Donald Trump

Trump’s Secretary of State Pick and Putin Want to Drill for Oil in the Arctic

ExxonMobil has lost at least $1 billion in Arctic drilling investments due to Obama’s sanctions on Russia.

Daniel Oberhaus

Daniel Oberhaus

Tillerson and Putin. Image: premier.gov.ru/Wikimedia Commons

On Friday, President Obama signed an executive order to protect part of Alaska's Arctic known as the North Bering Sea from future oil well drilling. The news was met with enthusiasm by environmentalists and Alaska Native tribes, but the celebration was short lived.

The Wall Street Journal reported early Saturday morning that President-elect Donald Trump is expected to tap Rex Tillerson, CEO of ExxonMobil, for Secretary of State. On Sunday morning, Trump tweeted that he hasn't made a final decision, but said that Tillerson is a "world class player and dealmaker." If Trump does pick Tillerson for Secretary of State, that will make the CEO of the third largest petroleum company in the world America's top diplomat.

Trump's choice is less than surprising given that the president-elect has expressed a desire to normalize relationships with the Kremlin. During his ten year reign at the helm of Exxon, Tillerson has been noted for his close ties to Russia, which began when he oversaw Sakhalin-I, Exxon's flagship drilling project in Russia that began in 1996.

Most recently Tillerson brokered a massive deal with the Russian state oil company Rosneft to explore for oil in the Russian part of the Arctic Ocean in 2011. The deal also gave Rosneft significant holdings in oil resources in other countries, including the US.

The Exxon-Rosneft project, which was estimated to be worth "tens of billions" of dollars on the low end and up to $500 billion on the high end, drilled its first Arctic exploration well and struck oil in 2014.

Just days after the company announced it had hit oil in the Arctic, Exxon had to withdraw from its deal with Rosneft after the Obama administration imposed sanctions on Russia after it annexed Crimea from Ukraine. In 2015, Exxon filed a report with the US Securities and Exchange Commission detailing that the US sanctions on Russia had lost the oil giant up to $1 billion in revenue.

Image: Daniel Oberhaus

Unsurprisingly, Tillerson has spoken against sanctions on Russia so that Exxon can continue drilling in the Arctic.

"We don't find [the sanctions] to be effective unless they are very well implemented comprehensively, and that's a very hard thing to do," Tiller said during the annual Exxon shareholder meeting in 2014. "So we always encourage the people who are making those decisions to consider the very broad collateral damage of who are they really harming with sanctions and what are their objectives and whether sanctions are really effective or not."

Even though recent US orders to keep its portion of the Arctic oil well-free would be difficult for Trump to overturn, it is comparatively easy for the president-elect and his top pick for Secretary of State to lift sanctions on Russia, which is ramping up oil extraction in the Arctic.

Unfortunately, though the US and Russia have drawn political lines over the Arctic, the ecosystem itself is not so easily divided. The Arctic Ocean is one of the most pristine marine environments in the world and is home to a number of species unique to the region, many of whom are already being seriously impacted by climate change-induced ice melts. This area is also important as a major global fishery that provides sustenance not only to indigenous communities in the region, but the rest of the world as well.

Drilling in the region is particularly dangerous because there is no effective way to contain and clean up an oil spill in icy water, according to the World Wildlife Foundation. For a company like Exxon (which doesn't have the best track record when it comes to oil spills), a spill on the order of the 1989 Exxon Valdez crisis in the Arctic would devastate the region.

"At a time when the climate crisis is deepening, both the United States and the world deserve much better than having one of the planet's top fossil fuel tycoons run U.S. foreign policy," Michael Brune, executive director of the Sierra Club, said in a statement published on Saturday. "ExxonMobil not only deliberately concealed its knowledge of climate change for decades but is responsible for one of the costliest environmental disasters in history. We urge Senators…to stand up for families across the country and the world and oppose this nomination."