ConocoPhillips: ‘Somebody Intervened In Washington’
by Alec MacGillis ProPublica, Dec. 21, 2015, 5 a.m.
This story was co-published with Politico Magazine.
From his seat in the small plane flying over the largest remaining swath of American wilderness, Bruce Babbitt thought he could envision the legacy of one of his proudest achievements as Interior Secretary in the Clinton administration.
Babbitt was returning in the summer of 2013 from four sunlit nights in Alaska’s western Arctic, where at one point his camp was nearly overrun by a herd of caribou that split around the tents at the last minute. Now, below him, Babbitt saw an oil field 2014 one carefully built and operated to avoid permanent roads and other scars on the vast expanse of tundra and lakes.
Under the deal he’d negotiated just before leaving Interior in 2000, that would be the only kind of drilling he thought would be allowed in the 23 million acres of the National Petroleum Reserve-Alaska, which, despite its name, is a pristine region home to one of the world’s largest caribou herds and giant flocks of migratory birds. The compromise was fair and, he hoped, enduring 2014 clear-eyed about the need for more domestic oil but resolute in defense of the wilderness.
The deal lasted barely 15 years.
In February, the Obama administration granted the ConocoPhillips oil company the right to drill in the reserve. The Greater Mooses Tooth project, as it is known, upended the protections that Babbitt had engineered, saving the oil company tens of millions and setting what conservationists see as a foreboding precedent.
How ConocoPhillips overcame years of resistance from courts, native Alaskans, environmental groups and several federal agencies is the story of how Washington really works. It is a story that surprised even a veteran of the political machine like Babbitt.
As environmentalists, energy companies and politicians brawled over big symbols like the Keystone pipeline and offshore drilling in the Arctic Ocean, the more immediate battles over climate change and fossil fuels were being waged over projects like Greater Mooses Tooth 2014 out of the public eye, away from the cable-news shout-fests and White House protests.
The fight was unfolding in the real Washington 2014 where influence accrues across election cycles almost without regard to who’s in power. In this Washington, companies bend decisions of major import in their direction by overwhelming a bureaucracy that, after years of budget cuts, outsourcing and inattention, lacks the resources and morale to hold its own. Increasingly, industry spins the revolving door. It brings in people who learn there’s serious money to be made after leaving government jobs, by sticking around the capital and making it their career.
Big industries like oil play Washington as a long game, exhibiting a persistence too often lacking in the people in charge of safeguarding the public good. And to win the long game, to push ahead on frontiers like Greater Mooses Tooth, you need someone who is a real player.
‘Aggressively Pursuing the Agenda’
In a city known for its status seekers, Andrew Lundquist was one of the legions who preferred to recede into the background. He was earnest, wary and remarkably unflappable. Even his appearance discouraged notice: average build, short sandy hair and a sober, almost melancholy bearing. He rarely was quoted in the press, and declined to be interviewed for this story.
He grew up in Fairbanks. His father, James, was a surgeon, who came from Minnesota to work at a new clinic in town. The family’s eight kids fished in the Chena River, built rafts, and camped out on the islands.
There’s a solidarity that comes with living in a place that’s so cold in winter your nose hairs freeze and that your tires go a little flat every morning. You get to know just about everyone. For the Lundquists, who leaned Republican, that meant being friends with both a U.S. senator, Ted Stevens, who once moved into a house they had just left, and future governor and senator Frank Murkowski and his family, who lived just up the river.
By the time Lundquist reached college age in the late 1970s, Alaska’s economy had transformed from a sprawling outpost for frontier strivers into an energy powerhouse, driven by vast reserves of oil discovered around Prudhoe Bay and pumped south through an 800-mile pipeline.
Lundquist got a degree in finance at the University of Alaska in Fairbanks, but not before a couple of short detours. He headed up north to the North Slope oil fields, where he managed a pipeline welding crew, and made a foray into the home-building business with Frank Murkowski’s son. “He wanted to see the oil fields personally 2014 that work helped deepen his understanding,” recalled a classmate, Peter Van Flein.
Once he’d learned how to make a living with his hands, though, Lundquist headed in a much different direction 2014 to Washington. In the waning years of the Reagan administration Lundquist took a job as a lowly go-fer in the Senate office of his family friend, Ted Stevens. “Stevens taught me really how to legislate and in a broader sense how to work in Washington, D.C.,” Lundquist would say later.
In 1995, as Republicans took control of Congress, he switched from one family friend to the other 2014 Frank Murkowski was now a senator too, and in line to be chairman of the energy committee, overseeing Alaska’s dominant industry. Lundquist, now equipped with a law degree, was soon director of the committee’s 40-person staff.
On the Senate committee, he maintained a cordial working relationship with his Democratic counterparts, holding a Monday meeting with them no matter what was on the docket. Together, the panel worked through federal land exchanges, boundary adjustments, nuclear waste disposal and other difficult issues.
But in one area, Lundquist’s transactional exchanges with Democrats took on a harder edge: Alaskan oil. Over and over, he’d demand to know what it would take for Jeff Bingaman, the New Mexican who was the top Democrat on the panel, to open more of the North Slope to drilling. When it came to that, Bingaman recalled, “He was aggressively pursuing the agenda of his employer.”
