Biden Approves Drilling in Alaska: The Willow Project and What This Means

As you are likely aware, the Biden Administration’s approval of the Willow Project dominated last week’s news cycle. Our team did a deep dive into the project’s background, environmental impacts, support from the Biden Administration and Congress, and impact on energy and environment industries. Here is what we found:

Overview

On March 13, the Biden Administration approved the Willow Project in Alaska, which is set to be a significant and decades-long oil drilling venture located in the National Petroleum Reserve (NPR-A), previously known as Naval Petroleum Reserve. The 23-million-acre Naval Petroleum Reserve was set aside for energy supply needs about a century ago.

This project approval was granted to ConocoPhillips, Alaska’s current largest oil producer and a leader in oil and gas exploration and production there for more than 50 years. Willow was originally proposed to have five drill pads which were ultimately approved for three pads with up to 199 wells by Biden Administration. Now that the Biden Administration has given Willow a green light, construction can begin. The company announced that pre-construction had begun. The company shared that it expects legal action from environmental law groups – including a complaint filed by Earthjustice on March 15.

Economic and Environmental Impact

The Willow project is expected to produce up to 180,000 barrels of oil a day, create up to 2,500 jobs during construction and 300 long-term jobs, and generate billions of dollars in royalties and tax revenues for the federal, state, and local governments, according to the company. In a conversation with one of the Alaska Senators, it was reported that Alaskans were already thanking him as one businessman shared that the company had begun purchasing mattresses from his mattress store. 

But even as Willow got a green light, the Biden administration moved to limit future oil development in 13 million of the 23-million-acre NPR-A. President Biden also invoked provisions of a 1953 law to prevent future oil and gas leasing across 2.8 million acres of the Beaufort Sea north of Alaska, expanding on restrictions former President Barack Obama imposed in 2016.

Environmental groups responded negatively to any new drilling stating that according to the Administration’s own estimates, the utilization of that oil will result in the emission of about 10 million tons of carbon dioxide per year, totaling about 300 million tons over the project’s lifetime. They point out that this approval comes after the Biden Administration set the most ambitious carbon emission reduction goals in U.S. history, a target of net-zero carbon emissions by 2050. 

What Was the President Thinking?

The looming question in this story is why the Biden Administration would approve such a controversial project for a pro-climate Democrat. According to pundits, it may be part of a strategy to create a “Biden-moves-to-the-center’ narrative” heading into next year’s Presidential election. AP reports that the President remarked on a taped program for Comedy Central's The Daily Show, “We’re going faster than anyone has ever gone,” Biden said when asked about young people who want him to push harder. He said the energy situation “got really complicated” with the Russian invasion of Ukraine, adding that “we’re going to need fossil fuel. So, it’s a matter of transitioning, but it’s not like you can cut everything off immediately.”

Additionally, the move has been touted as a way to bring down gas prices. One of the principal arguments made by congressional supporters to the Administration was that they had gone to the Saudis after the President had said he would have no dealings with them and to Venezuela which has one of the worst environmental records for drilling, production, and refining of oil to ask them to produce more oil, so how does that make sense when the oil produced, transported and refined in the United States does so under American rules, the strictest environmental standards anywhere.

Alaskan Policymaker Support for Willow was United and Unrelenting

On March 3, before Willow was approved, all three lawmakers in Alaska’s congressional delegation – Sens. Lisa Murkowski (R) and Dan Sullivan (R) and Rep. Mary Peltola (D) – met with President Biden, urging him to approve the project. They later co-wrote an op-ed stressing, “This should be an easy decision. The administration has made combating climate change a priority, while also acknowledging that the transition to cleaner energy will take time,” they wrote. “In the meantime, we need oil, and compared to the other countries we can source it from, we believe Willow is by far the most environmentally responsible choice.

Does this Portend Administration and Congressional Support for All Forms of Energy

Even if you don't come from an oil and gas producing area, it is hard for a policymaker to question the importance of America's dominance in energy production today to the stability of world order and our own national security. What would have happened if we hadn't started building out all forms of energy with new renewable production in the U.S.? What if we had decided not to engage in the shale gas production that provided the U.S. with an oil and gas surplus and thus the ability to be there for Europe when Russian gas supplies were cut off during the war in Ukraine? Imagine what gasoline prices would have been for Americans. Just last week, EIA reported that U.S. oil imports to the EU increased by 41% to offset the loss of Russian oil. Overall, the U.S. exports of oil hit a record of 3.6 million bpd supplied to the rest of the world, with a total production of 12.5 million bpd. This American production gave the world the ability to not have to depend on Russian oil supplies and kept our prices more stable.

It was heartening that HR 1, was reserved by this Congress for an energy package geared to making energy production of all forms more streamlined. It is important to those in the energy business to know that American policymakers can support all American energy. It sure is important in raising private capital for energy infrastructure. And it is most important because the world would be a less safe place without America's energy leadership.