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(Bloomberg) — President Barack Obama’s call to restrict oil exploration on 12 million acres of the Arctic National Wildlife Refuge probably won’t have much practical impact for an area already off-limits to drillers, though it’s created a new fault line with the Republican-led Congress.
The White House on Sunday said it would ask Congress to designate “core areas” of the 19.8 million-acre refuge as wilderness, including its 1.5 million-acre coastal plain that geologists believe lies atop a rich oil reserve.
“Designating vast areas in the Arctic National Wildlife Refuge as wilderness reflects the significance this landscape holds for America and its wildlife,” Interior Secretary Sally Jewell said in the statement.
The practical impact is slight because Republicans, who now control both chambers of Congress, voiced immediate opposition. And oil and gas production is already prohibited in the Arctic refuge. It does add to the list of energy issues that the administration and Republicans disagree on, such as climate change and construction of the Keystone XL pipeline from Canada.
The announcement comes as a decline in global oil prices has drillers cutting back on production. West Texas Intermediate for March delivery dropped 72 cents to settle at $45.61 a barrel on the New York Mercantile Exchange on Friday.
Oil rigs have dropped by an unprecedented 258 in seven weeks, threatening to end the surge in domestic oil production that has turned the U.S. into the world’s largest fuel exporter.

Chairman Murkowski

The Arctic refuge area has been the subject of a political fight over energy development and environmental protection for decades. Alaskan lawmakers said Obama’s plan threatens their state’s sovereignty and economy.
“It’s one more layer of restriction,” Alaska Governor Bill Walker, a Republican who was elected as an independent, said at a press conference called Sunday to react to Obama’s announcement.
Robert Dillon, a spokesman for Senator Lisa Murkowski, an Alaska Republican, said the Interior Department can treat the refuge as a “de facto” wilderness until Congress acts. That means greater restrictions on motorized vehicles operating in the area, for example, he said.
Murkowski, the new chairman of the Senate Energy and Natural Resources Committee, vowed to fight the proposal.
“It’s clear this administration does not care about us, and sees us as nothing but a territory,” Murkowski said in a release. “I cannot understand why this administration is willing to negotiate with Iran, but not Alaska. But we will not be run over like this. We will fight back with every resource at our disposal.”
Spokesmen for ConocoPhillips, BP Plc, Royal Dutch Shell Plc and Exxon Mobil Corp., all of which have significant operations in Alaska, didn’t return calls and e-mails seeking comment on Sunday.

More Steps

John Northington, a Washington-based energy consultant, said the move by the administration probably delays any possibility of drilling occurring, even if Congress were to approve drilling and Obama’s successor were to go along. The Interior Department would probably have to do a new environmental analysis that could take years, he said.
“That doesn’t even include the litigation that would accompany all of this,” Northington said.
While the Arctic refuge has faded in national importance, Jerry McBeath, a professor of political science at the University of Alaska-Fairbanks, said opening the refuge remains an important issue to Alaskans.
Without more crude output in the state that can flow to market on the Trans-Alaska Pipeline System — which has seen declining volumes in the past decade — freezing temperatures could force the pipeline to be closed in coming years. That would make it impossible to sell the oil produced in Alaska.

‘Highly Unlikely’

To the further frustration of Alaskans, Dillon said the administration may announce later in the week additional restrictions on drilling off Alaska’s northern coast.
The Arctic region represents one of the nation’s largest known petroleum reserves, though harsh conditions and environmental concerns have hampered exploration and development. The designation being sought by the Interior Department is the highest level of protection from development that’s available to public lands, according to the department.
Approval of a wilderness designation from the Republican- controlled Congress is “highly unlikely” with Murkowski as chairman of the Senate’s key energy committee, said Cindy Shogan, executive director of the Alaska Wilderness League, an environmental group.

‘National Treasure’

Shogan said the proposal is nonetheless significant because it reverses a White House position made to Congress by President Ronald Reagan in 1987 recommending oil drilling in the refuge.
“It’s a national treasure worthy of the highest protection available for our public lands,” Rhea Suh, president of the Natural Resources Defense Council, said in a statement.
More than 7 million acres of the wildlife refuge are now protected as wilderness. Obama’s proposal would expand that territory and include for the first time the coastal plain.
The Interior Department said the refuge is home to the most diverse wildlife in the Arctic, including caribou, polar bears, wolves and muskoxen. It was established in 1960 by President Dwight Eisenhower and expanded in 1980 under President Jimmy Carter, according to the Alaska Wilderness League, which applauded Obama’s move.
Obama announced Dec. 16 he was blocking the leasing parts of Bristol Bay, Alaska, for oil and gas exploration and production.

–With assistance from Mark Drajem in Washington and Bradley Olson in Houston.

To contact the reporters on this story: Jim Snyder in Washington at jsnyder24@bloomberg.net; David Lerman in Washington at dlerman1@bloomberg.net To contact the editors responsible for this story: Bernard Kohn at bkohn2@bloomberg.net; John Walcott at jwalcott9@bloomberg.net Jon Morgan