After winning most Arctic refuge bids, an Alaska agency prepares to assume oil leases
Meanwhile, some Alaska Native and environmental groups urged AIDEA to abandon the leases.
The Alaska state agency that submitted most of the bids in a lightly attended auction for drilling rights in the Arctic National Wildlife Refuge expects to have those leases in hand by next week, the organization’s executive director said on Wednesday.
The Alaska Industrial Development and Export Authority, a state-owned entity, is waiting for the official transfer of leases to nine tracts in the refuge coastal plain, the organization’s executive director said at a Wednesday board meeting.
The Bureau of Land Management is expected to transfer the signed leases by Jan. 21, said AIDEA executive director Alan Weitzner.
“We have 15 days to conclude the leases from the time of the sale, which is January 6,” Weitzner told board members at the teleconferenced meeting. AIDEA has received drafted lease agreements and provided some response information to the BLM, he said. “We are currently within the 15 day time period and looking to conclude these leases by that time, but it does remain subject to receipt of their signing,” he said.
The lease sale drew minimal interest, despite decades of campaigning by the oil industry and its supporters for permission to drill in the long-protected area. The AIDEA board, in an emergency meeting on Dec. 23, authorized spending of up to $20 million on leases as a backstop in case oil companies sat out the auction.
Ultimately, AIDEA wound up as nearly the only bidder — and the high bidder for nine of the leases. Regenerate Alaska, a subsidiary of Australian independent 88 Energy Ltd., submitted a single bid that turned out to be the highest offered for a tract on the western border of the refuge. Knik Arm Services LLC, a small company, was the only other successful bidder, with the highest offering for another tract.
AIDEA’s total financial responsibility from the lease sale is over $16.8 million, Weitzner said. That combines the approximately $12 million in successful AIDEA bids — all submitted at the BLM’s established minimum of $25 per acre — and the additional $10 per acre annual lease payment, which is required up front when leases are awarded, Weitzner said. On top of that, he said, is potential surety bonding.
The poor showing at the lease sale was disappointing, Weitzner said. But oil companies’ decisions to sit out the sale were not surprising, given various factors, he said.
”The companies across all industries are facing economic realities, and the oil and gas sector is no exception,” he said. Some companies might have opted out because there is little new geological information about the area available, he said. Others that are active in Alaska are busy with prospects on state land elsewhere on the North Slope, he said.
Nonetheless, it was worthwhile for AIDEA to acquire ANWR leases, he said.
“The way I look at it, and I believe that we will see to be the case, is that AIDEA’s involvement preserved the right to go forward on these leases for development,” he said.
Critics who spoke during the meeting’s public comment period said AIDEA had made a mistake in participating in the lease sale.
The paltry lease-sale showing and the need to pay annual rents in addition to the initial bids are evidence that the move was a bad financial decision, said Lois Epstein, Arctic program director for The Wilderness Society.
“With no industry interest and no major oil company interest during last week’s lease sale, these leases are a bad investment for AIDEA and the state of Alaska, as there will not likely be a return on investment,” she said. The annual rental for the nine tracts won by AIDEA will be over $4.8 million, money that will likely be wasted, she said.
Others who spoke urged AIDEA to abandon the leases.
Siqiniq Maupin, Executive director of Sovereign Inupiat for a Living Arctic, said the AIDEA action combines a bad financial decision with a violation of Alaska Native rights. There will be “no or little impact to the state of Alaska that will be positive,” she said. The incoming Biden administration will be moving away from fossil fuels, she noted, making the lease purchases an unwise investment. “There will not be a big boom of jobs and income. We will lose money as a state. Yet our human rights are still violated,” she said.
The Gwich’in Steering Committee, the umbrella group for Gwich’in tribal members in Alaska and Canada, has also been trying to convince AIDEA to drop the leasing effort.
Steering committee leaders met with Weitzner on Friday to press their case.
“We let them know that our way of life is not negotiable, and that we wanted to know how they intend to include Indigenous voices, and protect Indigenous ways of life and values, ” Bernadette Demientieff, the Gwich’in Steering Committee’s executive director, said in a statement.
This is about future generations. This is about climate action. The coastal plain nourishes life and sustains the Porcupine caribou herd that, in turn, sustains our people. Sacred lands are not for sale,” she said in the statement.
Elsewhere on the North Slope, the state of Alaska on Wednesday auctioned off leases in the central North Slope and in state territory of the Beaufort Sea. The auctions were part of the areawide leasing program that provides annual lease sales in various regions of the state.
In all, those state lease sales drew a little over $7 million in combined high bids for tracts covering 191,248 acres of territory, the Alaska Division of Oil and Gas said.
The North Slope lease sale drew the most interest by far, with 112 tracts receiving bids. Australia’s Oil Search and Alaskan independent Great Bear Petroleum Ventures were the dominant bidders, and there were two smaller companies bidding. The Beaufort Sea lease sale drew three bids, all from Hilcorp Energy Co. The Brooks Range Foothills lease sale drew no bids.
State officials characterized the results as successful, especially considering the economic strains imposed by the COVID-19 pandemic.
“This is good news for Alaskans,” Tom Stokes, director of the Division of Oil and Gas, said in a statement. “We look forward to working with these companies to ensure Alaska’s future in energy development.”