Alaska is “open for business,” but nobody’s interested
Radio silence from the Trump administration after Alaska’s largest-ever oil and gas lease sale flops
By Lucy Livesay and Andre Miller, Center for Western Priorities
December 6 marked the much-anticipated “largest” sale of oil and gas leases in Alaska’s wildlife-rich National Petroleum Reserve (NPR-A) — 900 tracts, totaling 10.3 million acres of the 22.8 million acre reserve. But despite the bombast and bullish statements that accompanied the Bureau of Land Management’s announcement of the lease sale earlier this fall, the administration has fallen entirely — and notably — silent.
That’s because the vaunted sale yielded bids for merely 7 tracts of the 900 offered, totaling only 0.8 percent (79,000 acres) of the 10.3 million acres offered — an embarrassingly tepid response to what Alaska Senator Lisa Murkowski called a “key step” in securing American energy dominance.
This lease sale is a stain on the administration’s ‘lease everywhere’ approach. You cannot force drilling where no demand exists — but the administration would sure like to try. Administration officials and members of Congress looking for unchecked energy development on U.S. public lands will talk a big talk until the economics don’t pan out in their favor. Look at the evidence:
“The president has tasked me to prepare our country to be energy dominant. The only path for energy dominance is a path through the great state of Alaska.”
— Interior Secretary Ryan Zinke, speaking to crowds at an Alaska Oil and Gas Association conference
“This order in effect makes Alaska open for business.”
— Interior Secretary Ryan Zinke, regarding his Secretarial Order “effectively maximizing the tracts offered for sale during the [December] NPR-A lease sale”
“In May, I put my hand on [the Trans-Alaska Pipeline System] and pledged to help fill it by putting Alaskans back to work on the North Slope. This large and unprecedented sale in Alaska will help achieve our goal of American Energy Dominance.”
— Interior Secretary Ryan Zinke, announcing the December NPR-A lease sale
“Responsible development in the NPR-A will strengthen our economy, begin to refill our Trans-Alaska Pipeline System, and generate new wealth to create prosperity and reduce our deficits. Those are substantial benefits — and this lease sale is a key step to gaining them.”
— Alaska Senator Lisa Murkowski, regarding the NPR-A lease sale
“I welcome the BLM’s announcement today. Exploration and development of the NPR-A offers a promising opportunity to fill TAPS, boost Alaska’s economy, and protect America’s energy security.”
— Alaska Senator Dan Sullivan, regarding the NPR-A lease sale
Compare those statements to today’s reaction from Secretary Zinke, Senators Murkowski and Sullivan, and the Bureau of Land Management:
None of the officials quoted above have weighed in to explain how their much-touted lease sale turned into a disaster for taxpayers. No press release from the Interior Department, or the Bureau of Land Management, or Senator Lisa Murkowski, no celebratory tweets from Secretary Zinke or his press office — nothing.
Despite high expectations, the NPR-A lease sale fell flat, generating only $1.2 million, with the highest bid reaching a measly $14.99 per acre.
For comparison, the Congressional Budget Office estimates that the leasing of 800,000 acres of the Arctic National Wildlife Refuge 1002 Area, mandated in Senator Murkowski’s addition to the controversial tax bill, will generate $2.2 billion from lease bids. This would require each leased acre to sell for an average of $2,750 — more than 180 times the price of the maximum bid during the NPR-A lease sale. In light of the NPR-A bust, some members of Congress are calling on the Congressional Budget Office to rethink their estimate.
“It seems, from my perspective, that it’s this mentality that if we open it, industry will come. And that’s not necessarily true,” Lisa Baraff of the Northern Alaska Environmental Center told Reuters. Oil fields in the Arctic pose unique challenges for the oil and gas industry where high transportation costs can make drilling infeasible.
Speaking to E&E News, David McCaleb, a director at market analysis firm IHS Markit added, “It would be tough at $50 a barrel to go out there and try to drill the well and make a discovery when you still have to get that oil to market and the only way to do that is through pipelines up there, and it’s a very long way away.”
“The dismal response to this lease sale proves what we’ve been saying all along: even the small amount the GOP claims will be raised by drilling in the Arctic is a sham,” said Senator Maria Cantwell in a statement. “Congress should strike the language turning the Arctic National Wildlife Refuge into an oilfield and start over.”
Proponents of drilling in the pristine Arctic National Wildlife Refuge say it could become the “next Prudhoe Bay,” Alaska’s largest oil producing region, but the plan looks like a pipe dream.
And, equally important, some places — like the untouched expanses of the Arctic National Wildlife Refuge — are just too special to drill.