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Energy

State-owned Alaska corporation to consider bidding on Arctic wildlife refuge oil leases

  • Author: James Brooks
  • Updated: December 22, 2020
  • Published December 21, 2020

The coastal plain of the Arctic National Wildlife Refuge. (Photo by U.S. Fish & Wildlife Service)

Alaska’s state-owned economic development corporation is proposing to spend $20 million for drilling rights in the Arctic National Wildlife Refuge’s coastal plain.

Alan Weitzner, director of the Alaska Industrial Development and Export Authority, said Monday that the corporation’s board of directors will be asked on Wednesday to approve up to $20 million for bidding on leases being offered by the federal Bureau of Land Management.

AIDEA could make minimum bids on all available leases, or as many as possible, to preserve drilling rights as a backstop if no one else submits a bid. Once seismic surveys take place and legal battles are settled, the state could then sub-lease to companies that would actually drill. Because AIDEA is interested only in having someone develop ANWR — and doesn’t care who — it would prefer to be outbid, Weitzner said.

Wednesday’s vote will not be a strict order to bid. Instead, the board will vote upon a resolution authorizing Weitzner to post bids if, after an evaluation process, he finds it is appropriate to do so.

“What I’m asking for is for the authority to evaluate whether AIDEA does submit a bid under the coastal plain oil and gas lease sale,” Weitzner said.

AIDEA will have to make its final decision quickly: The deadline to submit bids is 4 p.m. Dec. 31. The Bureau of Land Management will open those bids on Jan. 6, via video streaming.

Weitzner said he wasn’t aware of any other time when the state bid on a federal oil and gas lease.

The decision immediately came under scrutiny from environmentalists who oppose drilling in the refuge. Lois Epstein, an engineer and Arctic Program Director for the Wilderness Society, said her group has been urging “everybody not to bid on the Arctic refuge because it’s a national treasure. It’s certainly a special place in the state of Alaska. There’s human rights issues. I’m shocked that they’re moving forward with this process of spending $20 million within 48 hours’ notice.”

She questioned whether AIDEA can qualify as a bidder.

Weitzner said, “based upon BLM’s Detailed Statement of Sale qualifications, AIDEA meets those qualifications.”

On Friday, AIDEA published notice of a Dec. 23 special meeting, saying only that it would involve “confidential matters related to a potential new project for the Arctic Infrastructure Development Fund.”

Details weren’t disclosed until Monday, when AIDEA published the draft resolution. Weitzner said there was no attempt to keep the resolution a secret; it wasn’t written until Monday.

When the board meets on Wednesday, much of its discussion will take place in a closed-door executive session. Epstein said it isn’t a good thing to have a board of seven people, all appointed by Gov. Mike Dunleavy, make a decision of this magnitude.

“It’s unacceptable for them to be moving forward in this sneaky way,” Epstein said.

Weitzner said members of the board may discuss the resolution in public after the closed-door discussion. Their votes also will be public.

Weitzner said AIDEA has been considering the idea for “about the last week and a half,” but he said the concept of having Alaska or AIDEA bid on ANWR leases has been around since at least 2017.

Arctic National Wildlife Refuge coastal plain

Former Alaska Gov. Bill Walker said his administration considered the idea after Congress approved oil and gas development in the refuge’s coastal plain in 2017.

“It’s something that we had anticipated doing some years ago, when we were in office, and so I’m very pleased to hear they’re going to do that,” he said after being informed of AIDEA’s plan.

Walker and fellow former Gov. Frank Murkowski separately wrote columns this month in the Anchorage Daily News, urging the state to bid on ANWR leases.

Because Alaska earns half of all lease-sale revenue, Murkowski said it’s as if the state is bidding at a 50% discount — it will get half of its money back.

Walker said it’s important that each part of ANWR’s drillable area receive at least a minimum bid because it allows the lease-holder to conduct seismic surveys. Once oil is found, the rights become much more valuable.

“If I were in office, I would be adamant that we have a minimum bid on every single tract,” Walker said.

Weitzner said $20 million isn’t enough for a minimum bid on every part of ANWR’s coastal plain open for leasing. There are 22 tracts, most between 40,000 and 60,000 acres apiece, and the minimum bid is $25 per acre plus other fees, according to the lease plan. He believes $50 million would be enough to make a minimum bid on each tract.

Weitzner said the idea of an ANWR bid was developed organically within AIDEA, not in response to Murkowski, Walker, or current Alaska Gov. Mike Dunleavy.

Asked whether the governor or any member of the administration had ordered the move, Dunleavy deputy communications director Jeff Turner said, “No. The opportunity to participate in the 1002 lease sale has been discussed by various departments of the state administration. AIDEA is an independent organization established by the legislature to promote economic opportunity for the state and its residents. The decision to participate in the lease sale will be made by the AIDEA board.”


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