Analysis-Legal challenges could delay Alaska's Willow oil project

[March 14, 2023]  By Clark Mindock and Timothy Gardner

WASHINGTON (Reuters) -The oil industry on Monday cheered the U.S. government's greenlighting of ConocoPhillips' multibillion-dollar oil drilling project in Alaska's Arctic, but court challenges could mire the plans in further delays.

President Joe Biden's administration approved a trimmed-down version of the $7 billion Willow project on federal lands in a pristine area on Alaska's north coast. Biden has been trying to balance his goal of decarbonizing the U.S. economy by 2050 as Russia's war in Ukraine raises worries about global energy security.

ConocoPhillips has held the leases in the National Petroleum Reserve-Alaska since 1999. Former President Donald Trump's administration approved the project in 2020. But Alaska District Court Judge Sharon Gleason blocked it a year later arguing its environmental impact analysis was flawed.

Now environmental groups are combing through the Biden Interior Department's approval for flaws that could provide them grounds for new lawsuits.

"We have some serious questions about whether this decision actually complies with the court's order from August 2021," said Bridget Psarianos, senior staff attorney at Trustees for Alaska. "We'll be looking closely at how (Interior's) Bureau of Land Management (BLM) is considering alternatives and what its final approvals are."

Judge Gleason had ruled that Trump's Interior Department failed to include projections for greenhouse gas emissions from foreign consumption of Willow's oil and also failed to analyze alternatives to the project.

Trustees for Alaska is also analyzing whether the latest approval complied with federal statutes like the National Environmental Protection Act, the Endangered Species Act, and the 1976 Naval Petroleum Reserves Production Act, Psarianos said.

Kristen Monsell, a senior attorney at the Center for Biological Diversity, another group involved in the previous suits, said Monday's approval for the Willow project is "still inadequate in numerous respects."

The approval would allow Conoco to develop more than 90% of the oil it had originally aimed for despite limiting the number of well pads, and the administration failed to explain how this was consistent with climate change goals, Monsell said.

She said the analysis did not adequately address cumulative impacts of the oil and gas development, including how greenhouse gas emissions from burning the fossil fuels would impact survival of threatened or endangered animals like polar bears and seals.

"That just adds insult to injury for these species that will be directly harmed by the project through oil spills, habitat destruction, and noise pollution," Monsell said.

Interior said it had no comment.

A polar bear keeps close to her young along the Beaufort Sea coast in Alaska. Marchh 6, 2007 REUTERS/Susanne Miller/USFWS/handout

Senator Dan Sullivan, a Republican from Alaska, told reporters the state's lawmakers are prepared to defend the decision against "frivolous" legal challenges.

"We will do so by working closely with the same Alaska stakeholders who brought us this far," Sullivan said. "We are already prepping an amicus brief for any litigation that will come against this decision," he said.

Erik Grafe of Earthjustice, an environmental law firm, called litigation "very likely" and said it "does not look like Interior has fixed the myriad legal flaws that Earthjustice and others identified for the agency prior to its decision".

Jenny Rowland-Shea, the director for public lands at the left-leaning Center for American Progress, said another concern was a leak last year of 7.2 million cubic feet of natural gas at ConocoPhillip's nearby Alpine oil field, which forced 300 of the 400 workers there to evacuate. Local regulators are still assessing its causes.

The BLM's environmental impact statement downplayed the risks of such a leak at Willow, but lawyers could make a case that Interior's record of decision did not adequately consider the issue, Rowland said.

Dennis Nuss, a Conoco spokesperson, said the company would not be surprised by another legal challenge but believes U.S. agencies "have conducted a thorough process that satisfies all legal requirements".

WILL DRILLING STILL BE ECONOMICAL?

John Leshy, professor at U.C. College of the Law, San Francisco and a former Interior Department solicitor under former President Bill Clinton, suggested the department did not have much choice in approving the projects. If Interior had not approved Willow then ConocoPhillips would likely have sued the agency saying its lease rights had been taken.

And if the courts side with environmental groups on potential lawsuits it would probably only delay Willow, Leshy said.

But Mark Squillace, a professor at the University of Colorado Law School and former Interior Department lawyer said there were other threats to the project, including potential declining prices for oil as electric vehicles drive the energy transition which could threaten Willow's long-term viability.

"The bigger risk to the project is economic," he said.

(Reporting by Timothy Gardner, Clark Mindock, Nichola Groom and Valerie Volcovici; Editing by David Gregorio and Sonali Paul)

[© 2023 Thomson Reuters. All rights reserved.]This material may not be published, broadcast, rewritten or redistributed.  Thompson Reuters is solely responsible for this content.