‘We Had to Look West’
For many in the Lower 48, the notion of expanded drilling in the Arctic had been tainted by images of sea otters and harlequin ducks coated in crude oil after the Exxon Valdez ran aground in Prince William Sound in 1989. But for many in Alaska, it had become a question of economic survival.
Since peaking in 1988 at just above two million barrels a day, production from the Prudhoe Bay fields had been declining precipitously. Without more supply, the Trans-Alaska Pipeline was at risk of clogs and corrosion 2014 and the state’s coffers were at risk of steep deficits.
The cry went up, louder than before, to drill within the Arctic National Wildlife Refuge, the 19-million-acre expanse east of Prudhoe Bay. The refuge’s coastal plain was believed to hold far more stores of crude and less wildlife than the National Petroleum Reserve-Alaska, known as NPR-A. But, with its stunning white peaks of the Brooks Range, the refuge had long been a more potent symbol of virgin land. The expanse to the west, by contrast, had been set aside as a fuel reserve for the U.S. Navy in 1923, thus giving it its mundane name.
The agitation in Alaska was bipartisan: the Democratic governor, a Yale-educated Vietnam veteran named Tony Knowles, was also fretting about the declining flow. The job of mollifying him fell to Bruce Babbitt.
Babbitt had been the natural choice at Interior for Bill Clinton. The laconic former Arizona governor was a founding member of the Democratic Leadership Council, the centrist reform group that had given rise to Clinton, and then ran the League of Conservation Voters.
“My job is to stand at the border with a flaming sword” to defend the wildlife refuge, Babbitt once said. But he saw nothing inconsistent about offering the oil companies NPR-A as a consolation prize.
“Babbitt was enthusiastic about opening up NPR-A if it was done on the right terms, and I agreed with him,” recalled Knowles. Babbitt confirmed this account: “It was clear to me that we had to look west.”
Doing it right meant not letting the reserve end up like the North Slope around Prudhoe Bay under the anything-goes oversight of the state of Alaska, a sprawl of drilling pads, gravel mines, pipelines and roads. It meant limiting the impact on natives, particularly the Inupiat living in the village just east of NPR-A, Nuiqsut.
And doing it right meant protecting Teshekpuk Lake, at 30 miles wide the largest in the Alaskan Arctic. The lake happens to be smack in the middle of the part of NPR-A thought to have the richest oil fields, its northeastern corner. Yet this area is also so full of wildlife that it had long been considered inviolable 2014 even by James Watt, who as President Reagan’s Interior secretary was the closest thing to an avowed enemy of the conservation movement.
Teshekpuk was the calving and summering grounds for a 60,000-head caribou herd. There were tundra swans that migrated to the Chesapeake Bay, buff-breasted sandpipers that headed for Argentina, yellow wagtails that wintered in Southeast Asia, and, trumping them all, bar-tailed godwits that flew 8,000 miles to New Zealand. Some 37,000 black brant geese, a large share of the global population, even molted at the lake.
To Babbitt, the region’s wildlife was “absolutely transcendent.” He thought he’d found a balance to protect precious watersheds and native hunting and fishing grounds. The drilling in NPR-A would emulate a low-impact project that was being pioneered by the oil company Arco just east of the reserve. Arco was managing without permanent roads, limiting itself to seasonal drilling, occasional helicopter flights, and ice roads 2014 an underlay of crushed ice with water pumped along it that, once frozen, is scarred for traction. In spring, it melts away.
“There was a relentless endorsement by everyone in sight that this was the wave of the future,” Babbitt said. “The problem with roads is that roads beget more roads beget more roads. A road becomes a network, becomes a spider-web of landscape fragmentation and destruction, with little use for wildlife.”
He released his plan in 1998. It allowed leasing on a 4.6-million acre swath in the reserve’s northeast but expanded the protected areas that Watt had defined around Teshekpuk Lake to about 600,000 acres. It also called for a three-mile buffer along Fish Creek, a stretch close to Nuiqsut that villagers relied on heavily for fishing and hunting.
The oil companies seemed to buy in, as Arco and BP snatched up leases. And by the time Babbitt left Interior in 2000, he had reason to believe it was a settled matter.
‘Where Your Principals Are’
In May of 2001, Andrew Lundquist took the podium in a banquet hall at the Hyatt Regency in Washington to tell the assembled guests about a new report on energy. He spoke in bland terms about a “substantive, forward-looking and truly comprehensive” proposal that increased “environmentally friendly exploration and production of domestic energy resources.”
Two weeks earlier, President Bush had released a 170-page plan to overhaul the nation’s energy policy. The plan had been produced by a Cabinet task force led by Vice President Cheney, just off a five-year stint as chief executive of oil-services giant Halliburton. Cheney’s imprint on the plan was not hard to discern. It called for building up to 1,900 new power plants, many of them to be fueled with coal. (The report made only passing mention of climate change.) It recommended exempting the chemicals used in hydraulic fracturing 2014 fracking 2014 from the Safe Drinking Water Act. It proposed opening the Arctic National Wildlife Refuge to drilling.
