After a three-year push by the Trump administration to open the Arctic National Wildlife Refuge in Alaska to oil drilling – an effort that resulted in a rush to sell leases before the White House changed hands – ultimately , the only lessee could be the State. of Alaska itself.
With a deadline Thursday to submit bids for 10-year leases on plots spanning more than one million acres of the refuge, there is no indication that oil companies are interested in purchasing the rights to drill under difficult conditions , to extract more expensive fossil fuels for a world that increasingly seeks to wean itself from them.
Amid the uncertainty, a state-owned economic development corporation voted last week to allow bids up to $ 20 million for some of the leases. “This is an extraordinary opportunity,” Frank Murkowski, a former Alaska political statesman, told the board of directors of the company, the Alaska Industrial Development and Export Authority, at a meeting before the vote.
There are legal questions surrounding the action, including whether the development authority qualifies as a bidder. And environmental organizations, some Alaskan Native groups and others are seeking an injunction in Federal District Court to outright suspend lease sales, arguing that they are part of a deeply flawed Department of Justice process. ‘Interior which, among other things, minimizes scientific findings on possible damage to the refuge.
But if the development authority continues, it sets up the possibility that when the sealed bids are opened on January 6, the state may find itself sole owner of the leases. That would give hope that at some point in the next decade interest in drilling in the refuge will pick up again and that he can sublet plots to someone else.
The result of the sale would also be a strange ending to the Trump administration’s attempt to allow drilling into the safe haven, which is believed to cover billions of barrels of oil, though this thinking is largely based on old data from several decades. President Trump has said opening the safe haven to oil companies is one of the most important efforts in his effort to expand domestic oil production.
About the size of South Carolina, the refuge is one of the last large tracts of virtually untouched land in the United States, home to stray caribou, polar bears and migrating waterfowl. Alaskan officials and many Republican lawmakers have long sought to allow drilling there, citing the jobs and income it would create. But the safe haven has been protected for decades, largely by Democrats in Congress.
That changed in 2017 when Republicans, who controlled both houses of Congress, passed a tax bill allowing the sale of leases of up to 1.5 million acres of the refuge along the coast. Following an environmental review, the Home Office this summer approved a sale, the plans of which were accelerated after Mr. Trump’s election defeat. President-elect Joseph R. Biden Jr. is opposed to drilling in the refuge.
This month, the Bureau of Land Management, the Home Office’s sales agency, withdrew around half a million acres from the tender, citing concerns about the disturbance of caribou calving grounds and disturbance of other wildlife. That leaves about one million acres available on 22 plots, with a minimum supply of $ 25 per acre.
Within days of the deadline, Lesli Ellis-Wouters, a spokesperson for the office in Alaska, declined to say whether any offers had been received. “This information is considered confidential until submissions are opened,” she said.
The Alaska Oil and Gas Association, a trade group, has long said companies avoid rocking their plans.
Pavel Molchanov, energy analyst at financial services firm Raymond James, said the companies were very unlikely to bid, given the cost of oil exploration and drilling in the Arctic, the potential damage to their reputation in operating on land prized by environmentalists, the growing movement among big banks to refuse to fund drilling in the refuge, and the depressed state of the industry amid the coronavirus pandemic.
“Drilling in the refuge is about the last thing the oil companies want to do now,” Molchanov said. “But even before Covid, the industry’s appetite for it would have been scarce.”
In an opinion piece that appeared in Anchorage Daily News ahead of the Economic Development Authority’s meeting, Mr. Murkowski, former Governor and United States Senator and father of one of the state’s current Senators, Lisa Murkowski , acknowledged widespread concerns that there would be no bidders. for leases. “After all of our efforts, hopes and aspirations, Alaska will look like the proverbial paper tiger,” he wrote.
Mr Murkowski said that by bidding the state would act as a safety net, and he argued that Alaska has expertise in leasing oil, although that expertise involves selling leases on land. owned by the state, not to purchase leases on federal land.
He also pointed out that with rental income split evenly between the federal and state governments, if his offers were successful, the state would get a one-time deal. “You’re going to get half of your money back,” he told the board. Only the state, he added, “can buy at 50% off”.
Mr. Murkowski was one of the few speakers to support the plan. Most commentators have said the shelter should be left alone and the state should spend its money elsewhere, such as on Covid relief.
Suzanne Bostrom, a lawyer at Trustees for Alaska, a nonprofit public interest law firm that represents groups trying to block sales, said the authority’s decision to allow the offers “smacked of real despair ”.
She said there were “very serious questions” as to whether the authority could “spend state resources without any control”.
“The legislature is supposed to make these kinds of decisions,” she said.
In the tax bill, the sales were presented as a way to raise $ 900 million over 10 years for the federal treasury to offset more than $ 1 trillion in tax cuts. But this figure has long been questioned by outside experts. Last year, a New York Times analysis suggested the actual amount would be around $ 45 million.
And with the sales looming, any potential financial windfall for the government looks even smaller, said Autumn Hanna, vice president of Taxpayers for Common Sense, a non-partisan organization in Washington, DC.
“We remain firmly convinced that lease sales are going to be grossly insufficient for taxpayers,” said Hanna. “We don’t think there is any evidence of industry interest and that there could be a real tender.”
The group said its latest estimate showed the federal treasury could receive as little as $ 15 million from lease sales.