Wall Street backs away from Arctic drilling amid Alaska political heat

Wells Fargo has become the third big U.S. bank to announce it won't invest in Arctic oil.

By Yereth Rosen, Reuters - March 3, 2020
A Wells Fargo bank sign is pictured in downtown Los Angeles, California, on August 10, 2017. Wells Fargo is the third major U.S. bank to rule out financing for Arctic oil drilling. (Mike Blake / Reuters file photo)

ANCHORAGE — Wells Fargo and Co has become third big U.S. bank to publicly announce it will no longer invest in Arctic oil drilling.

The bank said on Monday that it does not “directly” fund oil and gas projects in the Arctic region, and has not done so since 2018. It had hinted at that decision in previous statements about improving business practices, but had not mentioned Arctic drilling specifically.

The bank’s statement followed similar moves announced by JPMorgan Chase and Co last week and Goldman Sachs Group Inc in December, as well as by British investment bank Barclays last January.

[JPMorgan Chase becomes the second major US bank to drop Arctic oil financing]

Banks and investment managers have been backing away from fossil-fuel development in the face of worsening climate change and pressure from activists, even as the United States has boosted oil and gas production to record levels.

The moves reflect Wall Street’s increasing desire to cast itself as environmentally friendly, but sparked a political firestorm in Alaska.

The moves also come even as President Donald Trump’s administration has reduced environmental protection provisions over the last three years and is moving forward with planned lease sales in the Arctic National Wildlife Refuge.

The 19-million acre refuge was off-limits to drilling for decades until 2017 legislation that authorized opening it to oil and gas exploration. However, environmentalists and some Alaska Native groups representing those who live adjacent to ANWR have continued to fighting against its development.

Bernadette Demientieff, executive director of the Gwich’in Steering Committee, which represents Athabascan groups that live in an area spanning the southern edge of ANWR and across the border in Canada, said the campaign to get banks to withhold investment has been going on for two years, and will continue.

“We’re going to keep going. We’re going to keep visiting more banks until the Arctic Refuge is protected for good,” she said.

Alaska oil production has dwindled in the last three decades, as the expansion in U.S. drilling in recent years has come from shale plays in Texas, North Dakota and other states. The state currently produces roughly 500,000 bpd of crude oil, down from more than 2 million bpd in 1988, according to U.S. Energy Department figures.

Republican Governor Mike Dunleavy’s office did not respond to requests for comment, but he has sharply criticized the moves by banks in the past, saying Alaskans shouldn’t do business with those institutions. State legislators echoed those comments Monday in the state capital of Juneau.

“Wells Fargo, unlike some of the megabanks such as Goldman Sachs, has extensive business operations in Alaska,” said Republican Representative Bart LeBon. “They have an obligation to support the community activities and the business activities of their customers within a marketplace.”

Most of Alaska’s existing Arctic oil production takes place on state land in the central North Slope, west of ANWR.