Energy

After canceling sale earlier this year, Biden administration to hold Cook Inlet oil and gas lease sale in December

Alaska Dispatch News

The Biden administration said Monday that it will hold an oil and gas lease sale in Cook Inlet by the end of the year.

The federal Bureau of Ocean Energy Management said the sale, scaled back from an earlier proposal, will help protect fisheries and habitat for sea otters and endangered beluga whales.

The agency will make about 958,000 acres available for 10-year leases in the Inlet’s federal waters, the agency said. The leases could lead to oil and gas drilling.

The lease sale will be the first in five years in the federal waters west of the Kenai Peninsula. Hilcorp Alaska was the lone bidder in 2017, securing 14 tracts for over $3 million.

In May, the agency canceled the lease sale, then set at 1.1 million acres, citing a lack of industry interest. Lease sales in the Inlet’s state and federal waters over recent decades have generally sparked little to no bidding.

The cancellation prompted criticism from industry supporters who said interest can’t be properly gauged without a sale.

The Inflation Reduction Act that passed in August, a Democratic measure seen as a compromise between climate-protection efforts and traditional resource extraction, required that a 2022 Cook Inlet lease sale be put back on the table.

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The new lease sale will remove 17 blocks from the original proposal, the Bureau of Ocean Energy Management said. Another 193 blocks will still be offered.

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The removed acreage will help to protect habitat for the endangered Cook Inlet beluga whale and sea otters, the agency said. Cook Inlet is home to two stocks of sea otters, one of which is considered threatened under the Endangered Species Act.

Kara Moriarty, head of the Alaska Oil and Gas Association, said a lease sale is important because industry needs the opportunity to look for more oil and gas, though a sale will not necessarily result in drilling, she said. Oil will remain a critical global resource for decades to come, and more natural gas from Cook Inlet is important for supplying future electricity and heat in Southcentral Alaska, she said.

“Even though the full tracts may not be offered, there’s still an opportunity for companies to evaluate whether it makes good business sense to participate in this lease sale,” she said. “I think that the administration has to recognize that relying on foreign nations, which do not produce oil and gas with the same level of environmental protections that we do, is frankly not sound policy.”

The Center for Biological Diversity, a conservation group, said in a statement Monday that a smaller sale will still threaten whales and the climate.

“Interior slightly decreased the amount of ocean habitat being auctioned off, but that can’t change the fact that more oil drilling means more harm to our climate and the Cook Inlet belugas, one of the world’s most endangered whale populations,” said Kristen Monsell, senior attorney for the center. “The noise pollution, vessel traffic and oil spills that will stem from new oil drilling won’t stay within prescribed boundaries, and belugas and other Cook Inlet species will pay the price.”

Oil and gas companies can begin submitting bids in the lease sale Tuesday, said John Callahan, a spokesman with the agency. The bids are set to be opened on Dec. 30, revealing which companies, if any, will acquire tracts for lease and potential exploration and drilling.

Cook Inlet was once Alaska’s leading region for oil and gas production, but only a small fraction of the state’s oil is produced there today, compared to the large North Slope oil fields.

Hilcorp Alaska, the top Cook Inlet producer, has raised concerns about future supplies of natural gas, prompting utilities to look to more renewable energy, and possible natural gas imports, as future alternatives. The company also has said it’s spending heavily in Cook Inlet in pursuit of more natural gas.

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Alex DeMarban

Alex DeMarban is a longtime Alaska journalist who covers business, the oil and gas industries and general assignments. Reach him at 907-257-4317 or alex@adn.com.

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