Speaker 1: Today on Parts per Billion, we go a little deeper
Speaker 1: into some headlines you might have seen recently and figure
Speaker 1: out exactly what's going on with the Arctic National Wildlife Refuge. Hello,
Speaker 1: and welcome back yet again to Parts per Billion, the
Speaker 1: environmental podcast from Bloomberg Law. I'm your host, David Schultz.
Speaker 1: So today we're going to bring you an update on
Speaker 1: an episode we ran about three months ago. Back then,
Speaker 1: Bloomberg News reporter Jennifer to Louis told you guys about
Speaker 1: how the Trump administration might try to auction off oil
Speaker 1: drilling contracts for the Arctic National Wildlife Refuge. For those
Speaker 1: of you who are unfamiliar, this area, also known as anwar,
Speaker 1: is millions of acres of wilderness in northeastern Alaska that
Speaker 1: may contain a mother load of oil and gas reserves.
Speaker 1: The federal government has been debating about whether to allow
Speaker 1: drilling in this environmentally sensitive area for a long time,
Speaker 1: like a really really long time. Don't believe me. Here's
Speaker 1: President Obama twenty fifteen. It supports caribou and polar bears
Speaker 1: all manner of marine life. Here's Alaska Senator Lisa Rakowski
Speaker 1: in two thousand and nine. Drilling operations in Arctic waters.
Speaker 1: And here's former House Speaker John Bayner in two thousand
Speaker 1: and eight. Eight. They're going to great lengths to ensure
Speaker 1: that they can produce this oil in an environmentally sound way.
Speaker 1: And here is current House Speaker in Nancy Pelosi also
Speaker 1: two thousand and eight. You have the go ahead to
Speaker 1: drill here, Why do you want to drill in the
Speaker 1: Anmar any one more? Here's former VP nominee and then
Speaker 1: Senator Joe Lieberman in two thousand and five. One of
Speaker 1: the reasons I wanted to go to the Senate was
Speaker 1: to fight to protect the Arctic Refuge, the Arctic plane.
Speaker 1: Here's President George W. Bush in two thousand and one.
Speaker 1: And bring more energy into the marketplace. And a good
Speaker 1: place to look is going to be in war. And
Speaker 1: here's Joe Lieberman again, but this time all the way
Speaker 1: back in nineteen ninety one. In all of that, our
Speaker 1: capacity to produce the kind of going to get out
Speaker 1: of the refuge jet, it's most optimistic, will be a minuscule.
Speaker 1: So you might be asking yourself, why is this time different. Well,
Speaker 1: a few months ago, Jennifer said, the Interior Department announced
Speaker 1: it plan to auction off the rights to drill in
Speaker 1: anwar as early as this year. Now, in the past
Speaker 1: few days, it's taken concrete steps to do exactly that.
Speaker 1: But unlike three months ago, now the administration has a
Speaker 1: bit of a tight deadline to get this done. I
Speaker 1: invited Jennifer back on the podcast to talk about the
Speaker 1: latest developments with anwhar and also to talk about why,
Speaker 1: even if the Trump administration meets its deadline, drilling in
Speaker 1: this Arctic tundra may never actually happen. So, Jen Delouis,
Speaker 1: you were on this show back in August, we were
Speaker 1: talking about anwar, and now you're back here again and
Speaker 1: we're talking about anwar. What has changed in the last
Speaker 1: few days. Can you give us an update? Absolutely? So.
