Oil industry unlikely to rush to Alaska despite Trump’s call to drill 

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’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, Chevron Corp, and ConocoPhillips.

“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, Conoco, and Occidental Petroleum 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 $7 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 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 offshoe 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.