Arctic refuge drilling moves closer to reality with Senate vote

Oil drilling in the Arctic National Wildlife Refuge took a significant step forward on the 15th November, as the Senate energy committee approved legislation to compel lease sales in the 1.5-million-acre coastal plain along Alaska’s north-east coast — tying it to tax reform.


The 13-10 committee vote means ANWR drilling is now politically closer than ever to reality.


The estimated US$1.1 billion in federal revenue it will generate over the next decade offsets proposed tax cuts, binding it to the Republicans’ high-priority overhaul effort and setting it up to pass the Senate on a simple majority vote.


The last time drilling advocates got this close, it was 22 years ago, when the Republican-controlled Congress passed a budget bill authorising ANWR oil development, only to see it vetoed by President Bill Clinton. This time, the fate of ANWR depends on the Republican tax overhaul, not who occupies the White House.


Alaska Republican Senator Lisa Murkowski, whose vote on the tax package is crucial, celebrated the committee approval, saying that “responsible energy development” in the area would eventually generate “tens of billions of dollars” in federal revenue, create “thousands of good jobs” and “ensure a steady supply of energy for West Coast refineries.”


It also could mean a new source of oil for the 800-mile Trans Alaska Pipeline System, helping to preserve its viability amid declining North Slope production.


It is not clear how much enthusiasm energy companies would have for nabbing territory in the coastal plain. The cost of operations in the remote region could discourage drilling with crude prices hovering around US$55/bbl and a surge of oil from less expensive shale drilling projects in Texas, North Dakota and other states.


Still, geological surveys of ANWR’s coastal plain hint of large underground formations with the potential for monster discoveries which could produce oil for decades — far more enduring than short-lifespan shale wells in the lower 48 states.


A 2005 US Geological Survey review based on decades-old data said the refuge might hold between 4.3 Bbbl and 11.8 Bbbl of technically recoverable crude. That would rival the size of the mammoth Prudhoe Bay field which sparked the Alaskan oil rush four decades ago.


Environmentalists argue oil development in ANWR could spoil the nation’s wildest refuge and threatens polar bears, caribou herds and wolves in the region. Canada has also lodged its opposition to the plan, highlighting the risk posed to the porcupine caribou herd which uses the area for calving and foraging.


There is no justification for turning the coastal plain “into an oilfield,” said Senator Maria Cantwell, a Democrat from Washington. Just because Alaska and the US have been over reliant on oil “doesn’t mean we should be destroying the Arctic refuge today,” Ms Cantwell said.


Senate Republicans turned back a series of Democratic amendments, including one to bar development unless it is determined to be compatible with the refuge’s conservation purposes and another which would prohibit activity if it is found to be detrimental to the porcupine caribou herd. Senator Joe Manchin of West Virginia was the lone panel Democrat to vote in favour of the bill.