Few Drillers Interested In ANWR

While Trump’s misguided mob attacked democracy and the U.S. Capitol, yesterday, his misguided attack on the Arctic also fizzled. Only two oil companies showed up at his auction.

In November, the Trump administration fast-tracked plans to sell drilling rights in the Arctic National Wildlife Refuge (ANWR) to oil companies. Yesterday’s sale was supposed to end a battle that has raged for more than 40 years—a battle over drilling, pumping and transporting crude oil in the delicate coastal plain that supports migrating caribou, polar bears and other wildlife. The coastal plain covers about 1.6-million acres, which represents about eight percent of the massive refuge.

Fortunately, all but two obscure oil companies stayed on the sidelines during yesterday’s highly contested auction of drilling rights in ANWR. The oil industry essentially dealt Trump another defeat, while handing the world an important victory.

Environmental organizations and tribal groups have been lobbying oil companies, banks and other financial institutions to stay away from the refuge.

Many major banks say they won’t fund oil projects in the Arctic. Opponents have also filed multiple lawsuits seeking to block drilling. They’ve raised concerns about its impacts on Indigenous people, the global climate and wildlife.

But amid a global recession, low oil prices and an aggressive pressure campaign against leasing by drilling opponents, oil analysts predicted low interest in the sale. They were right. Opponents took the sale as evidence that drilling in the refuge is no longer treasured by oil companies. The ANWR oil lease attracted just three bidders — one of which was the state of Alaska.

“They held the lease in ANWR, which will be recorded in the history books,” said Larry Persily, an Alaska resident. “But no one showed up. It was a dry hole. They had the lease sale, but no one’s going to see any oil coming out of ANWR.”

Even Kara Moriarty, head of the Alaska Oil and Gas Association, acknowledged that the sale results weren’t as strong as expected. But she said the industry still supports future access to the coastal plain.

“Today’s sale reflects the brutal economic realities the oil and gas industry faces after the unprecedented events of 2020, coupled with ongoing regulatory uncertainty,” she said.

The lease sale raised a total of $14.4 million in bids, according to the Bureau of Land Management (BLM), the federal agency that held the sale. Nearly all of that came from Alaska’s state-owned economic development corporation, the Alaska Industrial Development and Export Authority. Half of the cash will go to the federal government, and half will go back to the state of Alaska.

Alaska’s state-owned economic development corporation was the only bidder on nine of the parcels offered for lease in the northernmost swath of the refuge, known as the coastal plain. Two small companies also each picked up a single parcel. Half of the offered leases drew no bids at all.

The money raised is nowhere near the projections when a Republican-led Congress officially opened the coastal plain to drilling in 2017 as part of the Tax Cuts and Jobs Act. The bill ordered two lease sales, the first by the end of this year, with the revenue aimed at offsetting massive tax cuts.

With less than two months left before the presidential transition, the Trump administration attempted to move quickly through a process that would normally take longer. After finishing its environmental review in August, the Trump administration then launched a “call for nominations” on November 17. That’s a 30-day window for oil companies to tell the government which pieces of land they want included in the lease sale. But the BLM did not wait 30 days before scheduling the sale date.

“I laughed out loud. It was a joke. A joke to the American people,” said Desirée Sorenson-Groves, director of the Arctic Refuge Defense Campaign.

“Those companies that bid today will never drill in the Arctic National Wildlife Refuge. We will stop them.”

“We don’t know very much about this area,” says David Houseknecht, a geologist with the U.S. Geological Survey. Oil seeps and rock formations seem promising, but he says the agency hasn’t estimated the coastal plain’s oil potential since the late 1990s.

Back then, it relied on seismic testing from a decade prior, technology that’s now outdated. It found that anywhere from about 4 to 12 billion barrels of recoverable oil could lie beneath the federal lands. That’s a whole lot of oil, but also “a very large range of uncertainty,” Houseknecht says. “The seismic data that we have is old, low resolution and a sparse grid.”

The other challenge–no data from actual wells in the refuge. Just one exploratory well has been drilled in the coastal plain, on Alaska Native land in the 1980s, and the results are a closely-guarded secret.

In response to concerns about wildlife, as well as oil industry interest, the Bureau of Land Management recently removed nearly a third of the original 1.6 million acres from the sale. Additional oil leasing and drilling in the refuge will face headwinds, said U.S. Rep. Jared Huffman, D-Calif., a longtime drilling opponent. His next step will be pushing for permanent protection for the Arctic refuge. He’s likely to have support from a Biden administration. President-Elect Biden and his pick for Interior Secretary — Rep. Deb Haaland — oppose drilling in the refuge. His administration could delay the environmental permitting process for companies that bought leases from the Trump administration. Or a Biden administration could try to buy the leases back. Biden’s sweeping climate plan aims to make the U.S. economy carbon-neutral by 2050.

“There is huge uncertainty now as to how quickly oil consumption and natural gas consumption will peak and start to decline,” says Philip Verleger, a Colorado-based energy economist. “I do not think ANWR is ever going to be produced.”

Now, Trump can add a failed coup and more failed policies to the heap of wreckage in his wake.

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