And it called for expanding drilling in the National Petroleum Reserve-Alaska. Specifically, “such consideration should include areas not currently leased within the Northeast corner of the Reserve” 2014 that is, the areas around Teshekpuk Lake that Babbitt had shielded.
The report’s familiarity with the fine points of the Alaskan landscape was hardly surprising, given that its production had been managed by Andrew Lundquist. Plucked from the Senate to serve as the task force’s staff director, he ran meetings in Cheney’s absence, served as the contact point for the energy companies that clamored to influence the report, and handled the flow of drafts from more than 100 administration staffers across multiple departments. He was the hub of the action, the final word.
As he had in the Senate, Lundquist looked for areas of consensus, seeking to add some language on conservation and renewable energy. But he knew not to push too hard on that front, given Cheney’s inclinations. In a moment of candor Lundquist had explained his career strategy to a senior White House colleague. “He once said to me, 2018You’ve got to take your initiative but cover your ass 2014 take risks but don’t get too far ahead of where your principals are,'” the former colleague recalled. “He knew how to comport himself.”
As reward for such comportment, Lundquist was promoted to White House energy policy director. He devised a plan to win House approval for drilling in the wildlife refuge, by limiting the drilling to 2,000 acres of its coastal plain. But the proposal stalled in the Senate, where Democrats hung onto a slim majority.
The Sept. 11 attacks did little to derail the administration’s energy fixation. As the White House pushed to turn the task force recommendations into law, it was besieged by demands from government auditors and environmental groups for records of meetings that Lundquist and Cheney had held with more than 150 energy companies and trade groups. Cheney fought disclosure all the way to the Supreme Court. At the heart of the fight was Lundquist, who was personally subpoenaed in April of 2002.
The subpoena would not have been legally necessary if Lundquist was still in the administration. But he was not. Just a few weeks earlier, after barely more than a year in his position, he had left it to strike out on his own.
‘Cash Flow Perspective’
In the early 2000s, much of Washington seemed suddenly awash in money. Luxury stores and restaurants sprouted in a landscape never known for its glamour; by decade’s end, half of the nation’s wealthiest counties were to be found in the Washington area.
The wealth was being driven in part by the post20139/11 proliferation of contractors capitalizing on the surge of spending on homeland security. But also responsible was an older Washington industry: lobbying.
Companies were learning that the spread of earmarks 2014 specific spending appropriations tucked into larger bills 2014 made it all the more advantageous to have lobbyists working Capitol Hill. Meanwhile, the worsening gridlock in Washington meant that ever more consequential actions were coming straight from the executive branch. Lobbyists familiar with the inner workings of the bureaucracy were highly desirable. From 2000 to 2010, money spent on federal lobbying more than doubled, to $3.52 billion, and most of this growth could be attributed to the expanding ranks of revolving-door lobbyists.
Lundquist caught this wave at the right moment. Nine months after he left the White House 2014 Jan. 1, 2003 2014 he registered the Lundquist Group, LLC, with an office on New York Avenue less than a block from the White House complex.
Under a 1978 law, one of the post-Watergate reforms, former top administration officials were not allowed to lobby their old agencies within a year of leaving office. Lundquist was at risk of violating that, since his registration occurred only nine months after his departure.
But the lines around what counted as lobbying were so gray as to make the law all but unenforceable. There was nothing to stop former officials like Lundquist from sharing intimate knowledge of the government with their new business associates, enabling lobbyists to deliver perfectly customized pitches. Challenged by reporters about whether his registration fell within the off-limits period, Lundquistasserted he had made no improper contacts with his former colleagues at the White House and Energy Department. “I stuck to the letter of the law on ethics rules,” he said.
In 2003, Lundquist reported collecting $300,000 in lobbying fees in addition to whatever he earned in other consulting 2014 a big jump from the roughly $125,000 he was making at the White House. “Ultimately, a person has a family to support,” said Don Val Kish, who worked with Lundquist on the Senate committee. “Money at the top levels of federal government is pretty good, but the private sector is much better.”
Halfway through 2003, after a year on his own, Lundquist, who has four children, sold his three-bedroom home in Arlington and bought a place nearly four times as big 2014 a $1.48 million, four-bedroom, six-bathroom house with a pool on 1.75 acres in Great Falls, the affluent Fairfax County enclave further up the Potomac.
That Lundquist was in such high demand was no surprise 2014 he was starting his business at the exact moment when Republicans were pushing for major energy legislation based on the plan he had shepherded. His clients in that first year included Toshiba Corp., which wanted to build a nuclear reactor in Alaska; British Petroleum; a Wyoming coal-mining company called Kennecott Energy; and Duke Energy, the electric utility giant. Each had a big stake in specific planks of the legislation.
His old boss Frank Murkowski was now governor of Alaska; the state became another Lundquist client. In 2004, he added Exelon, the large nuclear-power utility, and Coeur d’Alene Mines, a major silver and gold mining company whose board of directors he would join a year later. He was also on the board of an independent Texas oil drilling company, Pioneer. “There’s nothing I don’t work on in energy,” Lundquist told the Roll Call newspaper in 2004. “Energy has been a great niche for me.”
