A mere three bidders, including a state agency, put forward offers for controversial oil leases in an ecologically sensitive area of Alaska during an auction that the Trump administration rushed to conduct in its final days.
After half a century of debate over opening up the Arctic National Wildlife Reserve to oil exploration, the first-ever sale of drilling rights in the area elicited minimal interest on Wednesday, with the Alaska Industrial Development and Export Authority, the agency responsible for driving the state’s economic growth, accounting for the bulk of the bids.
The dearth of offers comes at a time when the appeal of high-risk remote exploration projects has waned for cash-strapped energy companies, with the shale revolution of the past decade providing access to ample supplies of readily available oil. Environmentalists also lobbied against the sale, and there was a lack of support from lenders.
The auction — which was mandated under a 2017 law — raised a total of $14.4m. A 2018 congressional report predicted this round of lease sales, plus another due to be held by 2027, would raise $2.2bn in revenues over a 10-year period.
A coalition of non-governmental organisations said the poor returns rendered the process “a fire sale of some of the most valuable and ecologically significant wilderness remaining in North America”.
“The Trump administration railroaded this lease sale through amid a global pandemic and economic recession, absent any real evidence that pursuing Arctic Refuge oil would provide any significant federal returns,” said the group, which includes the Alaska Wilderness League, First Peoples Worldwide and the National Resources Defense Council said
Katharine MacGregor, deputy secretary of the interior, said that while the bids were “so great to have”, the longer-term impact of royalties was more important.
“It is my hope that if and when commercial quantities of oil are discovered on any of these leases that this action will make history for generations to come,” she added.
Of 16 offers submitted, 11 were from the AIDEA. Two small companies — Knik Arm Services and Regenerate Alaska, a subsidiary of exploration group 88 Energy — submitted one bid apiece. Three bids had not been properly completed.
ANWR received protected status under President Dwight Eisenhower in 1960 and is home to migrating birds, polar bears, caribou and other wildlife, with little human activity.
While it has been estimated to contain up to 12bn barrels of technically recoverable oil, no significant exploration has ever been carried out. A push to open it up to drilling has been resisted by indigenous groups and environmentalists.
The Tax Cuts and Jobs Act of 2017 mandated that two lease sales be carried out for the area, the first by the end of this year. The Trump administration has expedited the process, ensuring the auction took place before the inauguration of Joe Biden, the Democratic US president-elect, who opposes them.
Analysts said that while Mr Biden may struggle to cancel the lease sales, he could slow down any projects and push up costs by introducing onerous regulation.
The American Petroleum Institute, Big Oil’s powerful lobby group in Washington, welcomed the auction. Frank Macchiarola, API senior vice-president, said the environmental review process had confirmed that oil and gas development could be carried out responsibly in certain areas of the reserve.
Twice weekly newsletter
Energy is the world’s indispensable business and Energy Source is its newsletter. Every Tuesday and Thursday, direct to your inbox, Energy Source brings you essential news, forward-thinking analysis and insider intelligence. Sign up here.