was $56 million, half for the federal government. With a budget of $28 million a year, it would take over 13 years to plug the remaining legacy wells. 

So now the administration is pushing forward with a plan to lease a new coastal plain in the wildlife refuge? And even skirting around due process — including environmental impact analysis and a 30-day review period — to finalize the sale before Trump leaves office (40 days from today, not that I’m counting).

Environmental Organizations and Alaska Native Groups

As you may imagine this has prompted lawsuits, four of them at the moment. Environmental organizations, some Alaska Native groups, and even a coalition of 15 states have come forward contending that the Trump administration is illegally shortcutting the process and putting forth a flawed (or falsified) environmental review.

Furthermore, we must acknowledge the Gwich’in people, who have lived in the area for thousands of years. They have consistently opposed drilling in a land they call iizhik gwats’an gwandaii goodlit, or “the sacred place where life begins.” They don’t need it, don’t want it, and it will most certainly have a devastating impact on their way of life and the supporting wildlife ecosystem. 

“This is a shameful attempt by Donald Trump to give one last handout to the fossil fuel industry on his way out the door, at the expense of our public lands and our climate.” 

— Michael Brune, executive director of the Sierra Club, said in a statement published in the NYT on December 3, 2020.

Now, let’s look at it from a different perspective, shall we? The 1002 Area is believed to sit on one of the last remaining petroleum reserves in the United States — the land is everlasting, and the few goods we receive for it are soon worn out and gone — and could potentially yield billions of barrels of oil. And this could potentially be a significant economic windfall for the state of Alaska, as detailed earlier this week in an Op-Ed by former Governor Bill Walker:

“For a number of reasons, I strongly believe this may be Alaska’s only opportunity for exploration to occur in the 1002 Area. If this will be the last time this opportunity comes our way, the state of Alaska should take a much more active role.

Here we sit with a significant deficit and oil throughput in our pipeline down from 2.1 million barrels per day at its peak to often under 500,000 per day with likely continued decline. This equates to diminishing state revenue and increasingly perilous financial stability. We cannot afford to sit this out and risk keeping the 1002 Area being locked up into perpetuity.”

— Bill Walker, 11th governor of Alaska from 2014-2018, in Anchorage Daily News, December 9, 2020

But here’s the thing. Regarding the “perilous financial stability” of Alaska, this 1002 Area is a red herring. It’s not for the Alaskan people, and will certainly not help them. The economic doldrums that Alaska — and most of the country — is experiencing can not be remedied by a temporary influx of Big Oil jobs. Plus, as proven by the recent loss of 3,000 oil jobs in Alaska, those jobs are tied less to the oil leases and more to the fluctuating (read: declining) price of oil.

“Unless oil prices get back to some very, very high level, I don’t see anything on the horizon that thousands … of jobs are going to get created in Alaska over the next year or two years,”

— Mouhcine Guettabi, an economist at the University of Alaska Anchorage Institute of Social and Economic Research, in Anchorage Daily News, November 16, 2020

Even still, just as with the NPRA, the amount of oil available in the ANWR now seems to be just a tiny fraction of what is currently estimated. Assessments of the 1002 Area are based on data from the 1980s that used now obsolete technology to estimate the amounts of petroleum underground. The NY Times investigated this back in April 2019, and the findings are just as disappointing and convoluted as you’d expect from dealings with big government and Big Oil.

What is pretty clear, however, is that the Trump Administration’s 2017 lease plan for the 1002 Area over estimated $1.8 billion in revenue for the federal government over 10 years. The Congressional Budget Office later offered a lower estimate of $1.1 billion. And an independent analysis, based on similar leasing sales in Alaska’s history, proved to find an even lower estimate of potential revenue over the next decade at around just $45 million, lower than the NPRA’s annual revenue in 2019. That’s less than 3% of the Trump administration’s initial revenue estimation.

Perhaps validating this, six major U.S. banks — Goldman Sachs, JPMorgan Chase, Wells Fargo, Citi, Morgan Stanley, and Bank of America — have all said they will not finance drilling in the Arctic National Wildlife Refuge. Now, I’d like to think the big banks are taking a stand for environmentalism and moving away from fossil fuels, ya know, combating the climate crisis and working in the best interest of humanity and all creatures of Earth. But, yeah, it’s likely that their analysts have also looked at the data and determined that oil and gas leases in the ANWR are not exactly sound investments.

So what the hell is going on here?

The Role of Big Oil

If the NPRA is losing leases and losing money fixing abandoned wells, and revenue estimates for the ANWR are being rebuked and reduced to just 3% of their initial amounts, and lawsuits abound from a coalition of 15 states, and the four largest banks in the United States will not finance the opportunity, then what the hell is really going on here?

“It all makes one wonder what the administration is doing, what the endgame is. In reporting for the two articles I didn’t talk to anyone who had much of a clue. And while the administration is moving fast, it isn’t talking.”

— Henry Fountain in the NYT, November 16, 2020

It may be that Trump is desperate to make due on promises to Big Oil. How that benefits him directly (kick-backs) or indirectly (GOP favorability), is not difficult to imagine. Perhaps Big Oil made Donny an offer he couldn’t refuse?

It’s a last-ditch effort by a lame-duck President that may well be a moot point if they can’t get the leases sold by January 20th (at noon ET, to be precise, omg I can’t wait). And even then, we may see that no one actually bids on the leases, for all the reasons listed here proving it’s less than a sound investment.

So it would seem that we have a mad money grab by one of the most powerful men in the world during his last days of authority.

Opening with a quote from a leader of the Onondaga nation, Canassatego, I should mention that he brokered numerous land sales in Pennsylvania in the mid-1700s between the indigenous peoples of America and the British. Often times, he got more money than was initially agreed. He was a good negotiator and diplomat, for lack of a better term.

And while he is most remembered for his 1744 speech advising the British colonies to come together and find strength in a union, a confederacy, his accomplishments as a land broker between the indigenous peoples and the invading conquerors is his true legacy, for better or worse.

In 1750, Canassatego was poisoned, assassinated. Some say he was killed (by pro-French Iroquois) as a means to break diplomatic ties with the British. And some say he was killed for taking bribes in exchange for selling communal tribal lands. As you may imagine, those deals were not always clear, often sanctimonious, and even duplicitous.

“Suppose a white man should come to me and say, Joseph, I like your horses, and I want to buy them. Then he goes to my neighbor and says to him; Joseph’s horses. I want to buy them, but he refuses to sell. My neighbor answers, Pay me the money and I will sell you Joseph’s horses. The white man returns to me, and says, Joseph, I have bought your horses and you must let me have them. If we sold our lands to the government, this is the way they were bought.”

— Chief Joseph-Nez Perce

So here’s a thought: maybe we’re giving the Trump administration too much credit. Look for the individual who would most benefit from the crime and you’ll find your suspect, right?

If Big Oil and the GOP have been fighting for decades for the leasing rights of this wildlife refuge, then this administration is merely a means to an end. It barely even matters if there’s oil there or not. As the world’s politicians and corporations are now increasingly urged to atone for the climate crisis, this may be the last opportunity to grab that land. And this land is absolutely the last land in the U.S. that could offer any substantial oil and gas deposits.

We know that the land is everlasting, and the few goods we receive for it are soon worn out and gone.

Trump is no diplomat, no accomplished land broker. He is no Canassatego. He is nothing more than Joseph’s neighbor. And Big Oil simply paid him to buy Joseph’s horses.