‘Our Top People Go’
When Lundquist made it back home to Alaska now, his Washington connections followed. Most summers, he would head to Prince of Wales Island for a weekend at the Waterfall Resort, a five-star fishing outpost reachable by boat or seaplane. On paper, it was a fundraiser for breast cancer prevention and treatment in rural Alaska, a cause taken up by Nancy Murkowski, Frank’s wife, and one of personal relevance for Lundquist, whose mother had breast cancer. But it also served as a summit for oil industry leaders and Washington Republicans, who could meet in seclusion, and return home with their salmon and halibut cleaned and vacuum-packed by the resort staff.
Most years, the charity spent more on the fishing weekend 2014 the smallest package at the resort now costs $3,555 per guest 2014 than it raised for its cause. By the mid20132000s, at least nine U.S. senators had attended the weekend over the previous decade. At least three had let the charity pay for their attendance, in contravention of Senate ethics rules, while several others, including then-Speaker Denny Hastert and Majority Leader Trent Lott, failed to disclose who paid for the trip.
In one picture from the event in the mid-2000s, Lundquist stood in dark rain-gear and flashed a tight smile for the camera, with Hastert and his wife on one side and Frank and Nancy Murkowski on the other. “Our top people go,” Red Cavaney, then the head of the American Petroleum Institute, told American Radio Works, a public-radio documentary unit, for a show that aired in 2006.
Back in Washington, Lundquist was a regular on the political fundraiser circuit. Over the course of his lobbying career, according to the Center for Responsive Politics, he would give more than $165,000 in contributions 2014 93 percent of it to Republicans. Companies expected lobbyists to devote a sizable portion of their fees to contributions to candidates that the companies needed on their side.
Lundquist’s business was growing fast. At first, he shared his office suite 2014 decorated with portraits of Native Alaskans 2014 with Joe Allbaugh, a jocular Oklahoman who had made his name as George W. Bush’s Federal Emergency Management Agency director during 9/11. As that partnership ebbed, Lundquist brought on George Nethercutt, a Washington state Republican who’d lost a bid for the Senate after a decade in the House, and Steven Griles, who recently served as deputy secretary at Interior after years as a lobbyist for coal, oil and gas companies.
In its first year the firm of Lundquist, Nethercutt & Griles reported collecting $1.3 million in lobbying fees, and the next year, $1.6 million. “We had tremendous skills and knowledge and great experience,” recalled Griles. “If you have those things you can succeed in Washington. If you’re honest and represent people fairly, you can succeed.”
The good times lasted only so long for Griles. He resigned from the firm in 2007, a few months before pleading guilty to obstruction of justice in connection with the Jack Abramoff lobbying scandal, charges that stemmed from his time at Interior. Griles was sentenced to 10 months in prison.
Nethercutt said it was an “uncomfortable” time for him and Lundquist. “We said, 2018This can’t stand 2014 you’re going to have to leave.’ It was our reputations, too.”
Yet rather than tainting the firm, the disruption enabled Lundquist to reinvent it, this time as a bipartisan shop. Democrats had recaptured Congress in 2006, and Republican-leaning firms could be at a disadvantage. Lundquist brought on some Democrats and adopted a new name: BlueWater Strategies, suggested by one new hire, Eric Washburn, one-time energy staffer to then-Senate Democratic Leader Tom Daschle. An avid sailor, Washburn wanted to evoke “blue water navigation,” what you have to do when you’re far out in the ocean with no landmarks. “The idea is we’d help people navigate rough seas,” Washburn said.
Seas were in fact getting rougher for many in the fossil fuel industry. Within a year, Barack Obama would move into the White House after pledging to take on climate change 2014 this, he said, could be “the moment when the rise of the oceans began to slow.”
And among the companies that turned to Andrew Lundquist for help was ConocoPhillips.
Every President Since Reagan
With more than 1.2 million acres of leases on the North Slope and a 25 percent stake in the Alaska pipeline, ConocoPhillips was on its way to becoming the largest oil producer in the state. Still, some of its ambition had been frustrated.
The Bush-Cheney years, at first, had promised to be a boon for the company, whose PAC and employees had spent more than $750,000 on the 2000 election, more than 90 percent of it for Republicans. Gale Norton, Babbitt’s successor as Interior secretary, visited the Alaskan Arctic and pronounced it a “flat, white nothingness” ripe for more extraction. In 2003, the administration announced a plan that followed the recommendations of Cheney’s task force: it would more than triple the amount of drilling in the reserve’s northeast over what Babbitt had laid out.
Crucially, under this plan, protections would be lifted on much of the area around Teshekpuk Lake. This could be done, the Bush administration vowed, without serious environmental damage, by using directional drilling and other new technologies. “We felt that a lot more could be leased,” said Henri Bisson, then Alaska director of the Bureau of Land Management, the Interior Department agency that oversees government-owned land.
