31 Mar 2023
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The intersection between government policy, online activists, and also global community opposition is a complex and contentious issue. This has been exemplified by the recent decision on 13th March 2023 made by the Federal government and US President Joe Biden to proceed with The Willow Project proposed by ConocoPhillips in Alaska's oil reserve, which has generated significant tension and controversy. In this article, we will delve into the economic and environmental implications of this decision and explore its impact on various stakeholders.
To start, what exactly is The Willow Project? The Willow project is a massive oil drilling initiative planned for the National Petroleum Reserve on Alaska's North Slope, which is owned by the Federal government. This long-term project could extract up to 200,000 barrels of oil each day, with a total production potential of 600 million barrels over the course of its projected 30-year lifespan. The Bureau of Land Management has estimated that the project could generate between $8 billion and $17 billion in revenue. It's important to keep in mind that the time it takes for this oil to reach the market will be delayed, as the Willow project has not yet been constructed. Proponents of the Willow project have highlighted the potential job creation opportunities that the initiative could bring where the $8 billion investment in capital is expected to generate more than 2,000 construction jobs and 300 permanent positions, making a significant contribution to the local economy. Viewed through the lens of economic benefits, oil emerges as one of the most significant commodities worldwide, contributing approximately 3% to GDP. It is a crucial component of numerous products, ranging from plastics and chemicals to fertilizers, personal protective equipment, aspirin, clothing, transportation fuel, and solar panels. The demand for oil rises alongside economic growth, and shifts in supply and demand can trigger price volatility. Given the government's emphasis on driving economic growth and creating job opportunities and benefits for the local oil mining community, it is not uncommon for their objectives to conflict with the community's priorities.
According to Sentadell Associates' data-driven findings, a correlation exists between the 2016 and 2020 oil crises, during which ConocoPhillips, having divested its refining and transportation businesses through the creation of Phillips 66, became especially susceptible to volatile oil prices, as its operations were then solely focused on exploration and production. In the wake of the unconventional production of shale oil, a global crude oversupply resulted in a collapse in oil prices, leading to a decline of more than 50% in ConocoPhillips' operating revenue from 2014 to 2016. Similarly, in 2020, ConocoPhillips' revenue the decrease was due to lower transportation fuel demand and the fall in benchmark oil prices following the coronavirus pandemic. As a result, the company has directed its focus toward the approval of the Willow Project and not forgetting that this approval can also be based on the fact that In 2021, ConocoPhillips recorded operating revenue of approximately 45.8 billion U.S. dollars. The company, headquartered in Texas, was previously among the world's leading oil and gas producers before separating its midstream and downstream businesses to establish Phillips 66.
Moreover, despite the positive impact on the state's economy and the local community, environmental concerns will inevitably arise.
One can observe a prominent social media activist movement through the use of hashtags, such as the viral #StopWillow campaign as seen in the aforementioned social media post. This movement has garnered over 50 million views and continues to gain traction on various social media platforms.
While the Willow project has been approved by the Biden administration, it will be several years before the project's full production capacity is realized. The first barrels of oil are not expected to be delivered until 2028 or 2029, and the development of all three well pads will take even longer. It is also crucial to recognize that the project's environmental impacts will be felt for many years to come. The available evidence indicates that over its 30-year lifespan, the ConocoPhillips' Willow Project will generate an amount of greenhouse gases exceeding 278 million tonnes (306 million short tonnes), which is equivalent to one-third of the total emissions produced by coal-fired power plants throughout the United States. This information contrasts with the views of various community organizations and online groups that actively advocate for environmental protection. Furthermore, if the ConocoPhillips' Willow Project is approved, it is estimated that achieving a 50% reduction in emissions by 2030 would be exceedingly difficult for the United States.
The decision to proceed with the Willow Project proposed by ConocoPhillips in Alaska's oil reserve has sparked significant tension and controversy. While the project promises to create job opportunities and contribute significantly to the local economy, it also raises serious environmental concerns. The project's impact on greenhouse gas emissions is particularly worrying, given the United States' ambitious goals to reduce emissions. As we have seen, government policy, online activists, and global community opposition intersect in complex ways, making decisions such as this one difficult and contentious. Ultimately, we must continue to weigh the economic benefits against the environmental costs and strive for a more sustainable future.
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