Congress Moves to Open Arctic Refuge to Drilling—But the Fight Isn't Over

Senate Committee on Energy and Natural Resources Chair Sen. Lisa Murkowski, who is leading a push to open the Arctic National Wildlife Refuge to drilling. Photo: AP
Senate Committee on Energy and Natural Resources Chair Sen. Lisa Murkowski, who is leading a push to open the Arctic National Wildlife Refuge to drilling. Photo: AP

It isn’t just the super-rich who are pleased with the GOP tax bill. Proponents of opening the Arctic National Wildlife Refuge to drilling are the closest they’ve been in decades to achieving that controversial goal.

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Included in the tax overhaul package that cleared the Senate in a 51-49 vote over the weekend was a bill championed by Alaskan Senator Lisa Murkowski that would allow the sale of drilling rights in ANWR’s 1.5-million-acre coastal plain, a critical habitat for Arctic wildlife that seismic surveys indicate contains some 7.7 billion barrels of oil.

It’s a victory for pro-drilling groups in Alaska, who say opening the coastal plain for business will bring much-needed revenue to the state. (Every Alaskan resident gets a cut of the state’s oil revenue, too.) But it remains unclear whether the provision will make it into the bill’s final version. Even if it does, there’s no guarantee oil and gas companies will jump at the opportunity to lease the land, given the stiff opposition they’re sure to face from environmentalists, Alaskan Native tribes, and more. A recent Yale survey found that 70 percent of Americans oppose drilling in the refuge.

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In wake of the Senate vote, those who have opposed drilling in ANWR most vehemently are doubling down on their commitment to keeping the refuge off-limits.

“Right now we’re really focused on the conference process, and making sure this provision is removed,” Kristen Miller, the Conservation Director for Alaska Wilderness League told Earther. “Frankly, it should never have been in [the tax bill].”

Miller is referring to the process of coming up with a consensus tax bill between the Senate and House versions. The House bill, which passed without a single Democratic vote in November, does not include a drilling provision. And while Senate majority leader Mitch McConnell has expressed confidence that differences between the two bills will be resolved smoothly, a there’s a slim chance moderate Republicans could sink the drilling effort.

Last week, 12 members of the House GOP penned a letter to both chambers of Congress, voicing their opposition to allowing oil and gas companies into ANWR on the grounds that it could “threaten imperiled species and fragile habitat.” Many Alaskan wildlife biologists agree.

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“Further, the resources beneath the Refuge’s Coastal Plain simply our not necessary for our nation’s energy independence,” the letter reads. “If proven, the estimated reserves in this region would represent a small percentage of the amount of oil produced worldwide. Moreover, the likelihood that lawsuits would accompany any development is high.”

Kara Moriarty, President of the Alaska Oil and Gas Association, which strongly supports drilling in ANWR, told Earther she had “no doubt there’ll be fierce pushback every step of the way.” She added even if the drilling provision makes it into the final version of the tax bill “it’s not a guarantee to drill,” simply that the government would be directed to conduct two lease sales within a ten year period. Whether any oil eventually gets pulled out of the ground will depend not just on what sort of opposition companies face, but on the future price of oil.

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That’s small consolation to conservation groups, who see an uphill battle ahead with only a small number of House Republicans indicating any opposition to adopting the Senate drilling provision. It’s unclear whether any of these representatives will wind up on the conference committee set to negotiate the tax bill this week.

“I think a lot of people aren’t feeling very optimistic right now,” a spokesperson for Earthjustice, which has vowed to fight against the drilling measure, told Earther. “But nevertheless, it’s not a done deal. We’re really focused on seeing if we can get this drilling provision out of the final bill.”

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Groups like Earthjustice and Alaska Wilderness League are being joined on Capitol Hill this week by members of the Gwich’in Nation, a tribe in northeast Alaska and northwest Canada that has opposed drilling in the refuge for decades. To the Gwich’in, the coastal plain is sacred ground. It’s the calving site for the Porcupine Caribou herd, which has been a part of the tribe’s culture and a source of its food security for millennia.

“This calving ground is extremely important to us,” Bobbie Jo Greenland-Morgan, President of the Gwich’in Tribal Council, told Earther. “It’s a place that’s respected, that’s safe haven [for the caribou]. And the herd provide for us. It’s a cycle that’s been going on for thousands of years.”

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Greenland-Morgan said her people weren’t surprised by the Senate’s vote over the weekend, but they were “extremely disappointed.” Representatives of the Gwich’in Nation, along with allies from Alaska’s Inupiat community and other indigenous groups, will be holding an inter-tribal pray-in on Capitol Hill on December 6.

Greenland-Morgan wouldn’t speculate as to what would happen if the drilling provision were signed into law. But she expressed hope that more and more Americans will join forces to oppose the selling off of some of the most pristine lands in the United States.

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“These are public lands,” she said. “That makes every American connected in some way.”

Maddie Stone is a freelancer based in Philadelphia.

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DISCUSSION

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Alaska kind of hosed itself due to the way it structured severance tax on oil production. Severance is like a royalty. From EIA:

Alaska’s severance tax revenue has fallen further and faster than other states because its tax is based on the operators’ net income rather than on the value or volume of oil extracted. In 2015, when average net incomes after operating and capital expenses were near zero, the state derived practically no revenue from this tax, versus more than $5 billion in 2012. Based on 2014 data, severance taxes accounted for about 72% of the state’s tax revenue. Given the sharp decline in severance tax revenues, the governor recently proposed a 6% state income tax as well as scaling back the payout of dividends to residents from Alaska’s Permanent Fund.

Of course Alaska Oil & Gas Association (AOGA) is telling Alaskans that they can make that up on volume, i.e. keep the same tax structure and pump more oil. Basically low to no severance allows for O&G to make more money per barrel. The world market price is fixed - and without a state severance cut - they take more.

Alaska’s declining state revenues from oil production. Texas’ drop was due to the barrel going from over $100 to around $40. It taxes per barrel produced regardless of how the oil company is doing financially.

The point being is don’t let feel too sorry for Alaska when it cries about state revenues going to zero. It made its bed or hired shitty mineral rights lawyers. Alaska also gets a lot of federal dollars sent its way. This may also cut into state revenues decline given what’s going on with federal tax overhaul.

Then again, Pennsylvania ain’t collecting any severance on all that natural gas. Thanks to consultants/politicians/oil & gas lobbyists.