Alaska Fossil Fuel Expansion Prospects Amid Policy Shifts | Shale Magazine

It has appeared increasingly complicated to develop new oil and gas projects in Alaska in recent years due to concerns over the environmental implications of exploration activities in the region and opposition from both environmentalists and indigenous communities. The former Biden administration placed several limits on oil and gas operations in Alaska, restricting the leasing of land and limiting development. Now, under President Donald Trump, there is a revived interest in Alaskan oil and gas, so will the state attract new investment in fossil fuels?

The Biden Administration Approach to Alaska

In 2023, the Biden administration approved the controversial Willow Project, a massive drilling project in Alaska, which environmentalists argued was at odds with Biden’s climate pledges. The former government approved a scaled-down version of ConocoPhillips’ Willow, located in the National Petroleum Reserve (NPR-A) on the North Slope. ConocoPhillips expects to produce 180,000 bpd of oil from the project. 

However, in April 2024, the Biden administration introduced restrictions on new oil and gas leasing in other parts of the state. The restriction was placed on 13 million acres of the NPR-A to help protect wildlife. The move followed several years of discussion over whether it was viable to develop the land for fossil fuel projects in the face of environmental challenges. The region had been relatively untouched until the late 1990s when exploration began. 

Then, before leaving office in January this year, Biden introduced new protections on 1.3 million acres in Alaska’s North Slope to restrict further exploration, which took effect immediately. However, at the time, President-elect Donald Trump vowed to grant broad access to fossil fuel companies to drill on federal land. 

Alaska’s oil production fell from around 2 million bpd in 1988 to 426,000 bpd in 2023, according to the U.S. Energy Information Administration. Currently, just two major projects are under development, ConocoPhillips’s $8 billion Willow and Santos’ Pikka, which are expected to increase the state’s output to 650,000 bpd.

Trump’s Executive Orders Could Drive Fossil Fuel Development in Alaska

When President Trump came to office in January, he signed a flurry of executive orders in support of greater fossil fuel development. “We will drill, baby, drill,” the president said in his inaugural address. He also overturned two of the Biden administration’s restrictions on oil and gas exploration. The first was a restriction on several U.S. coasts from future oil and gas drilling, including the entire U.S. East Coast, the eastern Gulf of Mexico, parts of the Pacific coast, and portions of Alaska’s Bering Sea. The second was the limit on almost 3 million acres of the Arctic Ocean in the NPR-A, which Biden introduced when approving Willow in 2023. 

Trump aims to expedite the permitting and leasing of energy projects in Alaska, undo resource development restrictions on state and federal lands, overturn the cancellation of leases within the ANWR, and prioritize the development of LNG. However, many oil majors remain wary about developing new projects in Alaska due to the risk of policy changes under future governments, as well as local opposition and the potential for long delays. 

Interior Department Reopens Millions of Acres in Alaska 

In March, The Interior Department announced plans to expand fossil fuel drilling opportunities in the coastal plain of the Arctic National Wildlife Refuge and the neighboring NPR-A. The Interior Secretary Doug Burgum said he expected the move to boost interest in Alaska’s “abundant and largely untapped resources.”  

“For far too long, the federal government has created too many barriers to capitalizing on the state’s energy potential,” Burgum said in a statement. “Interior is committed to recognizing the central role the State of Alaska plays in meeting our nation’s energy needs while providing tremendous economic opportunity for Alaskans.”

Approximately 82% of the available land in the NPR-A will be made available to leasing and energy development, largely reversing the Biden-era protections on the region. However, a 1976 law states that the Interior Department must protect certain parts of the reserve with wildlife or with scenic or historical value when leasing land for new projects. 

Potential New LNG Connection Between Alaska and Asia

The removal of certain restrictions on Alaskan oil and gas projects, as well as mounting pressure from the Trump administration for countries to purchase more U.S.-produced liquified natural gas (LNG) to avoid tariffs, is spurring greater interest in the region. 

In March, Trump announced that Japan and South Korea plan to work with the United States to develop a $44 billion LNG export project. The project “Alaska L.N.G.” would include the construction of an 800-mile pipeline from fields north of the Arctic Circle to southern Alaska for gas to be shipped to Asia. The project has been under discussion for several years, but the complexities involved in developing such a project have led it to be tabled until now.  

It is still uncertain whether the LNG export project will go ahead, but recent progress in discussions demonstrates the renewed interest in the region. Nevertheless, developing new oil and gas projects in Alaska will be an uphill battle, as many environmentalists and local communities continue to oppose such development. In addition, many oil and gas companies have shifted their operations to more sustainable regions, with the promise of “low-carbon” oil, to ensure their longevity. By contrast, commencing new exploration activities in Alaska could be risky due to potential policy changes within just a few years under a new government. 

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