- By Jenna Kunze
- Economic Development
The Department of the Interior last week hit pause on all activities related to oil and gas in the Arctic National Wildlife Refuge (ANWR), a decision blasted by Alaska Native corporations and stakeholders who stand to lose out on a potential loss of revenue.
The move follows President Biden’s executive order, issued on his first day in office, to direct the Interior Department to review oil and gas activity in the Refuge. The department said in a statement Tuesday the freeze will allow it time to conduct a “comprehensive environmental analysis” under the National Environmental Policy Act and to “address legal deficiencies” from the first-ever lease sale on the coastal plain pushed through under the Trump administration.
“The Department is notifying lessees that it is suspending oil and gas leases in the Arctic Refuge, pending the review, to determine whether the leases should be reaffirmed, voided, or subject to additional mitigation measures,” the agency said in a statement.
The coastal plain, also known as the 1002 Area, makes up about 1.5 million acres of ANWR’s roughly 19 million acres. The area previously was off-limits for oil and gas development until the Trump administration in 2017 opened it up for development. On Jan. 6, the former administration held a lease sale, where the majority of the leased tracts were snatched up by the state, and many more were left on the table.
Of the 22 tracts up for auction, half of them didn’t receive any bids, according to Bureau of Land Management records. Of the 13 bids submitted, seven tracts went to the state-owned Alaska Industrial Development Export Authority (AIDEA), and the remaining to Knik Arm Services LLC, and Regenerate Alaska Inc.
Larry Persily, former federal coordinator of the Alaska Natural Gas Transportation Projects, told Tribal Business News that the flopped bidding process reflects an ostensible air of reluctance oil companies have to invest big money in projects that could take around 10 years to develop.
“I think the time to develop ANWR has passed, and I think we saw that with the lack of any legit bids,” Persily said. “Putting bids under review that were probably never going to develop into anything, I guess it’s just another reminder to anyone in the oilfield service business in Alaska … (to not) count on getting jobs out there.”
Perhaps the people who stand to lose out the most are Alaska Native shareholders who have been sitting on unrealized profits — in some cases, literally — for more than 40 years.
In 1971, Congress awarded two Native corporations, Arctic Slope Regional Corporation and Kaktovik Iñupiat Corporation, 92,000 acres of subsurface and surface rights to land within the coastal plain that’s been blocked from development up until 2017.
According to a USGS report, the coastal area is estimated to contain around 10.6 billion barrels of oil. According to Arctic Slope Regional Corporation’s annual report from 2018, the most recent available, the average royalty price per barrel of oil was $61.03.
“Today’s announcement is disappointing as it seemingly ignores the local Iñupiat voices of the North Slope of Alaska, and it fails to consider the beneficial impacts this exploration will provide to our communities,” ANWR said in a statement.
On the North Slope of Alaska, where a gallon of milk costs $10, resource development makes up a large portion of the borough’s property tax revenue. In 2019, oil contributed $377 million to the borough’s budget to pay for infrastructure upkeep, health and social services, according to North Slope Borough’s budget.
Matthew Rexford, tribal administrator for the Village of Kaktovik, declined to comment to Tribal Business News, but penned his thoughts in an April 11 op-ed in the Anchorage Daily News. Kaktovik is the only village within ANWR’s coastal plain where drilling would occur.
“For the past 40 years, the ANWR debate has been largely framed by lawmakers and environmental groups and has centered around the caribou, polar bears, tundra and birds. But what about the people — my people? Aren’t we worth preserving? Don’t we get a say in whether oil can be developed on our land so we can have an economy?” Rexford wrote.
Rebecca Logan, CEO of the Alaska Support Industry Alliance, a nonprofit trade organization that advocates for responsible oil and gas development, said the reaction among the organization’s membership can be summed up as “disappointed but not surprised.”
The group has about 500 members, including the majority of Alaska Native Corporations.
Logan said that, based on the Biden administration’s choice to defend a contentious oil project last month, oil and gas is still on the table as a viable industry.
Last month, the Biden administration proved supportive to oil and gas when it defended the Willow project within the National Petroleum Reserve-Alaska, a major oil drilling development.
“ANWR is … the thing that people get most emotional about, and it’s the thing that is the furthest out in planning for future oil and gas development,” Logan said. “It’s very different from what would happen if they would have stopped Willow where people are already working and all permits are in hand.”
She added that ANWR leaseholders might seek legal recourse if their permits are denied, but so much remains to be seen.
“Until you see … the Biden administration’s review of what’s happening there, it’s hard for us to comment on our future activities,” Logan said.
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