The Trump administration’s long-awaited lease sale auctioning off drilling rights for oil and gas in the Arctic National Wildlife Refuge was such a dud that the state of Alaska stepped in as a bidder of last resort.
An economic development corporation owned by Alaska offered the high bid on all but two of the 11 leases, which generated a paltry total of $14 million.
The state agency, the Alaska Industrial Development and Export Authority, doesn’t plan to develop the leases immediately and instead bought them with the intent to hold on to the acres so it can partner with companies to do the actual drilling later on, when market conditions are more favorable.
The auction fell way short of expectations laid out by the Congressional Budget Office, which estimated that lease sales in Alaska’s Arctic National Wildlife Refuge as permitted by the GOP’s 2017 tax bill would bring in $1.8 billion over a decade. No large public oil companies made bids.
It’s a disappointing result for the Trump administration, which has been racing to conduct a lease sale before President-elect Joe Biden takes office to make it more difficult for him to reverse it, since oil and gas leases on federal lands are considered government contracts.
The Trump administration was eager to deliver on a mandate from the Republican tax cut bill allowing energy exploration in a 1.56 million-acre section of the 19.3 million-acre refuge, known as the “1002 area,” where billions of barrels of oil are believed to lie beneath the coastal plain.
Alaska’s Republican delegation, headed by Sen. Lisa Murkowski, led a decadeslong quest to allow drilling in the refuge, known as ANWR, viewing it as a potential economic boon for the oil-dependent state.
But Biden has vowed to ban drilling in ANWR, declaring himself “totally opposed” to disturbing the status quo in a long off-limits area that environmentalists consider to be one of the wildest places left on Earth.
It turns out oil companies were mostly uninterested in the opportunity because of a combination of low prices from the pandemic and there being competition from cheaper and more desirable resources in the nation’s lower 48 shale regions. Investors concerned about exposure to climate change financial risks, including several United States banks, have also turned against funding Arctic drilling.
The 2017 tax cut bill calls for a second lease sale before 2024, but Democrats, after winning control of the Senate, would likely look to roll back the Republicans’ opening of ANWR drilling and seek to protect the refuge permanently.
