ConocoPhillips got approval this week for developing its Willow project in the National Petroleum Reserve-Alaska. But another area the state has been hoping companies develop, the Arctic National Wildlife Refuge, has received almost no industry interest. The Alaska Industrial and Development Export Authority is currently the only leaseholder in ANWR.
The state is sending millions of dollars to the federal government to hold the leases as the Biden administration reviews the leasing program.
Alaska oil and gas expert Larry Persily has an idea. He wants the state to consider selling carbon credits for keeping oil and gas in the ground in ANWR.
After laying out his proposal in a recent op-ed in the Alaska Beacon, Persily says that it’s a serious proposal even if it’s not likely to happen.
Listen:
This interview has been edited for length and clarity.
Larry Persily: I don’t think Alaska’s political leaders are willing to admit there will be no ANWR development. And like I said, you’d have to go and get the feds to cooperate because the federal law says if you got a lease, you got to produce it or get off the lot. And I think the argument would be not producing it and selling carbon credits does not meet that requirement. But to me, it seems an elegant solution. We don’t have to… the state could hold onto leases, make some money. The federal government could share in the credit of not developing it, which wasn’t gonna happen anyhow. I think there’d be a lot of buyers out there. They would find it very high-profile, opportunistic to pay for the credits of not developing ANWR.
Wesley Early: So you touched on this a little earlier, but can you give a quick overview of how we got to this moment regarding ANWR from the Trump presidency to the Biden administration?
Larry Persily: Sure. So Alaskans certainly have been wanting to develop ANWR pretty much, I think since Earth was created in the Big Bang, probably that long. That’s been argued about for years and years. There was legislation passed by Congress that said there will be lease sales. There was one that was rushed through in the Trump administration, the very final days; essentially nobody bid but the state of Alaska. There were a couple of small non-oil and gas producers that put in very small bids and they later said, in hindsight, “We’ll give you back the leases, we don’t want them.” So the industry, I think, is looking at ANWR, looking at the high visibility of ANWR Arctic oil and gas development and they just don’t want any part of it. So the Biden administration came in said, “Hey, those were rushed leases under Trump. We’re going to put them under review. You can’t do anything. We’re going to think about it. We’re going to ponder some more. We’ll get back to you.”
Wesley Early: There’s been a lot of talk about carbon credits lately — essentially companies could purchase these credits to offset their own carbon emissions. And the governor’s also proposed allowing companies to lease depleted Cook Inlet oil and gas reservoirs to store carbon dioxide. What do you think of these plans to lower emissions while also making money for the state?
Larry Persily: Well, right now, anything that makes money for the state would be great because we refuse to tax ourselves, and oil is not exactly a growth industry, Willow aside. So I think the governor is proposing these carbon credits to divert attention from the fact his budget doesn’t balance. We do not have a diversified source of revenue. We don’t want to tax ourselves. So he’s conjured up that we could make billions of dollars by selling carbon carbon credits. There is a market for carbon credits, no doubt about it. Other places are doing it, but the purchasers of these carbon credits are getting more skeptical. They’re saying, “Wait, are you really… is this legit?” in terms of your promising not to log in the Amazon or you’re promising not to log in Alaska. There is growing skepticism in the market for carbon credits where companies want to know they’re real and it really means carbon is going to stay in the ground, not the atmosphere. And that’s why I think something like oil and gas that doesn’t get produced is much more attractive than trees that don’t get cut, which were never going to get cut anyhow.
Wesley Early: You mentioned earlier that your plan does have a hang-up in that federal law does say you have to drill in your oil and gas leases. How would the federal government have to shift things to make your plan work?
Larry Persily: Well, that would assume that I actually put legal research into it. I don’t know if it would take a regulation or a law. I think it probably would take a change in law, but it was also a column I wrote to just get people thinking, “Why are we holding onto these leases? Why are we paying $3.5 million a year for something that’s never going to return anything?”
Wesley Early: You note at the end of your op-ed, that this is a dream, albeit a “sweet dream.” From your perspective, how likely do you think your dream could become a reality?
Larry Persily: Probably not. I mean, I’ve dreamed about a lot of things in Alaska for 50 years and most don’t become reality. But I guess I also want to make the point, okay, you don’t like my dream — find another. Because right now you’re writing a check for $3.5 million a year on leases that are not going to produce because there is just no industry interest in it. So pick another dream or keep writing the checks for nothing.
