Providing coverage of Alaska and northern Canada's oil and gas industry
January 2021

Vol. 26, No.2 Week of January 10, 2021

$14M in ANWR sale

AIDEA takes 9 of 11 tracts receiving bids; only interest on western side

Kristen Nelson

Petroleum News

It was a long-awaited event for many in Alaska - the first lease sale in the 1002 area of the Arctic National Wildlife Refuge.

But results were somewhat disappointing, as the U.S. Bureau of Land Management received just $14.4 million in apparent high bids at its Jan. 6 lease sale.

For Alaska, this is a level of bidding more typical for developed areas with companies filling in leases around existing operations than for a widely anticipated area just opening.

Deputy Secretary of the Interior Kate MacGregor, who read the bids at the opening, said BLM received 16 bids on 12 tracts; after three bids were declared incomplete during the opening, the agency reported the total as 13 bids on 11 tracts, 552,802 acres.

BLM had offered 22 tracts, some 1.1 million acres, in the sale.

The sale followed passage of the 2017 Tax Cuts and Jobs Act which directed the secretary of the interior, through BLM, to conduct at least two areawide lease sales of not less than 400,000 acres each within the coastal plan of ANWR within 7 years with the first sale before Dec. 22, 2021, and the second sale before Dec. 22, 2024.

Half of the $14.4 million in high bids, nine of 11 from the Alaska Industrial Development and Export Authority, goes to the state, MacGregor said.

Knik Arm Services took a single tract and Regenerate Alaska took a single tract - in both cases outbidding AIDEA.

Bidder interest was all on the western side of the coastal plain; there were no bids on tracts on the eastern half of the sale. The western side of the sale abuts state acreage at Point Thomson, the farthest east production on the North Slope.

In a Dec. 18 amendment to the sale, 10 tracts were withdrawn - the farthest east and farthest south tracts on the coastal plain, in response to information BLM received in response to a Nov. 17 call for nominations and comments.

In a statement after the sale BLM said the substantive input was from Alaska Native Tribes, nongovernmental organizations and the Canadian government.

The tracts withdrawn totaled nearly 475,000 acres, the agency said. Substantive comments received “focused on the core calving area of the Porcupine Caribou Herd, and the importance of polar bear and migratory bird habitat, in particular snow geese,” BLM said.

Tracts receiving bids

AIDEA took tracts 16, 17, 22, 23, 24, 26, 27, 30 and 31, paying the minimum $25 per acre. Its bids - including two on which it was not high bidder - were focused along the coast, with four bids on non-coastal tracts on the western side of the sale area, south of the coastal tracts on which it bid.

In a release after the sale, AIDEA listed the tracts it took. Its high bids totaled $12,018,825.

“By acquiring these tracts, Alaska preserves the right to responsibly develop its natural resources. This will create new, good-paying jobs on the North Slope and generate revenue for the local economies of Alaska’s Arctic and the State’s general fund,” AIDEA Executive Director Alan Weitzner said.

Knik Arm Services took tract 25, on the coast in the middle of tracts receiving bids. The company bid $1,622,260, $33.38 per acre, the highest bid amount per acre in the sale as well as the highest bid on a tract.

Regenerate Energy, an Alaska operating subsidiary of 88 Energy, took tract 29, on the western edge of the coastal plain, bidding $32.50 an acre, $771,373 in total for the tract. The tract is an area where the state is disputing ownership. In its Nov. 17 sale notice, BLM said: “Tract number 29 covers the disputed Staines-Canning River area. It is currently under litigation with the State of Alaska. The BLM may elect to not offer this tract in the upcoming sale.”

The tract was offered and drew three bids: AIDEA, Regenerate and one of the three incomplete bids.

Responses to sale

Comments from Alaska’s congressional delegation reflected the long fight to open the 1002 Area.

U.S. Sen. Lisa Murkowski, R-Alaska, said it was “the result of many Alaskans’ tireless efforts over the course of decades.”

“The first lease sale in the non-wilderness 1002 Area did not occur under ideal conditions, but it will benefit Alaskans both in the short-term and well into the future,” she said.

U.S. Sen. Dan Sullivan, R-Alaska, said it “is a momentous and historic day for all Alaskans. After 40 years and extensive congressional and administrative consideration, we have finally achieved a lease sale for the 1002 Area of ANWR as Congress mandated in 2017.”

Rep. Don Young, R-Alaska, also called it “a monumental day for Alaska. After our fight of over four decades, the first lease sale in the 1002 area of ANWR is here. Securing drilling rights on the Coastal Plain has been one of my career’s highest priorities, and seeing the culmination of hard work by countless individuals, including our late Sen. Ted Stevens, is very special to witness,” Young said.

Although none of its members bid in the sale, the Alaska Oil and Gas Association’s President and CEO Kara Moriarty called the sale “a historic event, and decades in the making,” and thanked the state’s congressional delegation, present and past, for the years of work spent in achieving the lease sale.

“While the results may not have been as robust as we might have expected, industry still supports future access to this area,” Moriarty said. “Today’s sale reflects the brutal economic realities the oil and gas industry continues to face after the unprecedented events of 2020, coupled with ongoing regulatory uncertainty.”

Opposition strong

There are ongoing lawsuits against the sale (see story in this issue) and a joint statement from multiple environmental and Indigenous organizations after the sale reflected the opposition.

“Today’s bids disregard the facts: oil and gas drilling on the Arctic Refuge coastal plain would threaten Indigenous rights, industrialize one of America’s last wild places, threaten imperiled wildlife, and exacerbate climate change.”

“The Trump administration railroaded this lease sale through amid a global pandemic and economic recession,” the groups said, “and absent any real evidence that pursuing Arctic Refuge oil would provide any significant federal returns.”

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