As it has so many times since its establishment by President Dwight D. Eisenhower in 1960, the Alaska National Wildlife Refuge (ANWR) was once again used as a political football this week by those on both sides of the issue of whether to allow exploration for oil and natural gas beneath the 1.5 million acre coastal plain that makes up the northernmost extent of the 19.6 million acre refuge.
In question this time is the future of a grand total of 9 federal leases auctioned off to a small handful of willing bidders in January as one of the final acts of the Trump administration. The Biden administration announced Tuesday that it would suspend any efforts to economically develop those leases based on claims that the environmental impact study conducted by the Trump Interior Department in advance of the lease sale was somehow lacking. Opponents of the move claimed that this was just one more instance of this administration taking a purely political action motivated by its seemingly boundless desire to cater to the environmental lobby that helped to put it into office.
Regardless of the motivation for the suspension, several key facts surrounding these leases and the process that led to their issuance seem to be getting lost in the media reporting this week.
First is the fact that, while 9 “oil and gas” leases were sold in that January lease sale, not a single one of them was auctioned off to an actual “oil and gas” company. Indeed, 7 of the 9 were bought by the State of Alaska itself, via its Alaska Industrial Development and Export Authority.
The two remaining leases were purchased by placeholder entities that are so insubstantial that neither of them – Knick Arm Services LLC and Regenerate Alaska, Inc. – even has its own website. One obvious motivation for all three of these entities to secure these leases would be a strategy of holding them in hopes of eventually partnering with actual oil and gas companies who have the financial wherewithal to risk the billions of up-front capital that would be required to explore for oil in this Arctic region.
One big problem with that thought process, though: There don’t seem to be any real oil and gas companies with massive financial resources that are interested in looking for oil up in ANWR anymore, something I actually predicted would most likely be the case last August when the Trump administration announced the plans for its lease sale. The reasons why are simple: Drilling in ANWR is too controversial, too legally difficult, too costly and there are too many other good places around the globe to explore for oil and gas. These are “oil and gas” leases in name only.
Then there’s the history of ANWR itself. Most of the news stories this week noted that Alaska state officials, including Gov. Mike Dunleavy, complained mightily about the suspension. “Our leases for oil and gas are valid and cannot be taken away by the federal government,” Dunleavy was quoted by Reuters as saying. “I oppose this assault on Alaska’s economy and will use every means necessary to undo this egregious federal overreach.”
First, this is not any sort of “assault” on Alaska’s economy, given that ANWR has contributed little revenue to the state’s coffers during its 61-year history. It is not an economic driver for the state and was never intended to be so.
Second, Gov. Dunleavy appears to have no understanding of the fact that President Eisenhower and Alaska officials of the time agreed to the setting aside of ANWR in a deal that provided that the federal government would open leasing in the vast areas of the North Slope that lie to the west, including the incredibly prolific resources beneath Prudhoe Bay.
That is the compromise that has literally driven the state’s entire economy for almost half a century now. But now that the phenomenal bounty of Prudhoe Bay and other oil developments on the North Slope have begun to decline, it has really been the state of Alaska and its officials who have tried to force changes to that initial deal.
It is important to remember that dozens of efforts to force the opening up ANWR have been attempted in Washington since the Jimmy Carter administration was in office in the 1970s. All had failed until current Alaska Senator Lisa Murkowski (R) managed to slip language requiring the leasing of the Coastal Plain into the major 2017 tax reform legislation.
This language, which shatters both the letter and the spirit of the compromise that created ANWR in the first place, would not have been passed by congress as a stand-alone bill. So, when Gov. Dunleavy says the state’s leases are “valid,” he is technically correct, but only under this language that became law due to a legislative trick.
The fact that not a single one of the remaining big players in Alaska’s industry, like ExxonMobil