Trump administration sets lease sale in oil-prone Arctic refuge

Anchorage — The Trump administration is fast-tracking a lease sale in an oil-prone 1.6-million-acre coastal plain of the Arctic National Wildlife Refuge with plans to conduct the sale on Jan. 7, the U.S. Bureau of Land Management announced Dec. 3.

A notice of the sale will be published in the Federal Register on Dec. 7, it said in a press release. The sale will be held 13 days before President-elect Joe Biden is sworn into office, and will be conducted by video livestream, BLM said. Biden has opposed leasing in the refuge and may move to block the award of leases or permits for exploration.

"Congress directed us to hold lease sales in the ANWR coastal plain, and we have taken a significant step in announcing the first sale in advance of the December 2021 deadline set by law," Alaska BLM director Chad Padgett said in a statement.

Congress authorized leasing in the coastal plain in the Tax Cuts and Jobs Act of 2017 that was signed into law by President Donald Trump on Dec. 22, 2017. Nominations from companies of tracts to be offered are being solicited on 32 tracts covering all 1.6 million acres of the coastal plain, with a deadline of Dec. 17 for the nominations, BLM said.

Oil and gas development in the refuge is a political hot button. US conservation and tribal groups have already filed lawsuits challenging BLM's Final Environmental Impact Statement and Record of Decision for ANWR leasing, and requests for a court injunction to halt the lease sale are anticipated.

Padgett said the 2017 tax cuts jobs act changes federal law by making oil and gas development one of the purposes of the refuge, at least as far as the coastal plain is concerned. The law directs the Secretary of the Interior to work through the BMM to carry out the lease sale provisions of the law.

The "purpose of the refuge" language in the law is a major point of contention in the lawsuits. Conservation groups are arguing that one "purpose" of the refuge should not diminish other purposes, mainly protection of fish and wildlife, which oil leasing and development would do, the lawsuits charge.

Industry appetite for leases uncertain

The bulk of the 19-million-acre ANWR, which is in far northeast Alaska, is still off limits for mineral development and much of it has been given a formal wilderness classification, the most stringent layer of protection under federal law.

However, Congress designated the coastal plain, the far northern portion of the refuge along the Alaskan Beaufort Sea coast, for possible leasing because of its oil and gas potential in the 1980 Alaska National Lands and Conservation Act.

However, ANILCA required Congress to specifically authorize leasing, which it finally did in 2017 after years of controversy.

It's unclear just how much appetite the industry has for the refuge, however, given the current low oil prices and no expectation of improvement in the near future. Large public companies may also be wary of the political controversy that will continue with any award of lease and attempts to develop discoveries.

Conservation groups are proving to be adept at waging public campaigns aimed at shareholders and boards of large public companies, a tactic that proved effective in encouraging Shell to quit a costly but controversial program to explore Arctic waters offshore northwest Alaska.

However, there are likely to be some companies interested, most likely small or medium-sized privately-held companies that are less exposed to public relations campaigns.

A private Alaska Native development corporation owns a 91,000-acre inholding in the northern part of the coastal plain. Arctic Slope Regional Corp. of Utqiagvik, formerly Barrow, owns the mineral rights with the surface lands held by Kaktovik Inupiat Corp., the private village corporation for the Inupiat village of Kaktovik, which is on Barter Island just off the coast.

One exploration well was drilled in the 1980s in the private enclave, by Chevron and BP. The results are still held confidential, but BP has sold its rights to the well data to major independent Hilcorp Energy as part of Hilcorp's purchase of all of BP's Alaska assets.

While much of the coastal plain is remote there is industry infrastructure built to Point Thomson, an operating gas condensate field on state lands a few miles west of the Canning River western boundary of the refuge.

ExxonMobil, the Point Thomson operator, has built a pipeline to the field. Other support facilities like housing and a year-around airport have also been built there.