The Biden administration’s final oil and gas lease sale in Alaska failed to receive any bids this week, as the state sued the administration on the grounds that the auction restricted oil and gas development in the region.
The Department of the Interior announced Wednesday that the Bureau of Land Management received no bids for its lease sale of 400,000 acres in the Coastal Plain of the Arctic National Wildlife Refuge, which was scheduled to take place Friday.
Oil companies, state agencies, and others faced a deadline to submit their bids in the auction on Jan. 6. The sale was congressionally required through the 2017 Tax Cuts and Jobs Act.
The failed sale results in there being no existing leases in the Coastal Plain, which has taken center stage in the battle for increased drilling in recent years. It is also the second auction within the last four years in the region to yield low interest and bids.
The administration has pointed to these sales as evidence that the oil and gas industry is not interested in drilling in the Alaskan refuge, as President-elect Donald Trump and his Republican colleagues have sought.
“The lack of interest from oil companies in development in the Arctic National Wildlife Refuge reflects what we and they have known all along — there are some places too special and sacred to put at risk with oil and gas drilling. This proposal was misguided in 2017, and it’s misguided now,” acting Deputy Secretary Laura Daniel-Davis said in a statement.
She said the industry should invest time and money in developing existing leases elsewhere rather than starting fresh in the Alaskan wilderness.
However, the local oil industry and the state of Alaska said there is interest in drilling.
On Monday, the state filed a lawsuit against the administration over the lease sale, saying it violated a congressional directive allowing oil and gas development.
The lawsuit, filed in the U.S. district court in Alaska, challenged restrictions set on the oil and gas lease, saying the restrictions prevent “actual oil and gas development” within the region.
It pointed to the size of the lease sale and the fact that it is a fraction of the 1.6 million available acres in the Coastal Plain. The offer amounted to 400,000 acres, which was the minimum required under the 2017 Tax Act.
The lawsuit also said current restrictions on surface use, construction, and occupancy make it “impossible or impracticable” to develop on. As a result, the state argued the administration was hurting the local economy.
“The United States’ conduct harms the State by depriving it of significant revenue that was to be generated directly from oil and gas leasing and development of the Coastal Plain and otherwise depriving the State and its citizens of the broader economic benefits that would result from such development,” says the lawsuit.
As a result, people familiar with the Alaskan oil industry were not confident the auction would see many sustainable bids.
Gov. Mike Dunleavy (R-Ak) wrote on social media that the lease sale was “designed to fail,” insisting that the auction “limits exploration to the largest extent possible while trying to pass it off as following the law passed by Congress to offer leases that have a legitimate chance of success.”
Geologist Bill Armstrong told the Anchorage Daily News he believed there would be limited competition over the available acreage, calling the auction a “‘non-sale’ sale.”
“The sale results will in no way reflect the industry’s interest in or the potential of ANWR,” he said.
Similarly, former oil and gas attorney Brad Keithley told the outlet he expected many companies to hold off on bidding until the Trump administration announced a lease sale in the region.
Throughout his campaign, Trump vowed to increase oil and gas drilling development in an effort to boost energy dominance and security within the U.S.
The Biden administration has seemingly attempted to curb these efforts in its final weeks, particularly by taking steps to protect some federal waters and lands from future drilling.
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The recent lease sale flop is unlikely to deter Trump from supporting oil and gas development in the Alaskan refuge. On Monday, the incoming president said he would be “opening up” the refuge, adding that his administration would be “doing all sorts of things that nobody thinks is possible.”
It remains unclear how swiftly the Trump administration will be able to pull together a new lease sale in the Alaskan Coastal Plain. During his first administration, Trump approved a total of nine sales in the region. While two were ultimately canceled by bidding companies, the Biden administration reviewed and suspended the remaining seven.