Wells Fargo Backs Out From Funding Arctic Oil Projects

Wells Fargo (WFC) became the third prominent U.S. lender to announce that it will no longer provide direct funding for oil and gas projects in the Arctic.

The San Francisco-based bank follows in the footsteps of Goldman Sachs (GS) and JPMorgan (JPM) which have already ended this business line over the past few months. (Goldman Sachs will also refuse to finance new thermal coal mine development or strip mining. JPMorgan also pledged to stop lending to most coal-related ventures.)

“Wells Fargo does not directly finance oil and gas projects in the Arctic region, including the Arctic National Wildlife Refuge [on Alaska’s North Slope] – part of a larger 2018 risk-based decision to forego participation in any project-specific transaction in the region,” the lender said in an updated policy statement.

However, Wells Fargo’s spokesman David Kennedy clarified that: “Our policy applies only to project finance in the region. We have ongoing business relationships with numerous companies involved in the oil and gas industry in the Alaska Arctic region and expect to continue those relationships long into the future.”

Kennedy added: “We respect the conversation around conventional energy development -- its importance to local economies, its necessity today in our daily lives, concerns about the need to transition to a low-carbon economy, and concerns about the potential impact of energy development on communities and the environment.”

Conservation groups like the Sierra Club and Gwich’in [Native Alaskan] tribal members have long pressured banks to stop investing in energy projects in the arctic refuge in order to protect local wildlife and to fight climate change.

Wells Fargo is the largest bank in Alaska, holding some $6.1 billion in deposits -- more than twice as much as the next biggest lender First National Bank of Alaska.

D.J. Fauske, a spokesman with the North Slope Borough (the municipal government where the arctic refuge is located), noted that Wells Fargo is the only bank available in the local city of Utqiagvik.

“[Borough Mayor Harry Brower Jr.] is very disappointed that his region and people are being unfairly targeted and even blamed now for the changing Arctic,” Fauske said.

Brower had written an op-ed in the Wall Street journal in which he criticized Goldman for withdrawing from Arctic oil projects.

“Beneath our lands are some of the largest oil and gas reserves in the world, including Prudhoe Bay and the coastal plain of the Alaska National Wildlife Refuge,” he wrote. “We have worked to maintain a balance between the modern world and our rich cultural inheritance. Largely because of the oil and gas under our lands, which are developed using the highest environmental standards, we have come far.”

Brower complained that Goldman did not consult with local indigenous people before its decision, nor did it understand the beneficial economic impact of oil drilling on Alaskan natives.

As with Goldman and JPMorgan in the past, some Alaskan politicians condemned Wells Fargo’s decision.

Rep. Bart LeBon, R-Fairbanks, a former executive vice president of Mt. McKinley Bank, said people should “re-evaluate your banking choices if you live and work in Alaska.”

Rep. Sara Rasmussen, R-Anchorage, said Alaska is “under attack.”

“It’s time that we push back, it’s time to start speaking with our wallets,” she said.

Meanwhile, the Trump administration is preparing to sell drilling rights in the Arctic National Wildlife Refuge.

“We are about to finalize a leasing plan for that,” said Interior Secretary David Bernhardt.

The Interior Department finished an environmental study of arctic refuge drilling last year. In 2017, the U.S. Congress ended a lengthy moratorium of oil drilling in the refuge by ordering lease sales in order to raise money which could offset tax cuts.

The refuge is estimated to possess billions of barrels of oil.