The White House will seek to pay down the national debt and raise federal revenues by opening up areas of the Alaska National Wildlife Refuge (ANWR) to drilling and selling off about half of the country’s strategic petroleum reserves.
The Trump administration says selling off strategic reserves “would raise $500 million in fiscal year 2018” and “as much $16.6 billion in oil sales over the next decade,” Bloomberg reported Monday.
Opening up ANWR to oil and gas drilling would raise another $1.8 billion over the next decade, according to Bloomberg’s analysis of President Donald Trump’s budget plan. Trump also proposed “ending the practice of sharing oil royalties with states along the Gulf of Mexico and selling off electricity transmission lines in the West.”
ANWR’s 1.5-million-acre “1002” area along Alaska’s Arctic coastline is estimated to hold 12 billion barrels of oil, but reserves could be even higher since researchers took the last resource assessment in 1998.
Alaska Republicans have long pushed for opening up ANWR’s 1002 area to drilling. Republicans argue that it would raise revenues and support local tribes struggling with poverty. ANWR’s 1003 area is less than one percent of the refuge.
Democrats and environmentalists have opposed drilling in ANWR for decades, saying it would damage the region’s fragile ecosystem and contribute to global warming.
Activists are determined to stop many of Trump’s proposals from going through, including a nearly 32 percent cut to the Environmental Protection Agency’s budget.
“Trump’s first budget prioritizes polluters by robbing working Americans of vital protections for their health and environment,” Ben Schreiber, Friends of the Earth’s senior political strategist, said in a statement.
Bloomberg reported that ANWR leasing could raise $100 billion in 2022, but it’s unclear how much interest oil companies will have in Arctic drilling with crude prices hovering around $50 a barrel.
Trump’s proposal to sell half of the nation’s strategic oil reserves goes much farther than past Republican calls for selling off reserves to raise funds. The reserve, originally set up in the 1970s, currently holds “687.7 million barrels of oil in salt caverns and tanks at designated locations in Texas and Louisiana,” Bloomberg reported.
Republicans have pushed legislation in recent years to sell off 190 million barrels from the strategic reserve by 2025, amounting to nearly one-third of the reserve’s capacity.
Trump’s call for U.S.-held oil sell-offs comes as OPEC prepares to meet in Vienna this week to discuss continuing holding crude production down to buoy prices.
It also signals that the U.S. is getting less serious about holding onto vast reserves of crude oil. Hydraulic fracturing has driven a U.S. oil boom that’s lessened the need for strategic reserves.
“The U.S. has likely become more sanguine when it comes to having a very large SPR holding, given lofty medium-term forecasts for the Permian basin,” Virendra Chauhan, an oil analyst at Energy Aspects, told Reuters.