Oil

Oil lease sale for Alaska’s Arctic National Wildlife Refuge draws few bidders

The Trump administration succeeded in opening the refuge for drilling. The highest bidder? The state of Alaska itself.

 

The northern coast line of Arctic National Wildlife Refuge is seen from the Beaufort Sea. After a highly-contested oil and gas lease sale, only a portion of the available parcels on the northern coast were bid on.
Brian Adams

Decades of legal action, speculation and political wrangling over drilling on the coastal plain of Alaska’s Arctic National Wildlife Refuge culminated in an underwhelming lease sale on Jan. 6. Only three parties placed bids for drilling rights on the land on the state’s North Slope, which is considered crucial habitat for the Porcupine caribou herd. The sale garnered about $14 million, according to the Bureau of Land Management — much less than a 2017 Congressional Budget Office estimate, which projected that two lease sales in the refuge would collectively amass $2.2 billion. (Other organizations’ estimates were much lower.)

Only half of the 22 available land tracts received bids at all. The Alaska Industrial Development and Export Authority (AIDEA), a state-owned economic development corporation, snagged nine of them, and two small private companies won one each. AIDEA’s bids were unprecedented; while the publicly owned corporation has financed loans for natural gas production in the past, it has never before acquired a lease itself. It’s unclear whether it even meets the BLM’s description of a qualified bidder; that’s important, because the agency has previously blocked leases purchased by people or groups that do not intend to develop them. “I think it’s more of a placeholder in the sense of trying to ensure that they can try to move forward in the future with development with other groups,” said Nauri Toler, an Iñupiaq environmental justice organizer for Native Movement, a social justice nonprofit with a focus on Indigenous issues. “I think it’s an overstep — a huge overstep.”

Kara Moriarty, president of the Alaska Oil and Gas Association, said that AIDEA’s ownership of the leases will provide oversight and accountability for the state. “It’s not unusual for AIDEA to be involved in oil and gas projects,” said Moriarty, citing examples at Cook Inlet and Mustang in which the corporation helped finance fossil fuel development. “The state being involved does help with continued legislation and the regulatory process.” AIDEA did not respond to multiple requests for comment.

At least two steps remain before the leases are finalized. One is an antitrust review conducted by the Justice Department, meant to ensure that the bidding process was legal and competitive. AIDEA’s position as a state-owned corporation — combined with the fact that the state of Alaska receives half the revenue from the lease sales — could be seen as undermining competition, said Jenny Rowland-Shea, a public-lands expert at the Center for American Progress, a progressive think tank. According to an email from a BLM communications staffer that was shared with High Country News, the agency has “coordinated antitrust review with the Department of Justice and have received a favorable reply.” It’s unclear what a favorable reply entails; however, Rowland said it appears that the Justice Department may have fast-tracked the review to less than a week — a process that typically takes 30 to 60 days. The Department of Justice did not respond to requests for comment.

Map source: Bureau of Land Management

The BLM must also formally sign off on the leases, a process the Trump administration is expected to attempt to push through before President-elect Joe Biden’s inauguration on Jan. 20. Still, even if the leases are finalized, drilling in the refuge is not guaranteed: The Biden administration could offer to buy back the leases or hold up the permits companies need to actually begin drilling. And several ongoing lawsuits have been filed by the Gwich’in Steering Committee, tribal nations, and environmental and conservation organizations and coalitions, as well as by other states against the BLM, Interior Department and U.S. Fish and Wildlife Service, alleging an insufficient and unlawful environmental review. If their efforts are successful, they could result in canceled leases. 

“The very future of the Gwich’in Nation is on the line.”

For now, all eyes are on AIDEA, the BLM and the Justice Department. Activists say they aren’t giving up the fight. “The very future of the Gwich’in Nation is on the line,” said Faith Gemmill, an Arctic Village Council Member and campaign organizer for the group Resisting Environmental Destruction on Indigenous Lands.

“We’re not going to sacrifice our way of life for these types of unethical energy proposals that impose cultural genocide on our people. … I’ve been involved in the issue for 27 years. There’s been a lot of times when it’s not looked good, it’s looked bleak. And we always overcome.”

Surya Milner is an editorial intern at High Country News. Email her at [email protected] or submit a letter to the editor.

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