The past several weeks have seen a handful of the world’s largest banks announce that henceforth, they won’t finance oil development in the Arctic, with some calling out specific areas of concern and others issuing more general statements. The banks, including Goldman Sachs, JPMorgan Chase, Wells Fargo and UBS, have laid out their concerns with high-minded language pledging a commitment to a sustainable planet, protection of fragile ecosystems and reducing high-density carbon emissions.
The problem is, all that talk doesn’t amount to meaningful action toward those goals.
Alaska has long been at the center of both environmental transition from a changing climate and some of North America’s richest deposits of oil and gas. It’s a juxtaposition that has led to bitter fights over new resource development in the state, with the result that everyone’s at least a little unhappy about the state of affairs: Developers feel like environmental groups unfairly shut down or hamper good projects; environmentalists think authorities allow producers to take too many risks. But it’s also a tension that has resulted in Alaska having strong standards and a track record of responsibly developed projects. The same is not always true in other oil-producing states and countries — and when it comes to banks declining to finance Arctic projects, that’s the rub.
Take the massive oil shale development in the Permian Basin in the Lower 48, for instance. It has been one of the major sources of new oil in the 21st century, underwritten by tens of billions of dollars invested by JPMorgan Chase and others. It’s been a profitable energy investment during boom years when the relatively expensive-to-produce oil was supported by high prices — but as oil development goes, it’s far “dirtier” than oil produced on the North Slope. The reason why is called flaring.
Flaring is the intentional burning of natural gas that comes out of oil wells for no purpose other than to dispose of it and relieve pressure that might otherwise cause a dangerous well blowout and spill. As you can probably imagine, burning literal tons of natural gas is pretty consequential when it comes to a project’s carbon footprint. Here’s how consequential: In the first quarter of 2019, wells in the Permian Basin flared an incredible 661 million cubic feet of gas per day. In North Dakota’s Bakken Shale development, that figure was 500 million cubic feet per day. By comparison, under the proposed Alaska LNG Project, state demand over the long term is estimated at 500 million cubic feet per day. The two major Lower 48 shale oil fields each burn at least enough waste gas to power the entire state of Alaska.
Yet that waste hasn’t led to divestment from the same banks walking away from Arctic oil development in Alaska. Here, natural gas isn’t flared but is instead reinjected to help force more oil to the surface. It’s a far less carbon-intense way to produce oil. Perhaps that nuance has escaped some of the world’s largest banks.
Whatever the reason, it’s easy to spot the hypocrisy. The same financiers turning their noses up at Alaska projects simultaneously pour money into developments where enough gas to supply whole countries is needlessly burned, throwing massive quantities of carbon dioxide into the atmosphere. Were the banks truly concerned about transitioning to cleaner energy, they would be buttressing Alaska oil development, not forswearing it. If they wanted to help alternative energy succeed, they would be offering cheaper loans to solar panel manufacturers, not pouring money into some of the most energy-intensive oil development in North America. And the banks themselves happily look past the fact that their operations benefit tremendously from — and consume plenty of — fossil fuels.
Fortunately for Alaskans unhappy with the shell game the megabanks are playing, there are several local banks and credit unions offering solutions for personal and commercial banking. In addition to the benefits of keeping more money circulating through institutions based closer to home, these banks and lenders are often more familiar with the issues Alaskans face and what’s important to our communities. Heck, maybe they even know about natural gas flaring.
If the banks aren’t going to walk their talk, perhaps Alaskans should.