Environmental groups were aghast. Even Tony Knowles, the former governor who had urged expanding drilling in NPR-A, viewed the plan as excessive. The Cheney task force “was the big change,” said Stan Senner, then the director of Audubon Alaska. “They were now willing to go into an area that every president going back to Reagan had reason to close.”
The National Audubon Society and other conservation groups filed a lawsuit, charging that the administration had failed to consider the reserve’s “international importance to migratory birds and other wildlife.” And a federal judge in Anchorage, James K. Singleton Jr., ultimately agreed, blocking the expansion.
The ruling threw NPR-A into limbo for the remainder of Bush’s second term. The drilling debate shifted to the Lower 48, where the fracking revolution was getting underway, helped by a provision in the comprehensive energy law that finally passed in 2005 exempting fracking chemicals from the Safe Drinking Water Act. It was the very provision the Cheney task force had called for in 2001.
In 2009, the Democrats were back in the driver’s seat in Washington and they were threatening to roll back the Bush rules on Alaska. To preserve its plans, ConocoPhillips had to make a new play. The oil company retained Lundquist’s BlueWater Strategies at a rate of $200,000 per year. “For Conoco, they do so much work in Alaska, that having Andrew in particular who had those really strong Alaska connections, it strengthened and reinforced what they were already looking for and seeking help on,” said Washburn, the former BlueWater partner.
Lundquist arrived on the scene too late to keep Obama’s first Interior secretary, former Colorado Sen. Ken Salazar, from producing an NPR-A plan that, on the whole, cheered environmentalists. It set aside half of the reserve for conservation and 2014 once again 2014 strengthened protections around Teshekpuk Lake. As Babbitt had years earlier, it also called for a buffer along Fish Creek, near Nuiqsut.
But that was just the blueprint. The real battle would come in applications for drilling. Dealing with the five federal entities that had to pass judgment on a project would be an enormous paperwork headache, but also an opportunity. You could play one group against the other as you navigated the system.
And for this, ConocoPhillips would have Lundquist’s help full time: At the start of 2013, he became the company’s senior vice president for government affairs, with a 20-person team under his command.
He left BlueWater’s office near Union Station and moved west into ConocoPhillips’s Washington office, in the heart of the K Street corridor. He gave up the boards of the mining and oil companies he’d served on, which between them had compensated him with more than $1.75 million in stock and fees over the previous seven years. And a few months later, the company filed its application to drill in NPR-A at Greater Mooses Tooth.
‘Got to Love That Name’
The name was a marketing gimmick, Alaska-style.
Moose’s Tooth, a legendary peak in Denali National Park, is 500 miles from the infinite flatness of the NPR-A’s tundra. It was also the name of a highly popular Anchorage brewpub started by some rock climbers. In short, the peak had no connection with the drill site, but it bestowed a friendly backcountry connotation.
“Got to love that name, Greater Moose’s Tooth. Only in Alaska,” Larry Archibald, ConocoPhillips’s senior vice president for exploration, had told oil-market analysts in a 2009 conference call.
With Greater Mooses Tooth (the apostrophe eventually would be dropped), ConocoPhillips was proposing the first drilling on public land in NPR-A. It was getting oil from another spot just within NPR-A boundaries, but that was on land controlled by one of the native corporations created under the Alaska Native Claims Settlement Act, not by the federal government.
The exploratory wells had been promising, Archibald told the analysts. NPR-A “keeps giving and giving nice light oil,” he said. The site was on land included in Babbitt’s 1999 lease sale, rights that ConocoPhillips had acquired from Arco. ConocoPhillips had gotten approval from the Bush-Cheney administration for a similar drilling project in 2004, when environmentalists were focused on the larger fight over Teshekpuk Lake. Now, financial conditions were finally right to proceed with production, thanks in part to a change in Alaska tax law the oil industry had secured. Because so much time had passed, the company would need to reapply.
ConocoPhillips would need approval from the Interior Department, which would rely mainly on its Bureau of Land Management (BLM), and from the Army Corps of Engineers. The U.S. Fish and Wildlife Service and the Environmental Protection Agency also would weigh in.
The stakes were high. Greater Mooses Tooth-1 would cost $890 million and add 30,000 barrels to the 200,000 barrels ConocoPhillips was producing daily in Alaska, which in 2013 had provided the company with $2.3 billion in earnings, more than a quarter of its total. More than that, it was the test of whether the Obama administration’s limits would hold, of what precedent would be set for the expanse waiting to the west.
“The GMT-1 proposal is politically sensitive at a national level,” wrote Bud Cribley, the BLM’s Alaska director, to his top staff in a memo preparing them for a teleconference with the director of the bureau, Neil Kornze, in March 2014.
And at the center of the showdown were the roads. ConocoPhillips had abandoned the roadlessapproach pioneered by its predecessor Arco 2014 accessing sites via helicopters and ice roads, which meant restricting drilling mostly to winter. The lack of roads “destroys the economics” of the project, the company insisted. In a written response to questions for this story, a company spokesman disputed that its new approach represented a departure from the initial vision for the area. “All of the roads that have been built 2026 were determined to be the environmentally preferred alternative,” he said.
