Donald Trump is opening Alaska’s wilderness to the oil business. Last week, the administration announced it would issue decades-long leases in the massive Arctic National Wildlife Refuge (ANWR), capping a decades-long fight to open up oil drilling in a critical strip of the Alaskan Arctic.
But it’s not clear anyone will take them up on the offer.
Drilling in this region of Alaska might have made economic sense 10 or even five years ago. Today, Morgan Stanley, Goldman Sachs, JPMorgan Chase, and Wells Fargo have all sworn off financing oil development in the tundra’s refuge. And even if they did, few oil firms appear ready to take out loans.
Last year, BP sold off its Alaska operations (including leasing rights in a private inholding of ANWR). Anadarko, Pioneer Natural Resources, and Marathon Oil have hocked their holdings. Shell left Alaska without bothering to sell its assets.
The hesitancy to drill new wells in Alaska’s Arctic is driven in part by a warming world: The state is heating up twice as fast as the rest of the nation, and its melting permafrost wreaks havoc on drilling infrastructure. But it has much more to do with the dire economics of drilling for expensive oil in remote locations.
Oil prices have hit historic lows, dropping to $45 this year, while breakeven prices to extract oil in Alaska’s rugged, remote terrain remain between $55 to $65 per barrel, estimates S&P Global Platts Analytics. In ANWR itself, the bar may be even higher: $80 to $85 per barrel, according to Rystad Energy.
Yet the refuge remains a battleground. At its peak in 1988, more than 2 million barrels a day gushed through the 800-mile trans-Alaska pipeline, transforming Alaska’s economy and environment. The possibility of a billion-barrel oil discovery remains, and a few oil companies are holding out in hopes of hitting pay dirt one last time before the global economy shifts definitively away from fossil fuels.
✦ To read more about the oil industry’s motivation to discover a second Prudhoe Bay, you can sign up for a Quartz membership. ✦
Here’s what happened over the past week that helped or harmed the world’s chances of cutting greenhouse-gas emissions to zero:
⬇️ Decreases emissions
1️⃣ As Hurricane Marco and Tropical Storm Laura barrel down on Louisiana, offshore oil drilling operations in the Gulf of Mexico are evacuating staff and have shut down more than half of production.
2️⃣ One of Australia’s largest insurers will not finance or insure oil and gas projects, after also walking away from coal. Meanwhile, a European insurance industry trade group is warning that the EU’s climate policy doesn’t go far enough to mitigate the risks of natural disasters.
3️⃣ With US vehicle emissions standards up in the air, the world’s five biggest automakers are banding together to set their own higher efficiency standards, in line with those adopted by California.
0️⃣ Net-zero (for now)
1️⃣ European oil companies have raised the bar for the industry’s climate commitments, and now their rivals are under pressure to catch up. Canadian oil company Husky Energy announced it will tie executive pay to greenhouse gas emissions reduction targets.
2️⃣ Meanwhile, a Norwegian life insurance company with $91 billion in assets under management dumped Chevron and Exxon from its portfolio because the companies haven’t committed to as rigorous climate policies as their European rivals.
3️⃣ Despite the grim outlook for the oil market, the world’s biggest oil company, Saudi Aramco, is forging ahead with a $15 billion deal to invest in refineries and petrochemical factories in India.
4️⃣ A Turkish offshore gas exploration vessel struck fossil fuel gold with the discovery of a massive natural gas deposit, which the government said could be enough to wean the country off its dependence on energy imports.
🔼 Increases emissions
1️⃣ In an early sign of life returning to the oil market, the count of active drilling rigs in the US rose for the first time since the beginning of the pandemic. Most of the increase is among shale drilling companies in Texas.
2️⃣ During the pandemic lockdown in Indonesia, on-the-ground enforcement of forestry laws went on hold, causing the rate of deforestation—already one of the world’s highest—to more than double.
3️⃣ A draft of new European methane emissions regulation leaves out a key source: leaks in production equipment and transportation pipelines. Much of the bloc’s gas is imported from Russia and Algeria.
Additional reporting by Tim McDonnell.
Speaking of emissions admissions
Fossil fuels aren’t the only sector being upended by the pandemic. Coronavirus is pushing American universities to at last reckon with online education. Here’s a short history of remote higher ed:
🎓 Remote learning in the form of mail-in college correspondence courses dates back to the 19th century. The first institution to offer degrees online was Jones International University, a for-profit school founded by cable TV entrepreneur Glenn Jones.
🎓 Other for-profit schools soon followed. Using aggressive—and at times deceptive and fraudulent—marketing techniques and liberal use of federal student loans, the for-profit online sector boomed. By 2010, more than 2 million students—many of them adult learners and members of the military—were enrolled in for-profit institutions, a tenth of all college students.
🎓 It didn’t take long for the industry to collapse, however, as investigations (pdf) and lawsuits exposed the for-profit institutions’ low graduation rates, high levels of student indebtedness, and poor record of career placement.
🎓 Traditional universities could have filled the gap, but they were busy pursuing another online venture: massive open online courses, or MOOCs, an idealistic effort to make college education free and universal.
🎓 The void in online undergraduate education left by the collapsing for-profit universities was instead filled by an eclectic group of private, non-profit schools who invested in their online capabilities and, just as critically, their marketing.
Read more about how the coronavirus pandemic signals a turning point in this history, in our field guide to higher ed going remote.
Stats to remember
As of Aug. 23, the concentration of carbon dioxide in the atmosphere was 412.21 ppm. A year ago, the level was 409.47 ppm.
Have a great week ahead. Please send feedback and tips to tmcdonnell@qz.com and mjc@qz.com.