As oil companies show little interest, feds cancel plans for drilling off Alaska shores

There will be no new offshore oil and gas sales in federal waters near Alaska anytime soon.

In a plan released Friday, the Department of Interior said it will hold just three oil and gas lease sales in American federal waters between 2024 and 2029. All three will take place in the Gulf of Mexico.

That’s a significant shift from Trump administration plans that called for 47 lease sales, including some in Alaska waters.

The Trump plans were struck down in 2019 by a federal court, and when the Biden administration took office, it almost entirely eliminated plans for oil and gas leasing offshore Alaska.

Before Friday, the Biden administration had planned a sale in federal waters within Cook Inlet in 2026. That’s now canceled.

In a written statement, Alaska Sens. Lisa Murkowski and Dan Sullivan expressed their disappointment in the decision, saying that it encourages reliance on foreign imports, including those from authoritarian countries whose interests are opposed to those of the United States.

[Biden calls for 3 lease sales in Gulf of Mexico, disappointing environmentalists and drillers alike]

But while state officials and members of Alaska’s congressional delegation have promoted offshore oil and gas development in Alaska, the federal decision is unlikely to significantly change Alaska’s prospects: Even when leases were available, oil and gas developers showed little interest in deep offshore work.

Federal waters cover territory more than 3 miles offshore, where drilling tends to be more technically difficult and expensive. Oil and gas producers have been more interested in state-waters lease sales, which cover territory within 3 miles of shore.

Last year, the Biden administration attempted to cancel a federal-waters oil and gas lease sale in Cook Inlet, but Congress overrode the decision and a sale took place in December.

The results were meager: Only Hilcorp participated, submitting a single $63,983 bid.

Interest in offshore drilling within the Arctic Ocean is even more limited: A 2008 lease sale attracted big bids, but after a disastrous Shell drilling season culminated with the wreck of its drilling rig, it ended its exploration efforts.

No companies have made serious bids on prospective offshore oil and gas basins near Kodiak, the Aleutian Islands and Bristol Bay.

All three of Friday’s announced Gulf of Mexico sales represent the minimum needed to allow large offshore wind-power projects under the federal Inflation Reduction Act.

That act, passed by Congress in 2022, requires at least 60 million acres of offshore oil and gas leasing as a precondition of large-scale offshore wind power leases.

Originally published by the Alaska Beacon, an independent, nonpartisan news organization that covers Alaska state government.