In a surprising setback to the Trump administration’s long-stated goal of energy independence, a recent auction for oil drilling leases in Alaska’s Arctic failed to attract major oil companies.
After literally generations of debate, when the federal government leased a 5% portion of the Arctic National Wildlife Refuge, the much-anticipated flood of oil interest simply did not appear.
In fact, of the 22 parcels of land, totaling 1.1 million acres, the government of Alaska was the only bidder and ended up winning leases on 9 of the 12 parcels that received bids. Only two were acquired by private companies, and the others that did not receive interest withdrew from this round of auctions.
The region is known as the Coastal Plain, and federal estimates They say a transformative supply of oil wealth (about 11.8 billion barrels) lies beneath the area that provides rich habitat for seabirds, polar bears, caribou and other animals.
Although the leases were expected to generate $ 1.8 billion in revenue over ten years, enough to “offset the tax cuts,” concern about the lack of interest led to the state development company, the Export and Industrial Development Authority. of Alaska (AIDEA), to authorize $ 20 million in emergency expenses on leases.
Leases that were not sold will be offered again during the next lease period, while those that were retired will be available for 10 years. AIDEA says it will work with private companies on the leases it has.
A historic day, a historic failure
If the staggering absence of interest was due to the lack of infrastructure or roads around the coastal plain, the decline in investment and the use of fossil fuels during the pandemic, the perception that every inch of the Arctic would be legally contested by indigenous tribes and environmentalists. activists, or a private equity drought when banks and companies withhold funds for development projects in the Arctic, what was supposed to be a historic day ended with crickets and question marks.
“Today’s sale reflects the brutal economic realities that the oil and gas industry continues to face after the unprecedented events of 2020, coupled with the current regulatory uncertainty,” said Kara Moriarty, executive director of the Oil and Gas Association. Alaska in a statement.
Whether fairly ignorant of the failures, or confident in future attempts to lease the land, Alaska Sen. Lisa Murkowski and Congress Don Young and Dan Sullivan, everyone described it as “A monumental / historic day for all Alaskans.”
Opponents view failure in a different way, one that is more embarrassing and humorous than historical. Adam Kolton, Executive Director of the Alaska Wilderness League, described as an “epic failure” and “a great shame”.
“Essentially, the Trump administration was having a party, it was hoping the oil industry would show up, and it didn’t,” Kolton said. according to AP. “[It’s] A death sentence for anyone arguing that this is going to be an oil, jobs and income bonanza. I mean, they just got unmasked. “
Indigenous groups were sad to see the measure passed, however, their concerns raised during the public comment period resulted in 460,000 acres, or 10 leasable areas, being set aside due to wildlife concerns involving caribou and polar bears.
After the “epic failure,” it could even happen that the Arctic is not explored at all, as the leases are not finalized and a 2-week antitrust review from the Justice Department is still pending, which Trump hopes to expedite. during his last days in office, according to Alaska Public Radio.
Future lease sales required by the Trump Jobs and Tax Cuts Act of 2017, which may occur under the Biden Administration, could attract even less interest, as the president-elect has stated that he is completely against drilling. in the Arctic and may attempt to repeal or interfere. with any drilling lease or work at the ANWR, things that take years to complete.
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