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Biden to Signal Support for Alaska Oil Project, Defying Greens

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(Bloomberg) — The Biden administration is on track to telegraph support for a scaled-back drilling plan at ConocoPhillips’s proposed Willow project in northwest Alaska, over the objections of environmentalists who say the world can’t afford to burn the estimated 600 million barrels of oil it could yield.

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In a just-concluded environmental review set to be posted online as soon as Wednesday, the US Interior Department’s Bureau of Land Management says it prefers an oil development plan that limits the company to drilling as few as three wells across the Willow site in the National Petroleum Reserve-Alaska — instead of the five ConocoPhillips previously envisioned. The bureau’s conclusion was described by people familiar with the matter who asked not to be identified because the court-ordered final supplemental environmental impact statement had not yet been made public.

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The release of the environmental analysis will set the stage for a possible project approval in no fewer than 30 days. The final decision rests with Interior Secretary Deb Haaland, who could impose additional stipulations further limiting drilling and activity at the site. 

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A White House spokesman deferred to the Interior Department for comment. An Interior Department spokeswoman declined to comment.

The release of the analysis is set to be a critical milestone for the $8 billion project the Interior Department says could produce some 180,000 barrels of oil per day and inject new crude into the Trans-Alaska Pipeline System. The head of ConocoPhillips’s Alaska operations has warned further restrictions that scale down drilling to just two locations would not be economically viable. 

The initiative is politically fraught for the administration, coming as President Joe Biden charts a path away from fossil fuels and beseeches US oil companies to produce more crude in the meantime. Although the NPR-A was set aside for energy development decades ago, environmentalists say new industrial oil operations there imperil critical wildlife habitat and that the resulting crude and carbon dioxide emissions would exacerbate global warming. They’ve dubbed Willow a litmus test on climate.

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The Bureau of Land Management’s final environmental impact statement tracks an earlier draft released last spring, the people said. Under its preferred scenario, the project would be pared down to three wells, with a fourth indefinitely deferred. The plan also would shrink the amount of necessary gravel roads, pipelines and other surface infrastructure, effectively reducing construction time and mitigating the potential impacts on caribou, yellow-billed loons and other animals. 

Even so, the agency previously estimated oil production would reach an estimated 614 million barrels over 31 years — less than a 3% reduction from the 629 million envisioned under ConocoPhillips’s proposal. 

ConocoPhillips leadership has signaled their support for the approach. Nick Olds, the company’s executive vice president for the lower 48, called it “a good path forward” in an August earnings call, stressing that even though the approach would reduce surface infrastructure it would maintain estimated recoverable resources.

—With assistance from Justin Sink.

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