Daily on Energy: BP’s Alaska exit not a good sign for ANWR drilling

At least that’s the argument some Democrats were making in reaction to BP selling all of its Alaska assets to privately held Hilcorp Energy for $5.6 billion after the British oil giant had operated for 60 years in the state.

“If BP thought it could have squeezed a nickel out of drilling in the Arctic Refuge, it wouldn’t have hesitated to annihilate it,” Sen. Ed Markey of Massachusetts tweeted Tuesday. “Their exit is further evidence that there is absolutely no reason to turn the Refuge over to the oil and gas industry. All risk, no reward.”

ANWR lease sale is coming soon: Republicans are closer than ever to achieving their goal of drilling in the long-off-limits Arctic National Wildlife Refuge, known as ANWR, after Congress as part of the GOP tax cut bill of 2017 voted to allow energy exploration in a 1.5 million-acre section of the refuge, known as the “1002 area,” where billions of barrels of oil are believed to lie beneath the coastal plain.

However, it has been an open question on how interested energy companies would be in the opportunity, with oil prices hovering at low levels in the mid-$50s per barrel and competition steep from in the nation’s lower 48 shale regions.

“ANWR could be a big find, and big finds imply fat margins, but this is not a time of oil scarcity,” Kevin Book, managing director for research at ClearView Energy, told me. “Companies may not want to tie up capital on 10-year megaprojects if there’s a faster cash turn waiting onshore. Plus, nobody wants to drill the next multibillion-dollar duster at $55 per barrel.”

The Interior Department is expected any day to release an environmental impact statement assessing the risks of drilling in ANWR, a necessary step before the agency conducts a lease sale, which the Trump administration is planning for this year.

Any actual drilling wouldn’t happen for 10 to 15 years. But Democrats and environmental groups have accused the Trump administration of rushing the environmental review and leasing process before the 2020 election, when a Democrat could win the White House and block the planned sales.

Will industry come? The level of interest won’t be known until the lease sale happens, and it’s unclear if BP would have participated, industry allies are quick to point out.

“Shut up and let the sale happen,” said Robert Dillon, an energy consultant and former senior staffer for Republican Sen. Lisa Murkowski of Alaska, who led the push in Congress for opening ANWR to drilling. “If nobody shows up, you’ve got your answer.”

BP was part of a group of big oil companies that helped drill an exploratory well in ANWR in the mid-1980s, the only well ever drilled in the refuge.

Alaska oil production trends: BP’s exit from Alaska more broadly shows the trend of declining production in the frontier oil-producing state and how major companies are moving on to chase opportunities in shale.

Oil production in Alaska has fallen from more than 2 million barrels per day in 1988 — more than any other state — to 464,000 barrels per day in 2018, according to the Department of Energy, an amount less than four shale-producing states.

“This will not be the last deal in the region,” Wood Mackenzie analyst Rowena Gunn said in a note to reporters Tuesday. “ExxonMobil may be next to follow BP, Anadarko, Pioneer, and Marathon in the list of companies having sold out of Alaska.”

David Hayes, a former deputy secretary of the Clinton administration’s Interior Department, told me BP’s exit is “consistent with two realities” of oil exploration and production in the Alaskan Arctic.

Oil and gas operating costs in the Alaskan Arctic are higher than in other fossil fuel producing areas in the U.S., and many of the current oil fields in Alaska are becoming mature.

Expanding opportunities into long-protected and remote areas like ANWR could be a risky bet, given those realities and the added scrutiny major companies are facing over their contribution to climate change.

“I suspect that both of these factors played into BP’s thinking,” said Hayes, who is now with the State Energy & Environmental Impact Center at the New York University School of Law.

Jumping the gun? Alaska-based industry groups, however, say it would be wrong to interpret BP’s move out of the state as a bad sign for ANWR.

Rebecca Logan, executive director of the Alaska Support Industry Alliance, told me it’s not surprising to see smaller companies like Hilcorp take over the aging oil fields in the state, because they are more willing to invest in drilling for oil that is harder to get.

“It’s shocking to people to have a company that’s been here for 60 years leave,” Logan said. “But it’s a leap to say what this means for ANWR. The lease sale will show us the level of interest. Regardless of sales and acquisitions, companies will make that decision based on other factors.”

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CNN’S CLIMATE CHANGE TOWN HALL WILL LAST SEVEN HOURS: CNN’s town hall about climate change will feature 10 Democratic presidential candidates and last seven hours.