Speaker 1: Back in August, the Trump administration was laying the foundation
Speaker 1: for a future sale of Arctic oil leases, and now
Speaker 1: it's actively charting a sale that could occur just days
Speaker 1: before President elect Joe Biden takes office on Monday, the
Speaker 1: Interior Department issued what's known as a call for nominations
Speaker 1: that asks oil companies to nominate tracks that should be
Speaker 1: up for grabs in a future lease sale and gave
Speaker 1: them basically thirty days to respond. But a sale is
Speaker 1: no sure thing. Even if an auction is held before
Speaker 1: the swearing in noon on January twentieth, it's not clear
Speaker 1: that the Bureau of Land Management can actually get through
Speaker 1: a post sale process of vetting high bidders and actually
Speaker 1: award those leases. And that's critical because if these leases
Speaker 1: are formally awarded, the Biden administration has less room to
Speaker 1: maneuver and make good on his pledge to permanently protect
Speaker 1: the refuge. So I want to get into more about
Speaker 1: the refuge itself. But I noticed that you mentioned the
Speaker 1: time of the inauguration at noon on the twentieth. Could
Speaker 1: that be a factor. Could they actually do an auction
Speaker 1: like at nine am that day? That might be cutting
Speaker 1: it a little close, but I would not rule out
Speaker 1: activity that day to get done with Lisa's I mean,
Speaker 1: just to give you a sense of how tight this
Speaker 1: timetable is, Interior just signal to a federal court that
Speaker 1: they won't issue a notice of sale until after the
Speaker 1: call for nominations period is over, So that's December seventeenth
Speaker 1: at the earliest, and they have to wait. So they
Speaker 1: have to wait at least thirty days after that to
Speaker 1: hold a sale, making the earliest auction possibility January seventeenth,
Speaker 1: but that's a Sunday, and the day after that is
Speaker 1: a holiday Martin Luther King Day. So unless they decide
Speaker 1: to do a notice of sale sometime in the next
Speaker 1: couple of weeks, that looks like a two day margin
Speaker 1: to hold a sale and undergo a post auction vetting
Speaker 1: of high betters that you know usually takes a couple
Speaker 1: months and involves multiple agencies. So you know, they're under
Speaker 1: the gun here. They know it. But even sympathetic supporters
Speaker 1: of Arctic drilling who have worked in the Interior Department
Speaker 1: have told me they don't quite know how they get
Speaker 1: it done. So, you know, we're talking about trying to
Speaker 1: get it done before President like Biden takes office and
Speaker 1: potentially hours before President like Biden takes office. But is
Speaker 1: there another factor going on here in terms of timing,
Speaker 1: because I get the sense that, you know, the last
Speaker 1: time that you and I talked, you mentioned that there's
Speaker 1: a congressional deadline here. This is a legal deadline that's
Speaker 1: in a law, you know, is that also playing a
Speaker 1: role here? Absolutely? You're right. Congress in the twenty seventeen
Speaker 1: tax overhaul mandated that the Interior Department hold two lead
Speaker 1: sales of tracks on the Refuges Coastal Plane, one by
Speaker 1: December twenty twenty one and another by December twenty twenty four.
Speaker 1: Opponents of Arctic drilling are plotting ways they think the
Speaker 1: Biden administration can maneuver around that requirement without ever issuing
Speaker 1: a lease, but it's not clear that they'll be successful.
Speaker 1: And regardless, this is something that the Biden administration will
Speaker 1: have to deal with. These dates are codified in law,
Speaker 1: so we're talking about, you know, a real race against
Speaker 1: the clock here. But so it's possible that they could
Speaker 1: just the administration could just run out of time. But
Speaker 1: let's say they don't. Are there other things that could
Speaker 1: scuttle the auctions here? Could a court step in? Could
Speaker 1: Congress step in? Are there other outside parties? So absolutely
Speaker 1: a court could step in, and that's probably the highest
Speaker 1: risk for the Trump Interior Department. There are currently several
Speaker 1: pending legal challenges to aspects of this leasing program, and
Speaker 1: you can bet that environmentalists and indigenous groups will be
Speaker 1: going to court to seek an injunction blocking any sale
Speaker 1: that the Interior Department authorizes. Before we get into what's
Speaker 1: going to happen afternoon on January twentieth. Let's talk about
Speaker 1: who wants the rights to drill for oil in Alaska.
Speaker 1: You know, oil prices are not as low as they
Speaker 1: were earlier this year, but they're still really low. And
Speaker 1: as we talked about three months ago, it is not
Speaker 1: easy to drill for oil in this part of the world.
Speaker 1: Who is clamoring to get the rights to drill here, right,
Speaker 1: I mean, so that's the big mystery. Well, there are
Speaker 1: two mysteries here really, you know, it's who is clamoring
Speaker 1: for these rights to drill and why the heck do
Speaker 1: they want them? And you know, the operational cost on
Speaker 1: the refuge are really really high. This is an area
Speaker 1: that is just it's difficult to operate in and costly
Speaker 1: to operate in. The low price of crude a may
Speaker 1: dure for some time. The reality is under the Biden administration,
Speaker 1: a leaseholder is not likely to get permits over the
Speaker 1: next four years. So all of those things are obstacles.
Speaker 1: And that's not even mentioning, by the way that the
Speaker 1: black Eye publicly that any leaseholder is going to take
Speaker 1: I mean, arcite drilling is not pup popular with the
Speaker 1: entire public and an activist have warned oil companies that
Speaker 1: if they bid, they are risking real reputational damage to
Speaker 1: their brand and their reputation. So that's all a factor.