To reach its existing site on the native corporation land within NPR-A ConocoPhillips was already building a six-mile road and a 1,400-foot bridge. This had provoked major opposition from conservation groups and the village of Nuiqsut and had, initially, been rejected by the Army Corps of Engineers. But, under pressure from the company and Alaska politicians, the Corps had reversed itself. Now, the company was proposing another road 2014 this one 7.7 miles long, with two bridges, plus another water crossing via a culvert.
For a permanent road to function in the North Slope’s permafrost, the gravel fill needed to be piled up 2014 between 5 and 8 feet high. This alteration of the landscape had consequences, said Sam Kunaknana, the tribal president for Nuiqsut. Caribou changed migration patterns to go around the barriers, complicating the hunting routines of villagers, who themselves found it hard to get over the roads on their snow-machines.
“We have to go further out to hunt our subsistence food, because the animals that once thrived in our area are now going further and further out,” Kunaknana said. The villagers had already given the first road a nickname: the “China wall.”
‘Nothing Short of Fraudulent’
When Babbitt returned to the North Slope in July 2013, and flew over the oil fields just outside NPR-A that Arco had developed without permanent roads, he was overwhelmed.
“You talk about things, you read about them, you get all the facts and the data and all of a sudden you see it, and it’s a revelation,” he said. “It’s a brilliant summer day, the fog disappears and the sun is shining across a vast sparkling expanse. There’s almost nothing there, except a few lines in the tundra where they’ve emplaced pipelines and a few tiny remote pumping stations 2014 it’s otherwise undisturbed as far as the wildlife are concerned.” It confirmed his earlier judgment: this was how it should be done.
Within days of Babbitt’s trip, ConocoPhillips filed its Greater Mooses Tooth application 2014 including a permanent road. With the landscape fresh in his mind, Babbitt decided to make NPR-A his cause, even though he was now into his 70s, and was spending much of his time in Peru monitoring roadless oil and gas projects in the Amazon. He visited BLM’s Kornze at his Washington office. He called Kornze’s boss, Sally Jewell, the former REI Inc. executive who had replaced Salazar at Interior. He wrote to ConocoPhillips’s Alaska division chief, and got a noncommittal response.
In its preliminary evaluation of the Greater Mooses Tooth project in February 2014, BLM did examine the possibility of a roadless option, but on terms that seemed designed to make it look unappealing to villagers grown leery of excessive air traffic. It envisioned year-round drilling rather than the seasonal approach used at the original Arco site. It accepted the company’s projections for frequent flights to the site. And it accepted its claim that roadless development would require a 5,000-foot airstrip to accommodate a plane that could deliver a relief-well drill rig in the event of a blowout.
This draft assessment was, Babbitt said, “nothing short of fraudulent.” At a speech in Colorado a month after it came out, he said, “BLM in Alaska is coming perilously close to acting as a leasing agent of the ConocoPhillips company.”
The roadless idea was now all but a lost cause. So Babbitt and other conservationists shifted their efforts to getting a road with the least possible impact.
The company wanted to build the shortest, cheapest route possible, even though that would cut into the three-mile setback that both Babbitt and Salazar’s plans had called for along Fish Creek, a crucial watershed and locus of subsistence hunting and fishing. In this preference 2014 “Alternative A” 2014 ConocoPhillips had the backing of Alaska’s elected leaders in Juneau and Washington, who were desperate to get new oil flowing in the pipeline, and of two Native Alaskan corporations, which would benefit financially.
Conservation groups wanted the road to take a slightly longer, 8.5-mile route, with only one bridge, that would steer clear of the Fish Creek setback 2014 “Alternative B.” They had the backing of the tribal council of Nuiqsut, the group led by Kunaknana charged with safeguarding local heritage.
Building the Alternative B route, the company said, would cost nearly $50 million more and throw the project into question.
The choice would be made by the federal bureaucracy. But, to judge from e-mails obtained through public records requests, there was little doubt which side was driving the process.
Again and again, ConocoPhillips’s representative in Alaska, a blunt engineer named Lynn DeGeorge, demanded meetings with the agencies that had a say. She resisted the agencies’ request to project costs for all the options, not just the one the company preferred. She ordered them not to share designs the company was submitting, and warned them not to meet without her. She asked for early looks at BLM’s assessments. She demanded to know if BLM received public records requests. She told BLM’s project manager, Bridget Psarianos, that her inability to offer a firm approval schedule was “pitiful.”
Her assertiveness was backed up by ConocoPhillips’s considerable resources 2014 it had committed $1.7 billion to capital projects in Alaska in 2014, double the amount from two years earlier, partly to cover the Greater Mooses Tooth expansion. The company had been flush enough to give its retiring CEO, James Mulva, the biggest exit package of any U.S. executive in 2012 2014 $156 million. Andrew Lundquist received stock options valued at more than $7 million in his three years on staff, on top of his base salary.
The government’s representatives, by contrast, were at frequent disadvantage. In late 2013, they had to go on furlough as a result of the government shutdown forced by congressional Republicans. A few months later, BLM’s Psarianos had trouble finding a working computer from which to send out the bureau’s latest assessment. A few months after that, she had to ask DeGeorge for GIS mapping data.