The network revealed the format for its Sept. 4 town hall on Tuesday. The event, which is scheduled to last from 5 p.m. to after 11 p.m., will consist of CNN hosts moderating a town hall discussion with each individual candidate for 40 minutes at a time. CNN chief climate correspondent Bill Weir will question the candidates throughout the evening, as well.

The town hall comes as climate activists and some presidential candidates have unsuccessfully pressed the Democratic National Committee to host an official debate dedicated specifically to climate change.

See the schedule of town hall speakers here.

DEMOCRATS ACCUSE TRUMP OF IGNORING CLIMATE CHANGE FOR ENVIRONMENTAL REVIEWS: Democratic senators and state attorneys general are accusing the Trump administration of ignoring climate change with its proposed new rules for how federal agencies weigh greenhouse gas impacts for infrastructure and energy projects.

With the public comment period closing this week, Democrats issued comments opposing the White House Council on Environmental Quality’s draft guidance on the consideration of greenhouse gas emissions in federal agencies’ National Environmental Policy Act review processes.

“This reckless guidance by the Trump Administration leads agencies to ignore the climate crisis, the most pressing environmental challenge of our time,” said California Attorney General Xavier Becerra, who led a coalition of 19 Democratic attorney generals opposing the guidance.

The guidance would narrow consideration of GHGs: The White House Council on Environmental Quality’s draft guidance, first proposed in June, would give any agency the discretion to ignore the indirect effects of greenhouse gas emissions of a given project, such as a pipeline, and provide the agency with a rationale to expedite projects.

Indirect emissions would include natural gas after it has been shipped downstream and used in a power plant, for example. The guidance seeks to clarify that agencies need only focus on the “direct” environmental effects of the project itself without weighing the after effects on climate change.

Agencies preparing environmental analyses “need not give greater consideration to potential effects from GHG emissions than to other potential effects on the human environment,” the guidance reads.

Senators accuse Trump of bias: Democratic senators led by Sheldon Whitehouse of Rhode Island filed separate comments this week accusing the Trump administration of bending to fossil fuel industry influence in proposing the guidance.

“The proposed guidance is yet another example of the regulatory capture of the Trump administration by the fossil fuel industry,” Whitehouse said, along with Sens. Jeff Merkley of Oregon, Dianne Feinstein of California, and Ben Cardin of Maryland. “It ignores scientific, economic, and technical expertise on the costs of carbon pollution in order to cater to the interests of the fossil fuel industry to which the Trump administration is professionally, financially, and politically tied.”

TROPICAL STORM DORIAN ON TRACK TO HIT PUERTO RICO, THREATEN FLORIDA: Tropical Storm Dorian is on track to hit Puerto Rico and the U.S. Virgin Islands on Wednesday, and it could move on to Florida as a Category 2 Hurricane by the weekend, the National Hurricane Center said.

Puerto Rico, a U.S. territory of roughly 3.2 million, is still recovering from the devastation caused by Hurricanes Irma and Maria in September 2017.

Maria became one of the deadliest natural disasters in U.S. history, blamed for roughly 3,000 deaths. Recovery efforts, which include rebuilding the power grid that was destroyed by Maria, have been hindered by poor infrastructure, political turmoil, and economic woes.

Trump prepares to help, with caveats: President Trump approved a request for an emergency declaration for Puerto Rico on Tuesday, freeing up federal assistance to help with recovery. But Trump has been critical of how Puerto Rico uses federal money, leading to a fight with Democratic politicians on the island who have accused him of neglecting Puerto Rico’s U.S. citizens.

In a tweet Tuesday, Trump said Congress approved $92 billion in disaster aid last year. “[A]n all time record of its kind for ‘anywhere,'” he said. But critics and fact-checkers were quick to point out that federal data show Congress has only so far allocated roughly $43 billion for Puerto Rico and the island only received less than $14 billion as of May.

Trump issued a politically charged tweet on Wednesday.

“We are tracking closely tropical storm Dorian as it heads, as usual, to Puerto Rico,” Trump said. “FEMA and all others are ready, and will do a great job. When they do, let them know it, and give them a big Thank You – Not like last time. That includes from the incompetent Mayor of San Juan!”

The Rundown

Washington Post Trump pushes to allow new logging in Alaska’s Tongass National Forest

Reuters As fires race through Amazon, Brazil’s Bolsonaro weakens environment agency

Los Angeles Times Los Angeles has lined up record-cheap solar power. But there’s a problem

S&P Global Amid climate change pressure, insurers hold billions in coal-exposed investments

New York Times A senator’s lake house vs. a town fighting flooding

Calendar

WEDNESDAY | August 28

House and Senate in August recess.