The eleventh-hour inclusion of provisions in President Trump’s tax cut plan to greenlight oil and gas drilling in the Arctic National Wildlife Refuge marked a stunning legislative victory for the deep-pocketed petrochemical industry.
Since the 1980s, the sector has sought unsuccessfully to open a portion of this rugged wilderness the size of South Carolina to exploration and drilling. This time around, generous campaign contributions that skew heavily towards Republicans who control Washington’s levers of power paid off.
According to the Open Secrets database maintained by the non-partisan Center for Responsive Politics, oil and gas producers favored the GOP over Democrats 88 percent to 12 percent during the 2016 election cycle. The sector is the sixth most partisan industry/interest group in the nation, the center found.
But the push to open ANWR was not led by oil and gas conglomerates, an environmentalist and an industry official told Tarbell. Senator Lisa Murkowski (R-AK), chair of the powerful Senate Energy and Natural Resources Committee, and other congressional delegation members sought the plum as a consolation prize.
“This was a gift to the Alaska delegation,” said Lois Epstein, engineer and Arctic program director for The Wilderness Society in Alaska. “One thing people say here is that is that if you open the Arctic Refuge you become senator for life,” she quipped.
Murkowski was courted by tax bill proponents because she previously voted against repeal of some key parts of Obamacare, Epstein said. “Whether or not there is drilling,” it’s seen as an accomplishment for Alaska’s lawmakers, the environmentalist explained.
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“It was really the delegation, led by our senior senator,” affirmed Kara Moriarty, president and CEO of the Alaska Oil & Gas Association. “This has been a long priority for the state of Alaska.” Governor Bill Walker, a former Republican who is now an independent, also favors drilling, and support is strong statewide, noted Moriarty, a former aide to Senator John Thune (R-SD), chairman of the Senate Commerce Committee.
API’s largesse
Tarbell’s review of public lobbying disclosures reveals that even if lawmakers took the lead, there was ample industry outreach. The American Petroleum Institute, which represents oil and gas providers, and the three biggest oil and gas companies in Alaska—BP, ConocoPhillips and Exxon Mobil—all had lobbyists working the issue.
Underscoring the industry’s financial muscle, API President and CEO Jack Gerard drew a salary of more than $5 million in 2015, according to the group’s most recent IRS 990 filing. Additional compensation raised the total to $6.3 million.
API’s tentacles reach far. In 2015, beneficiaries ranged from the congressional Black and Hispanic caucuses to Americans for Tax Reform to the Boy Scouts. The petroleum industry also donates to indigenous villages and Alaska native corporations in its effort to soften ANWR opposition, Epstein said.
The Alaska Oil & Gas Association website notes that the industry gives millions annually to local non-profits, including all University of Alaska campuses, social service agencies and the United Way charity.
The $65 billion-plus, state-managed Alaska Permanent Fund uses a portion of oil revenue to distribute an annual dividend, set at $1,100 for 2017, to every eligible Alaskan.
The generosity extends to the three Republicans who comprise the Alaska delegation. According to Open Secrets, the oil and gas sector has been the top industry contributor to Senator Murkowski and Representative Don Young over the course of their political careers. Murkowski collected $1,405,044 from 2003 to 2018, while Young has raked in $1,401,568 since 1989. Both lawmakers held coveted seats on the conference committee that finalized the tax legislation.
The sector ranks fifth for donations to Alaska’s junior Senator Dan Sullivan, who received $423,685 over the last five years.
“It sometimes looks like we’re a partisan industry,” but in fact, contributions are driven by policy considerations, not party affiliation, Moriarty responded.
When Murkowski held a November hearing on oil and gas exploration in the refuge’s coastal plain, eleven of the twelve witnesses hailed from Alaska. Only one expressed opposition. None were major oil and gas producers.
Large companies were not invited—and wanted it that way, Moriarty said. “This wasn’t about the oil industry. This was about what is best for Alaska” and the U.S. energy supply, she insisted. “If we had been invited, then the headline was, ‘Oil industry pushing for ANWR.’”
Alaska lawmakers have a long history of fighting that battle. Former Alaska governor and senator Frank Murkowski, who chaired the committee his daughter now helms, championed the cause. The late Senator Ted Stevens (R-AK) famously described his failed 2005 attempt to add ANWR provisions to a spending bill as the saddest day of his life.
The API and Murkowski’s committee did not respond to requests for comment.
ANWR drilling supporters argue that modern technology enables extraction with minimal environmental consequences, and insist that the affected area is tiny. “The entire Arctic National Wildlife Refuge is 19 million acres, and 92 percent of it is permanently off-limits,” Moriarty said. “We’re talking about 2,000 acres.”
Environmentalists counter that the impact zone is much larger—closer to 1.5 million acres—when pipelines, well pads, noise and air pollution are factored in.
Epstein said that Murkowski has been skillful at minimizing the issue by touting the 2,000 acres figure and framing the debate as a “parochial issue.”
Hollow victory?
Murkowski justified the drilling provisions by arguing that $1 billion could be raised for the Treasury over the next decade—and $100 billion down the road.
But that’s only if oil and gas companies seek leases to drill, and it is unclear whether they will.
The industry faces a litany of hurdles that could turn the legislative victory into an empty win. “I believe that the biggest driver is not the regulations, not the availability, but the price of oil,” Epstein said. She pointed to cheaper drilling prospects in the lower 48 that are higher priorities.
Fossil fuel companies also know that opponents will seek to block ANWR exploration and drilling through protests, litigation and shareholder activism. Environmentalists warn that any oil extraction in this ecologically sensitive region could have devastating consequences for caribou and trigger oil spills.
“There are a lot of unknowns about the Arctic Refuge oil reserve” that make drilling there “high risk,” Epstein observed. Environmental impact statements and seismic tests are among them. Other challenges include the potential for a future president who wants to change course.
Moriarty emphasized that ANWR oil production was always ten to twenty years out. “The leasing revenue is the short-term” goal, and that is what lawmakers were directed to find, she said.
But she acknowledges the uncertainty. “There is no guarantee that we’ll have production from ANWR, but we can guarantee there would never be the opportunity if a lease sale is not held,” she said.
