Citigroup joins a growing list of financial institutions shunning Arctic oil development

The announcement came as crude oil futures went negative.

By Yereth Rosen - April 21, 2020
A view of the exterior of the Citibank corporate headquarters in New York, New York, May 20, 2015. (Mike Segar/ Reuters File Photo)

Amid oil-patch turmoil and cratering oil prices, another major U.S. bank has joined the list of institutions that are refusing to finance Arctic oil development.

Citigroup on April 20 released a sustainability policy that rules out investments in Arctic oil development. The announcement came the same day a major U.S. crude benchmark fell into negative territory, an unprecedented development.

“Frontier exploration and production occurs in remote environments with often harsh conditions where there is a greater reliance on technology and increased uncertainty regarding performance. Citi has not previously provided and will not provide project-related financing for oil and gas exploration and production in the Arctic Circle,” the policy says.

Citigroup is the latest among more than a dozen major banks with policies against Arctic oil development. Other large U.S. institutions that have announced such policies are Goldman Sachs, JPMorgan Chase and Wells Fargo.

[Suddenly, new investment in Arctic Alaska oil looks very unlikely]

For Alaska, the policy has implications for proposed oil development in the Arctic National Wildlife Refuge.

The Trump administration had vowed to hold an ANWR lease sale last year, but that date was delayed. The U.S. Bureau of Land Management in September issued a final environmental impact statement recommending leasing the refuge’s entire coastal plain. But the agency has yet to issue a record of decision, a step required before a lease sale may be scheduled.

The Gwich’in Steering Committee and other opponents of drilling in the refuge have lobbied the financial institutions to take a stand on the issue.

Some of those organizations hailed Citibank’s announcement.

“The dominoes continue to fall, and now four of the top six American banks have recognized that Arctic drilling is a toxic investment to be avoided,” Sierra Club campaign representative Ben Cushing said in a statement. “Drilling in the Arctic Refuge would be a disaster for wildlife, the climate, and the human rights of the Gwich’in Nation, and any company associated with this destruction will suffer a massive public backlash and long-lasting damage to their reputation. Banks like Morgan Stanley and Bank of America should act immediately to follow along with their peers or risk getting left behind.”

Financial institutions’ rejection of Arctic oil development goes beyond the current economic crisis, said Adam Kolton, executive director of the Alaska Wilderness League.

ANWR development plans envision a decades-long horizon, at least 10 years to first production, possibly 40 years to peak production and, according to the BLM’s EIS, possibly 70 years of activity, he noted.

That is way past the time needed to move away from fossil fuels in order to meet the targets set in the Paris climate agreement, he said.

“If you’re serious about climate change, it doesn’t make sense to finance long-term projects,” Kolton said.

[How coronavirus and an oil-price crisis could transform the oil industry in Arctic Alaska]

For the long-term, Alaska and other regions that have been dependent on the oil industry should change their strategies, he said.

“If every long-term bet for Alaska’s economic future is based on exploiting every last acre of Arctic territory, I’m afraid that’s going to be a losing economic strategy, as well as a losing environmental strategy.”

In the short term, any attempt to sell oil leases in the refuge appears futile, Kolton said.

“Whether you’re for drilling or against drilling in the Arctic refuge, we ought to be in agreement that this is the wrong time right now to talk about drilling when oil markets are cratering,” he said.

President Trump, however, has continued to tout ANWR oil development. He mentioned it in an April 10 briefing on the coronavirus pandemic when he was asked about cuts in domestic oil production.

“It means we have it in the ground and we can use it. Now we have We have a lot of ground with a lot of oil in it. . . .Especially with ANWR. As you know I got ANWR approved in Alaska. That’s one of the biggest finds anywhere in the world,” he said at the briefing.

There has been no announced oil discovery in the refuge.

No exploration drilling has been conducted in the refuge, with the exception of a 1986 well drilled on Native land within the refuge boundaries. Results of that drilling remain confidential, officially. However, a New York Times investigative story published last year found that the results were poor. The investigation, which examined legal records and used interviews of those involved in a legal dispute over the well, quoted an attorney who said the well was “worthless.”