Amidst all the talk about the growth of the federal government, Interior was one of several federal departments that had seen its number of full-time employees decrease between 2004 and 2012, as more and more federal spending flowed to private contractors and expanding departments like Homeland Security. Over that time Interior’s employees had some of the smallest growth in compensation in government, average increases in salary and benefits of less than one percent per year. Within Interior, BLM’s budget has barely budged in recent decades even as its duties have expanded. This is deplored even by one of George W. Bush’s three BLM directors, James Caswell. “BLM has always been and continues to be understaffed and underfunded,” he said.
Things were hardly any better at the Army Corps. Lacking resources, the Corps had to rely on ConocoPhillips for wetlands analysis, the data that would lie at the heart of the Corps’ determination. In a June 2014 e-mail, the Corps’ project manager, Hank Baij, thanked DeGeorge for “all your work” on the analysis 2014 as though ConocoPhillips were doing the Corps a favor by being allowed to provide the crucial data. A month later, budget constraints even forced the Corps to close its field office in Anchorage.
Despite the mismatch, by the summer of 2014, it appeared that the environmentalists and tribal council might just prevail with Alternative B. Not only BLM, but also EPA and Fish and Wildlife, were leaning toward the route outside the Fish Creek setback, judging it less damaging to the creek fishery, to the watershed and to subsistence hunting, and less risky in the event of a pipeline rupture because it involved fewer river crossings.
But Alternative A was far from dead. Back in Washington, another process was unfolding.
‘Pulling Out All the Stops’
On Sept. 17, as the Mooses Tooth decision was coming to a head, Andrew Lundquist arranged a meeting for himself and Ryan Lance, the company’s new CEO, with Deputy Interior Secretary Michael Connor. Prior to the Washington meeting, Interior and BLM staffers scrambled to prepare Connor. In their briefing paper they noted: “In recent meetings in Alaska, CP argued strenuously for Alternative A as its preferred alternative.”
A few weeks later, in late October, the BLM staff in Alaska issued its final recommendation. Alternative B, with the road outside of the Fish Creek setback, was the best option. But the final word would come from Washington, in a so-called Record of Decision issued jointly by BLM and the leadership of the Interior Department.
Interior, though, was taking its time 2014 far longer than the usual month for a final decision, which BLM staff in Alaska attributed to the pressure from Lundquist’s team in Washington. The delay proved a blessing for the company. By slow-walking its decision, Interior gave the company an opening to persuade the Army Corps. At first blush, that seemed to be a challenge for ConocoPhillips. According to BLM employees in Alaska, representatives of the Corps had given the impression in weekly progress meetings in Anchorage with BLM that if BLM’s staff favored Alternative B, the Corps would sign on too, to avoid conflicting rulings.
But now the company put on the pressure. On Nov. 11, DeGeorge sent a lengthy letter to the Corps, suggesting a rationale for the agency to back Alternative A. “Fish Creek and the adjacent areas are important habitat for subsistence activities. However, exceptions to BLM’s Fish Creek setback are permissible,” she wrote.
A month after that, Nicholas Olds, ConocoPhillips’s vice president for North Slope operations, sent a letter to Cribley, the BLM director in Alaska. Olds hinted that the Corps was now leaning toward the company’s position. He put BLM on notice that it should be prepared to reverse its recommendation or risk having a split decision by the government that would stall the whole project.
Baij, the Corps project manager, began telling his counterparts at BLM that after contacts with company representatives he feared ConocoPhillips would file a lawsuit against the Corps if it sided with the BLM and conservationists. “ConocoPhillips was pulling out all the stops,” said Lon Kelly, then the head of BLM’s office in Fairbanks. “They were telling Hank [Baij] over and over again, you can’t make us do” Alternative B.
Baij has since left the Corps and did not return calls on the matter.. His supervisor, Michael Salyer, demurred when asked about legal threats. “What Hank was or wasn’t fretting about, I don’t know,” he said. The ConocoPhillips spokesman said, “We are not aware of any discussion with Mr. Baij about legal actions.”
“It was Pretty Much Cooked”
As the decision dragged into 2015, Bruce Babbitt was invited to dinner with Andrew Lundquist and Ryan Lance, the ConocoPhillips CEO, at Del Campo, a sleek Washington grill where the tomahawk ribeye for two goes for $119.
Babbitt accepted, warily. The company men cordially debated Alaska drilling with him 2014 ironically, back in the day, Lance had been an engineer at Arco, where he was a leader of the roadless drilling system Babbitt had taken as a model. But they steered clear of the particulars of the impending decision. Babbitt thought about making a last-ditch pitch for his vision for NPR-A, but decided it was futile. “It was pretty much cooked,” he said.
He was right. The very next day came the ruling: the Army Corps had decided in favor of ConocoPhillips.
Under the agency’s logic, the company’s preferred route was best, essentially because a shorter road meant disturbing fewer wetlands. This confounded conservationists and the other agencies, who questioned the Corps’ reliance on ConocoPhillips’s wetlands data and who noted that the Corps had not taken into account the protections for the Fish Creek setback. Salyer, Baij’s supervisor, defended the decision and said that ConocoPhillips’ entreaties had had little impact. “I don’t think we felt a whole lot of pressure,” he said.
