In Alaska, Oil Giant Gambles on Willow Drilling Project

April 6, 2023

Oil workers are racing to get as much prep work done as possible, for the recently approved Willow oil drilling project, before winter’s frozen ground gives way to squishy mud and makes working impossible.

Your mission, should you decide to accept it, is to make Conoco Phillip’s controversial initiative a legendary example of hubris and business miscalculation.

New York Times:

It’s been just days since the Biden administration approved an $8 billion project to drill for oil in the National Petroleum Reserve in Alaska, the nation’s single largest expanse of untouched wilderness. But the oil giant ConocoPhillips is already in motion, massing equipment and flying in workers and provisions to this vast frozen flatland 250 miles above the Arctic Circle.

While scientists have warned that nations must stop approving new oil and gas drilling or face a perilous future on a dangerously heated planet, the people involved in the Willow project are eager to get going.

Executives at ConocoPhillips are building an operation to last generations with, perhaps, an eye toward even further expansion inside the reserve at a later date. Like other oil giants that earned record profits in 2022, the company is betting that any pivot away from fossil fuels will take place in a distant future.

A transition to renewable energy is going to take a long time, said Connor Dunn, a ConocoPhillips manager in Alaska. “There is going to be a significant need for U.S. domestic oil production for a great many decades to come,” he said.

But even as ConocoPhillips gears up to build Willow, it faces complications on a planet that is dangerously warming because of the burning of fossil fuels. Average temperatures in the Arctic are increasing about four times as fast as the rest of the globe, and the permafrost is thawing faster than expected.

The effects can be seen throughout the region that surrounds the reserve: in flooded ice cellars that can no longer preserve caribou and whale meat. In homes along the coast that are sinking into the ground, and in telephone poles now tilting from erosion. And it can be seen on the ice roads traveled by the oil company, which are growing thinner and melting earlier in the season.

Changes like these will make drilling in the Arctic, already one of the most expensive places in the world to extract oil, only costlier.

Global warming presents other economic challenges as well. Will there be demand for the oil in years to come, as renewable power like solar and wind becomes cheaper and more widespread? This is perhaps ConocoPhillips’s biggest gamble.

At the earliest, the crude would begin flowing in about six years. By that time, the Biden administration hopes that demand for oil will have plummeted because of federal investments to encourage use of renewable energy and to encourage a transition to electric vehicles.

The threat that demand for oil will hit a peak, and then decline, is a risk that all oil companies take as they begin new drilling, said Roger Marks, a longtime petroleum economist in Alaska.

“The stone age did not come to an end for a lack of stone,” Mr. Marks said, making the point that he expected the same would be true with oil. “That’s the long-term risk these companies face with electric cars and wind and hydro and everything else,” he said. “Eventually oil is going to go away, even if there’s still some to produce

Still, projected emissions from Willow would be a small fraction of the 5.6 billion metric tons of carbon dioxide emitted annually by the United States, the second biggest polluter on the planet after China. ConocoPhillips and the Biden administration both say that if Willow were not permitted, supply to meet demand would just shift to oil drilling elsewhere.

ConocoPhillips has about a month to take the first step in the Willow project, which is to open a gravel mine and construct a gravel road, before spring temperatures melt the ice roads, making the tundra swampy and impassable for construction vehicles.

The thaw is coming. The short winter construction season helps to make Alaska’s North Slope one of the most expensive places to drill for crude oil in the country, said Mr. Marks, the petroleum economist.

To keep the permafrost sturdy, ConocoPhillips uses thermosyphons, tall metal tubes filled with a refrigerant that are partly buried in ground to keep it frozen. Climate change is, of course, worsening the problem of a thawing permafrost.

Thermosyphons, which have been used in the Arctic for decades to protect roads and buildings, will also be installed on the platformsfor rigs that will pull up oil — oil that, when burned, will produce the emissions that scientists say will cause the ground to thaw more rapidly.

Riding in a van across the blindingly white territory, Mr. Dunn and five other ConocoPhillips employees said that they understood that fossil fuels are heating the planet and that they wanted to be part of the transition to clean energy. In the meantime, they are betting on oil.

