The size of the proposed $7bn Willow development in the National Petroleum Reserve-Alaska (NPR-A) has been substantially reduced by 40% with two of the five drill sites proposed by ConocoPhillips being denied by the Interior Department. This followed a review by the US Bureau of Land Management (BLM) of the potential greenhouse gas impact of the project’s original master plan.

ConocoPhillips is also now required to relinquish rights to approximately 68,000 acres of its existing leases in the NPR-A Bear Tooth Unit, including approximately 60,000 acres in the Teshekpuk Lake Special Area. This ‘will reduce the project’s freshwater use and eliminate all infrastructure related to the two rejected drill sites’, including approximately 11 miles of roads, 20 miles of pipelines, and 133 acres of gravel, ‘all of which reduces potential impacts to caribou migration and subsistence users’, states the Department.

However, the announcement was decried by environmental bodies, who say the project approval flies directly in the face of President Joe Biden’s highly publicised campaign to fight climate change and rapidly shift to cleaner and greener sources of energy.

Meanwhile, the Biden-Harris Administration also announced steps to limit future oil and gas leasing and industrial development in the Teshekpuk Lake, Utukok Uplands, Colville River, Kasegaluk Lagoon, and Peard Bay Special Areas of the NPR-A – places collectively known for their globally significant intact habitat for wildlife, including grizzly and polar bears, caribou, and hundreds of thousands of migratory birds, and protect the livelihoods of Alaska Native communities who have relied on the land, water and wildlife to support their way of life for thousands of years.

Action is also being taken to designate approximately 2.8mn acres in the Arctic Ocean nearshore the NPR-A as indefinitely off limits for future oil and gas leasing, completing protections for the entire Beaufort Sea Planning Area and building upon President Obama’s 2016 withdrawal under the Outer Continental Shelf Lands Act to protect the Chukchi Sea Planning Area and the majority of the Beaufort Sea.

However, environmental groups criticised the Biden Administration, saying it was trying to have it ‘both ways’ on climate change, according to Arctic Today, and are expected to challenge the project development in court.

Meanwhile, ConocoPhillips Chairman and CEO Ryan Lance, said: ‘This was the right decision for Alaska and our nation. Willow fits within the Biden Administration’s priorities on environmental and social justice, facilitating the energy transition and enhancing our energy security, all while creating good union jobs and providing benefits to Alaska Native communities.’

According to ConocoPhillips, Willow is expected to produce 180,000 b/d of oil at its peak, ‘decreasing US dependence on foreign energy supplies’. The project is also projected to ‘deliver between $8–17bn in new revenue for the federal government, the state of Alaska and North Slope Borough communities and has the potential to create over 2,500 construction jobs and approximately 300 long-term jobs’.

Commenting on the project green light, Mark Oberstoetter, Head of Americas (non-L48) Upstream for Wood Mackenzie, says: ‘The decision is a milestone for Alaska’s upstream sector, which has had exploration success from the Nanushuk play in the past decade but has, so far, been slow to move those discoveries to development. Many of those projects are on state-administered lands, not requiring federal approval. A revival of North Slope production is now on. With Willow joining other projects like Pikka, new pads at Milne Point, Narwhal, Nuna and Coyote, we see production returning to 700,000 b/d by 2030, levels last seen in 2008. Without production from Willow and these other new projects, the Trans Alaska Pipeline System (TAPS) would eventually run into low flow issues, jeopardising all production coming from the North Slope.’

Wood Mackenzie projections suggest Willow’s Scope 1 and 2 emissions intensity would be lower than other Alaska projects, and lower than many of the current sources of US oil imports. Scope 3 emissions, the burning and use of the products derived from crude oil, would be the largest source of emissions. But that is equally true for all other projects, it notes.

According to Rystad Energy analysis, Alaskan oil production has been declining since the 1980s after it peaked at more than 2mn b/d. By 2010, it was barely 600,000 b/d, falling to 430,000 b/d in 2022.