With a month left in his presidency, Barack Obama committed one more outrage to wind up Alaska’s political leaders. Taking advantage of a provision in the 1953 Outer Continental Shelf Lands Act, he permanently banned offshore oil and gas drilling in much of the state’s arctic waters.
However, this isn’t a story about a president trying to shore up his environmental legacy. Yes, climate change was on his mind. But just as it was when his administration canceled the existing lease for Shell’s Chukchi Sea prospects, the price of oil was a key factor in his decision.
And that’s the way it’s always been.
In 1982, Congress began removing significant areas off America’s outer continental shelf from oil and gas exploration. They did it by denying the Department of Interior the annual appropriations needed to advertise and execute new leases. Oil spills in the late 1970s were part of the reason for this. But the restrictions weren’t put in place until oil prices had dropped almost 40 percent from the record high $117 per barrel reached in 1979.
As prices precipitously fell during the next several years, Congress added new restrictions. Then in June 1990, with oil selling for less than $35 a barrel, George H.W. Bush joined the act with a presidential directive withdrawing even more areas. In June, 1998, with it under $25, President Bill Clinton extended the ban in most places for 10 years.
At that point in time, the arctic was still covered by extensive sea ice most of the year. Some leases had been sold in the 1980s and a few exploratory wells drilled, but nothing significant ever came from them. So the arctic wasn’t a big part of those restrictions.
Interest in the region changed as the sea ice retreated further and further each year. Then in February 2008, the U.S. government received a record amount of offers to explore in the Chukchi Sea. “It’s fabulous,” the executive director of Alaska’s Resource Development Council said as the bids were being opened. “The big boys came — flexed their muscles.”
The muscles they were showing off had been built up on steroids. Oil prices had been rising steadily on their way to a new record high of $154 per barrel. After it hit that mark President George W. Bush rescinded the executive bans imposed by his father and Clinton.
When Obama became president eight years ago, he didn’t stop Shell from drilling in the Chukchi. And he canceled their lease only after they acknowledged a “clearly disappointing exploration outcome” as the reason they would “cease further exploration activity in offshore Alaska for the foreseeable future.”
That happened last fall. And no Alaskan should need to be reminded that, during the year leading up to Shell’s decision, the price of oil had dropped from $106 to less than $50. And it kept falling after Shell left.
Where were the other “big boys” during all this?
BP and ConocoPhillips owned offshore drilling rights in our Arctic. But they never showed up.
Exxon Mobil was in the artic. But Rex Tillerson, Donald Trump’s nominee to be Secretary of State, had taken his company into Putin’s Russia to drill off his coast instead of ours. (Those projects were suspended just before oil prices began their dive because Obama imposed sanctions on Russia for its meddling in the Ukraine.)
However, something else was happening onshore in the Lower 48 that made the arctic less competitive. It’s been referred to as the shale revolution. Horizontal drilling and hydraulic fracturing techniques were combined to help states like North Dakota produce massive amounts of oil and natural gas.
It was a boom enabled by the rising price of oil which would peak at over $120. And like our North Slope producers, those efforts were scaled back and workers laid off not long after the roller coaster began its last big plunge.
So even if Trump finds a way to rescind Obama’s ban, nothing is going to happen off Alaska’s arctic coast until prices rise and stay near or above $100 per barrel for a long time. Then it’ll be another two to three decades before that oil would even be ready to get into the pipeline.
By that time climate change will be a bigger factor in this equation. Even an oil man like Tillerson believes human activity is contributing to it. So demand many never gain drives prices high enough to justify drilling off the arctic coast.
• Rich Moniak is a Juneau resident and retired civil engineer with more than 25 years of experience working in the public sector.