Interior could have contradicted the Corps by sticking with BLM’s preference. But e-mails show that it in the months after Lundquist and Lance’s visit to the department, it had chosen otherwise. In an unusual move, it had developed two versions of a Record of Decision, one for Alternative A and one for B, while waiting for the Corps’ choice.
On Feb. 13, its final Record of Decision gave ConocoPhillips the official go-ahead to drill in Greater Mooses Tooth with a road through the Fish Creek setback. Officials justified it by saying the alternatives were not so different and this would “provide a federally unified decision” with the Army Corps.
In just over a decade, Lundquist and his associates had obliterated several principles of Babbitt’s original balancing act. The land right around Teshekpuk Lake was still safe, for now. But the drilling sites in NPR-A weren’t going to be roadless; a road was going right through a key watershed and subsistence area; and tribal leaders’ wishes were being overruled.
Interior’s approval came with a highly unusual condition, as if underscoring its misgivings: ConocoPhillips would pay $8 million toward a new, yet-to-be-defined “mitigation” process that would seek to compensate for the project’s harm. “The Department looks forward to continuing to work with ConocoPhillips as it moves forward with safe and responsible energy development on the North Slope,” Assistant Secretary for Land and Minerals Management Janice Schneider, who negotiated the payment, said in a statement.
Dismay abounded. The tribal leaders in Nuiqsut took the decision as a direct affront. Not only had the agencies ruled against them, but Interior officials, after meeting with ConocoPhillips in Washington, had ordered BLM staff in Alaska to drop mitigation measures the village had requested, such as air filters for its school. “Our voice was not respected in the process,” said tribal administrator Martha Itta. The $8 million was little solace 2014 in Alaska, such payouts often had the effect of dividing the Native community.
Like the villagers, conservation groups took it as a foreboding sign that, in the very first application it had gotten to drill in NPR-A, the Obama administration had made an exception from the plan it had itself laid out, by allowing a road through the Fish Creek setback. The Salazar plan “was a good plan in that it really did strive to balance conservation and development 2014 but it’s only a good plan if it’s actually stuck to,” said Nicole Whittington-Evans, Alaska director for the Wilderness Society.
BLM employees in Alaska were demoralized, too, by the fact that their concerns about Alternative A had, it seemed, been sold for a price. Rather than requiring the company to take the less damaging approach, the government had settled for a payment with an undetermined purpose. “We were trying to get money out of ConocoPhillips for something we could have tried to mitigate and we decided not to,” said Lon Kelly, who has since retired from the BLM office in Fairbanks. “It was so disappointing for the Obama administration, for Sally Jewell, to go down this road.”
Babbitt, too, faulted the Interior leaders for not sticking to the BLM’s original finding in favor of Alternative B. “They should have raised their voice,” he said. “They could have defended their decision, which was done weakly, if at all.” He had little doubt what led to the outcome: “Somebody intervened in Washington,” he said.
Asked what happened at Lundquist and Lance’s visit to Interior in September, the company spokesman would only say, “A number of topics were covered at the meeting.” Interior officials declined to comment.
‘Kind of Infectious’
In the months after Greater Mooses Tooth won approval, the oil market plunged. Despite this, in November, the company gave its formal internal go-ahead for the project 2014 with so much invested in its North Slope operations already, drilling there is relatively cost-efficient. Construction is to begin in 2016. The company has also set in motion its next application for the reserve 2014 Greater Mooses Tooth 2, linked to GMT-1 by another road, a slightly longer one. With the world facing an oil glut for the foreseeable future, causing major cutbacks for oil projects in the Lower 48, drilling will nonetheless proceed on some of the most pristine federal lands.
Having guided Greater Mooses Tooth to a successful conclusion, Lundquist and his team moved onto the next, related goal: lifting the U.S. ban on crude exports, a step that would greatly expand the market for the company’s North Slope oil. In August, the Senate energy committee, Lundquist’s former haunt, voted to lift the ban. And in mid-December, Republicans got it inserted into the end-of-year spending deal.
Way back when his lobbying firm was taking off, Lundquist flirted with returning to government 2014 not in the administration, but running for office himself, from Alaska. But it was hard to leave a firm that was doing so well, and a Beltway circuit that he had mastered. “He wanted to stay in the private sector,” said Nethercutt, the former congressman. “It’s kind of infectious that way 2014 it’s a matter of the job and the sophistication. He’s run in some high-powered circles, and he got used to it.”
Of course, there was the chance that a new opportunity would present itself to Lundquist in a year or so, noted Joe Allbaugh, the former FEMA director under Bush who had shared a lobbying venture with Lundquist.
“I expect,” Allbaugh said, “that should there be another Republican president, he should be one of the first ones to be approached when it comes to energy jobs 2014 and rightly so, because of his expertise.”
Related stories: For more of ProPublica’s coverage of politics and lobbying, check out our ongoing series, The Breakdown.
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