The setback for ConocoPhillips highlights how difficult it’s become for Western oil producers to seek growth in a world gripped by an unprecedented wave of heat, droughts, floods and wildfires blamed on man-made climate change. Investors, governments, lawmakers and courts are increasingly embracing concerns that in the past had been more typical of environmental activists.
In the U.S., oil production has dropped about 13% from a record high of 13.1 million barrels a day before the pandemic, and has only shown signs of slow growth even as demand for crude and prices have come roaring back this year.
The federal judge’s ruling comes just days after President Joe Biden called for OPEC to boost crude supplies to keep a lid on oil prices that are making gasoline more expensive for Americans and stoking inflation.
Biden’s plea — recognizing that the long-term clean energy push doesn’t preclude the immediate need for cheap fuel — triggered speculation the administration may be softer on the oil industry than many had expected. Pro-oil advocates have criticized the government for limiting domestic production for environmental reasons while calling for more supplies from the Middle East and Russia.
Just this week, Chevron Corp. Chief Executive Officer Mike Wirth called for “an increase in engagement” from the White House on oil and gas in order to boost U.S. energy security and the economy.
But the global race to avert climate disaster is gaining momentum beyond any government’s position. Court battles have long challenged pipeline projects regardless of the White House incumbent. And shareholders have tamed shale’s once insatiable thirst for growth, mostly because of concerns over their balance sheets, but also due to pressure for more environmentally responsible investments.
Judge Gleason said Willow’s prior approval failed to adequately protect polar bears and didn’t properly consider the effects on climate change.
“We think this ruling greatly increases the likelihood for ConocoPhillips’s Willow project to be materially delayed or permanently shelved,” said Leo Mariani of KeyBanc Capital Markets Inc.
ConocoPhillips will review the decision and evaluate the options available, spokesman Dennis Nuss said by email.
The shares dropped as much as 4% Thursday, in line with a 3.8% slump in the S&P 500 energy index.