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Oil companies cautious on Alaska as policy reversals

possible

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US oil production already at record levels

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Industry seeks long-term certainty beyond executive orders

By Sheila Dang and Valerie Volcovici

HOUSTON/WASHINGTON, Jan 23 (Reuters) -

U.S. oil and gas companies are unlikely to expand

development in Alaska and the Arctic following President Donald

Trump's executive order enabling them to do so, company

officials and industry representatives told Reuters, noting a

future president could easily reverse Trump's move.

U.S. oil production is already at record levels due

largely to increased production in more accessible areas like

Texas and New Mexico, and companies have limited spending on new

projects to focus on returning cash to shareholders.

Analysts said drillers may not be in a hurry to take

advantage of Trump's order on Monday titled "Unleashing Alaska's

extraordinary resource potential."

The executive order would reopen vast areas for drilling and

mining, and expedite permits for projects, part of Trump's

sweeping plan to maximize oil and gas production while reversing

former President Joe Biden's policies encouraging the transition

to renewable energy sources to fight climate change.

"Many of these areas have been closed for a good long

while," said Dustin Meyers, senior vice president of policy at

the American Petroleum Institute, a trade organization that

represents major oil firms including Exxon Mobil ( XOM ), Chevron Corp ( CVX ),

and ConocoPhillips ( COP ).

"There is always the risk that these areas could be reclosed

after the next election cycle," he said, adding that is the key

issue that could temper interest from oil companies in the short

term to pursue new drilling projects there.

Drilling in the Arctic and Alaska is a high-risk endeavor,

involving decades of work and billions of dollars of investment.

Exxon, Chevron ( CVX ), Conoco, and

Occidental Petroleum ( OXY ) did not comment.

Conoco is among the most active oil companies in Alaska's

Arctic, and secured a federal approval from the Biden

administration for its $8 billion Willow project there in 2023,

angering environmental groups.

The U.S. drilling industry trade group AXPC also did not

comment.

A source at one major U.S. oil company, who asked not to be

named discussing the matter, said many companies are unlikely to

pursue projects in Alaska based on Trump's executive order

alone, seeking long-term certainty like an act of Congress.

Energy consultancy Rystad said Trump's use of the "drill,

baby, drill" mantra in his inauguration speech overestimates the

industry's willingness to prioritize growth over generating

shareholder returns.

Drilling in Alaska's pristine Arctic refuge has long been a

source of friction between Alaska lawmakers and tribal

corporations seeking to open more acres to drilling to spur

economic growth, and Democratic presidential administrations

that sought to preserve the local ecosystem and wildlife.

A 2017 tax law during Trump's first term mandated oil and

gas lease sales in the Arctic National Wildlife Refuge, a 19

million-acre sanctuary for species including polar bears and

Porcupine caribou. But interest has been sparse.

The Biden Interior Department received no bids from energy

companies last year when it offered 400,000 acres of the refuge,

the minimum amount required.

ANWR's wild landscape lacks roads and public facilities, but

its 1.6 million-acre coastal area along the Beaufort Sea is

estimated to have up to 11.8 billion barrels of recoverable oil,

enough to supply the U.S. for more than a year and a half at

current rates.

Before leaving office this month, Biden banned new offshore

oil and gas drilling in federal waters off the East and West

coasts, the eastern Gulf of Mexico and portions of the northern

Bering Sea in Alaska. The move was considered mostly symbolic

since it mainly covered zones that have no important prospects.

Trump issued an order seeking to repeal those protections.

Still, the energy industry is "cautiously optimistic" that

the Trump administration will continue easing regulations that

have hampered oil and gas development, said API's Meyers.

"The administration deserves a lot of credit for at least

doing everything that they can do to send the signal that these

areas are going to be open for development," he said.