Low Oil Prices, High Controversy May Shield U.S. Arctic Refuge from Fossil Exploration
Low oil prices and public controversy might be more effective than government policy in protecting the treasured Arctic National Wildlife Refuge from oil and gas exploration, after the U.S. Senate voted late last month to sell drilling rights in the environmentally fragile territory.
Senators have high hopes of raising US$1 billion in new revenue from the refuge over the next 10 years. But “data from previous Arctic oil lease sales suggest the U.S. is likely to collect less than a fifth of that,” or about $145.5 million, Bloomberg reports.
Like this story? Subscribe to The Energy Mix and never miss an edition of our free e-digest.
“Oil companies may be scared away by the controversies and costs of drilling in that remote and fragile terrain,” the news agency notes. “Even if they aren’t, crude prices would have to be some $15 more per barrel than they are today to make the effort pay off at all.”
Bloomberg notes that “the idea of tapping the 19-million-acre preserve for its potential oil bounty has long been debated in Washington, pitting energy industry advocates who see it as a way to revive production on Alaska’s North Slope against environmentalists who argue the activity would jeopardize a pristine wilderness with Arctic foxes, polar bears, and caribou herds.”
But with the global oil price crash now well into its fourth year, “it’s pure fantasy that the Arctic refuge is going to generate anywhere close to the kind of revenues that are being spouted about right now,” said Alaska Wilderness League Executive Director Adam Kolton. “This is a dry hole in the budget.”
Bloomberg says oil leases in the reserve could yield significant government revenue over the long term [assuming growing fossil production in a world moving toward decarbonization—Ed.). “But that would only come after successful discoveries and construction of production facilities—not to mention near-certain lawsuits along the way,” write reporters Jennifer A. Dlouhy and Alex Nussbaum. “By contrast, congressional revenue projections are built on a 10-year time frame, counting only the government’s possible haul from selling drilling rights—not royalty checks tied to possible later oil production.”