Declining oil prices due to a price war between Russia and Saudi Arabia, coupled with the economic downturn caused by the COVID-19 pandemic, will have a significant impact on Alaska’s oil future. As of May 12, the price for Alaska North Slope crude oil was $26.40, well below the $40 per barrel price needed for oil industries to break even.
ConocoPhillips, the largest producer of oil in Alaska, announced plans to significantly reduce its North Slope work force, cut oil production in Alaska by half, and cease drilling new wells.
Other oil producers in the state are following suit. Doyon Drilling, under Native-owned Doyon Ltd., announced a lay-off of 304 jobs on May 1. Oil Search, an Australian company, will suspend future drilling and cut $200M in Alaska. And Hillcorp Energy Company, which has been navigating the purchase of BP assets in Alaska at a 5.6M price tag are unsure if they will find lenders willing to complete the deal.
Meanwhile, efforts by the Gwich’in Steering Committee and others who have lobbied financial institutions to take a stand against drilling in the Arctic National Wildlife Refuge appear to be paying off, even as the U.S. Bureau of Land Management recommends leasing the entire coastal plain per their final environmental impact statement.
“Keeping destructive drilling out of the Arctic Refuge is critical to the survival and way of life of my people, and we are thankful that so many major banks are listening to us and taking our human rights seriously,” Gwich’in Steering Committee executive director Bernadette Demientieff said in a statement.
More than a dozen major banks now have policies against drilling in the arctic, including Goldman Sachs, JPMorgan Chase, Wells Fargo, Citygroup and, most recently Morgan Stanley. Currently, the only major U.S. Bank that has not taken a pledge to reduce or abstain from drilling investments in the Arctic is Bank of America. So, while oil companies are holding off on drilling new wells, shedding jobs, and in most cases, bleeding money, banks are not inclined to front them capitol on future investments.
As it stands now, it appears our energy future is in the hands of the banks. They are in a position to decide what kinds of energy investments will benefit from stimulus funding and which energy sources fall by the wayside. In the process, green energy may gain the footing needed to replace energy relics from our past.
Nationally, homeowners are scrambling to install solar energy during the final two years of an incentive to help the solar industry mature. It’s worth noting that this initiative began in 2005 under the George W Bush administration (the first president to put solar panels on the Whitehouse). This year, home owners stand to deduct 26% of installation costs from their federal taxes. Lenders are responding to the surge in residential solar by offering loans, in some cases, with no-down payment and no home lien. For home owners, the investment pays for its self through reduced electric bills.
Still, the Trump administration is moving ahead with a lease sale in the Arctic National Wildlife Refuge and expanded access to oil in the National Petroleum Reserve. And some Republicans in Washington are calling on Trump to prevent banks from halting loans and investments with companies that produce oil and other fossil fuels as long as they aide in the dissemination of federal assistance program funding during the COVID-19 pandemic.