“We all hope and want to see that energy transition in an orderly fashion,” Mr. Dunn said. “We look at it as, demand is there. Demand is a huge part of it, and we take that sole risk. If that demand is not there, we’ve taken that sole risk.”

Business Insider:

Set to be built in Alaska’s North Slope, the ConocoPhillips project is reliant on the region’s cold temperatures and the permafrost — ground comprised of soil, rocks, and ice that typically stays frozen year after year.

The plan includes almost 500 miles of ice roads and an ice bridge, Bloomberg Law reports. And it depends on the frozen ground to build drilling pads for oil extraction, gravel roads, and airstrips, according to the BLM review.  

Melting permafrost, brought on by global warming, not only releases additional greenhouse gases including carbon dioxide and methane but it can also cause the ground to suddenly give out, causing roads and other infrastructure to fall apart. 

“Key changes to anticipate as a result of a changing arctic climate are permafrost thawing, shorter ice road seasons, and changes to precipitation,” the agency said. “Permafrost thawing and uneven settlement could cause damage to infrastructure such as gravel pads, roads, and pipelines. A shorter ice road season would affect the transport of materials and personnel that depend on ice roads.”

Oil drilling infrastructure including gravel roads and well casings can also accelerate the thawing of the land immediately surrounding it, the agency said. 

“Well casings from production and injection wells would transfer heat to the surrounding soils and could change the thermal regime of the permafrost and create areas of deep thaw,” BLM said. 

One solution to the thawing permafrost is to haul in giant coolers — which is essentially what ConocoPhillips plans to do, according to the impact statement.

BLM said in its report that the oil company, based in Houston, would deploy thermosyphons, a type of non-electronic cooling device, nearby various infrastructure including well pads and well house shelters. 

“Thermosiphons would be installed in specified areas,” the report said, “to protect the permafrost and prevent subsidence.”

ConocoPhillips, Alaska’s largest oil producer, would also take other precautions, such as making the gravel roads and well pads especially thick, according to the agency. 


6 Responses to “In Alaska, Oil Giant Gambles on Willow Drilling Project”

  1. ecoquant Says:

    “There is going to be a significant need for U.S. domestic oil production for a great many decades to come.”

    This is a commitment to “same old” change, expecting things will advance gradually. They are completely ignoring the possibility that rate of change will accelerate, along with economic damages resulting from it.

    They are also assuming there will be a market for the oil. There may well be but the p.p.b. is going to become the cost to extract from free air CO2 emitted from burning of the barrel. That’s high.

    • rhymeswithgoalie Says:

      They are completely ignoring the possibility that rate of change will accelerate, along with economic damages resulting from it.

      Of course not! These people are the Smartest Guys in the Room!

      Next you’ll be telling me that the Very Smart people who handle investment banking could be caught with their pants down on “structured financial products” based on a mortgage boom!

      • ecoquant Says:

        Didn’t talk about or mean mortagages. Consider instead sudden massive losses along coasts.

        • rhymeswithgoalie Says:

          I was attempting to make an analogy with the financial industry’s “unforeseen” 2007/2008 collapse and the current confidence of the oil/gas industry. (Recently watched The Big Short.)

          • Ron Benenati Says:

            confidence? or strategy? Ownership and development of as many assets as possible; the rapid, in our face development of this project for instance screams, “We will not be stopped.” Ownership is control. “We in the fossil fuel industry have made investments you have no right to interfere with.” Too big to fail? Seems a concept that has a history of winning.
            Within an industry that has displayed such violent self interest around the world since its inception, the recent manifestations of its endless power grab makes my mind spin with wonder of where it will lead us.

          • rhymeswithgoalie Says:

            For so many decades oil&gas companies have been warping foreign policy because governments were so dependent on them. Governments are starting to distance themselves from FF lobbyists, and carmakers making the transition to EVs are reducing the long-term demand for fossil fuels.

            Yes, they still have a lot of power, but history has shown us how markets can collapse very quickly.

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