Speaker 1: So then I have to think, you know, you have
Speaker 1: to think, why do these folks, why would anyone bid
Speaker 1: for these tracks? And there's a few schools of thought,
Speaker 1: but one is they're bidding on a post Biden future,
Speaker 1: four years down the line, where maybe a friendlier administration
Speaker 1: will allow them to drill. There's also the possibility that
Speaker 1: folks who win leases can challenge in action by a
Speaker 1: Biden Interior Department on those leases and essentially force a
Speaker 1: legal sediment where that those rights are bought out from
Speaker 1: under them are bought back by the federal government. Also,
Speaker 1: these leases potentially could add to companies oil reserves, the
Speaker 1: assets that they can book. So there's some opportunity there
Speaker 1: to add to your assets maybe, and that could be
Speaker 1: one factor. But ultimately we may be talking about leases
Speaker 1: that go for two dollars an acre. That's relatively cheap
Speaker 1: if they want to buy them, even given all these
Speaker 1: headaches and problems. I think that's not just relatively cheap,
Speaker 1: that's cheap in any sense of the word. But I
Speaker 1: really I'm glad you brought up the reputational risk because
Speaker 1: that was another thing that I got from your reporting
Speaker 1: that I thought was really interesting that there are even
Speaker 1: several banks that have publicly committed to not lend to
Speaker 1: any company that is drilling in this refuge. I mean,
Speaker 1: it's it just sounds like it'd be so hard, like
Speaker 1: the price of crude would have to be so high
Speaker 1: to justify the costs of doing this, right, I mean,
Speaker 1: I guess, and I mean it's not out of the
Speaker 1: question that we could see higher crude prices again, but
Speaker 1: I mean, wow, how high would they have to be? Right, right?
Speaker 1: I mean, I think the oil companies and people in
Speaker 1: the industry will say and will say that you know,
Speaker 1: these are not this is not something that would go
Speaker 1: into operation four years or even ten years down the line.
Speaker 1: So what they're doing here is charting oil development and
Speaker 1: production that might happen, you know, a decade or two
Speaker 1: decades down the road. So the question isn't really what
Speaker 1: the oil prices are today, but of course twenty years
Speaker 1: from now, so it is of course conceivable that you know,
Speaker 1: we're looking at triple digit prices in twenty forty. But
Speaker 1: it's also conceivable that the world will be moving on
Speaker 1: from oil and will be even more aggressively looking for
Speaker 1: non fossil alternatives to power our cars and our homes. So,
Speaker 1: you know, these are all calculations that these companies have
Speaker 1: to be making. But finally, let's move back to the
Speaker 1: more the shorter term than a twenty forty. So let's
Speaker 1: say that Trump administration wins its race against the clock
Speaker 1: and is able to get these auction you know, these
Speaker 1: auction off these rights before or you know, inauguration. You
Speaker 1: hinted at this earlier, but I want to get a
Speaker 1: little bit more deeply into this. It sounds like there's
Speaker 1: still a lot of tools that the Biden administration would
Speaker 1: have to prevent this from moving forward. Can you talk
Speaker 1: a little bit about that, about what the Biden administration
Speaker 1: could do right? You know, if the leases are sold
Speaker 1: before Biden takes office, these oil companies have in their
Speaker 1: hands a contract with the government, and that gives them
Speaker 1: some rights, but that piece of paper is not a
Speaker 1: guarantee they'll ever get to drill. And activists and others
Speaker 1: who are informing the Biden transition team are very aware
Speaker 1: of that, these companies will need a slew of permits
Speaker 1: to mount operations, So that includes, of course a drilling approval,
Speaker 1: but it also includes Clean Air Act authorations, animal take permits,
Speaker 1: rights of way, just a slew of authorizations, and every
Speaker 1: single one of those under a Biden administration that is
Speaker 1: not inclined to let these folks drill will become an obstacle.
Speaker 1: So there's no reason to think they'll get any of these.
Speaker 1: And even if the Interior Department and other agencies under
Speaker 1: Biden just moves slowly on every one of these steps,
Speaker 1: that could block activity for years. A smart analyst reminded
Speaker 1: folks Monday that slow can also no. That's it for
Speaker 1: today's episode of Parts per Billion. If you want more
Speaker 1: environmental news, check us out on Twitter. We use the
Speaker 1: handle at environment just that at Environment, I myself am
Speaker 1: at David B. Schultz if you want to discuss anything
Speaker 1: with me. Today's episode of Parks Pavillion was produced by
Speaker 1: myself and Josh Block. Parts Provillion was created by Jessica
Speaker 1: Coombs and Rachel Daegel. Music for today's episode is a
Speaker 1: message by Jazar and dash Rhydom by Jamie Wilder and
Speaker 1: Johann Sebastian Bach. They were used under a Creative Commons license.
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