Biden administration could in effect kill off Conoco's Alaska project by limiting it

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The Biden administration finalized its environmental review of ConocoPhillips' (NYSE:COP) Willow project on Alaska's North Slope earlier this week, laying the groundwork for approval next month of what would be the largest U.S. oil development on public lands.

But some opponents of the project are quietly encouraging the administration to actually approve it, but in such a scaled-back way that it no longer makes economic sense, Bloomberg reported.

ConocoPhillips (COP) had proposed five drilling sites for the project, and the alternative proposed by the U.S. Bureau of Land Management calls for as many as three drill sites.

The company said the three drilling sites "reflect an integrated design concept and provide a viable path forward for development of our leasehold."

But even as the BLM released its report, the U.S. Interior Department said in its own press release that it has "substantial concerns" about the Willow project.

ConocoPhillips Alaska (COP) president Erec Isaacson has said if the government limits drilling to two locations, or well pads, Willow no longer would be viable.

As a result, some activists are pushing for deferral of one more well pad, saying the administration has the authority to do so through its record of decision.

"We are concerned by the suggestion that the administration could potentially deny this project through deferring or delaying some of the drilling locations," an American Petroleum Institute official said. "Companies can't make multibillion dollar investment decisions based on what might come down the road."

ConocoPhillips (COP) shares have fallen more than 11% since initial news of the Willow project review.