KEY POINTS JP Morgan's decision followed a similar move by Goldman Sachs last December

Barclays and Credit Agricole have alsi stopped financing new oil projects in the Arctic

Alaska’s Republican Gov. Mike Dunleavy is reviewing the bank's business ties with the state

State officials and oil industry executives in Alaska criticized a decision by JP Morgan Chase (JPM) to cease providing loans for oil and gas exploration projects in the Arctic.

Goldman Sachs (GS) made a similar move last December.

Earlier this week, JPMorgan Chase unveiled a comprehensive strategy to focus on fighting climate change and promote renewable energy by refusing to finance projects that "will be used for new oil and gas development in the Arctic.”

Barclays (BCS) of London and Credit Agricole in France, also have stopped financing new oil and gas projects in the Arctic.

“JPMorgan Chase is expanding its commitment to a low-carbon economy and further supporting the clean energy transition,” the bank said.

The bank had come under pressure from environmental groups, Democratic lawmakers and leaders of Gwich’in (Native Alaskan) communities who wanted to see an end to oil drilling in the Arctic National Wildlife Refuge, a 20-million-acre property in northeastern Alaska.

Alaskan politicians are seeking to retaliate.

Alaska’s Republican Gov. Mike Dunleavy tweeted: “If private companies choose not to invest in Alaska due to the agendas of outside special interest groups, then Alaska has a right to not invest money with groups like [JP Morgan].”

Dunleavy’s administration said it is reviewing the state’s relationship with JP Morgan.

“Given [JP Morgan’s] recent actions, a change in the relationship should be expected going forward,” said Dunleavy spokesman Jeff Turner.

Jason Brune, Alaska’s environmental commissioner, called JP Morgan’s announcement “anti-Alaskan” and protested by ripping up his Chase credit card.

“Speaking with my wallet, or rather, no longer speaking with my wallet,” he tweeted.

Last December after Goldman Sachs withdrew financing, Dunleavy removed the bank from Alaska’s billion-dollar plan to borrow money to pay tax credits to state oil and gas drillers. (The decision reportedly could cost Goldman Sachs between $200,000 and $300,000 in compensation).

Brune also suggested that the $67 billion Alaska Permanent Fund Corp., which is controlled by the state and mostly funded by oil revenues, should review its $950 million investment in JPMorgan funds.

“I’m very concerned,” he said. “No one does oil and gas development more safely than Alaskans, and banks taking positions like this only forces that demand to be met by other jurisdictions that don’t have the same strong environmental ethics that we have.”

Craig Richards, chair of the permanent fund’s board, said as an Alaskan, it is personally “disappointing to me to see banks that are bowing down to political pressure by certain activists and that are making political decisions, not business decisions.”

Dunleavy himself griped: “Some of these groups that don’t want to do business in Alaska still want Alaska business. They probably are going to come out a loser on that one.”

Mike Barnhill, deputy commissioner of the Department of Revenue, has requested a review of JPMorgan’s business ties with the state.

State Debt Manager Deven Mitchell noted that Alaska earlier had chosen JPMorgan as co-manager of two bond packages which have not been issued yet.

John Hendrix, chief oil and gas advisor to the Governor at State of Alaska, said such decisions by the banks pose a threat to investment in Alaska oil fields and the overall economy.

“It’s time for Alaskans to wake up,” he said. “How are we going to live if people don’t put money into our resources? We can’t live on [non-governmental organization] income streams.”

Andy Mack, a former Alaska natural resources commissioner who advocated for drilling in the Arctic Refuge, said: “One position by one large company I don’t think changes a lot. But if you see two or three or four large companies make these types of announcements, it’s certainly something that [oil] companies will all have to take into account. And that’s why the state needs to pay attention.”

Alaska’s Republican U.S. Sens. Lisa Murkowski, Dan Sullivan and Rep. Don Young criticized Democratic lawmakers who had called on the banks to stop financing local oil projects.

Bill Armstrong, owner of Armstrong Oil and Gas and an explorer for oil in Alaska’s North Slope region, said if more banks withhold funding, energy projects in the state would be endangered.

“This could potentially be a big problem for operators working on the North Slope if it spreads," Armstrong said.

However, Kara Moriarty, president of Alaska Oil and Gas Association, said some oil companies operating in Alaska, like ExxonMobil Corp. (XOM) and ConocoPhillips (COP), are so large that they don’t necessarily have to borrow money from banks.

“If Alaska has competitive projects, the investment will be there,” she said.

Environmental groups hailed JP Morgan’s decision.

“We’re glad to see America’s largest bank recognize that the Arctic Refuge is no place for drilling, and we hope that soon other banks and the oil companies they fund will follow along,” said Bernadette Demientieff of the Gwich’in Steering Committee.

The committee has warned that oil drilling would hurt the local caribou herds in the refuge and damage their food sources.

Pavel Molchanov, an energy analyst at Raymond James, said JPMorgan and Goldman will not be hurt by leaving Alaska since the region represents only a small portion of their overall investment portfolios.

“They get good PR out of it and it means nothing to them in a financial sense,” he said.

A larger problem, Molchanov said, was that oil prices are so low (now below $50 per barrel) that new oil projects do not make any sense – making it even harder for drillers to obtain loans.