Alaska development agency looks at spending up to $20M to buy more leases in the Arctic refuge

The Alaska Industrial Development and Export Authority is poised to take an early step this week to once again buy oil and gas leases in the Arctic National Wildlife Refuge in a sale that could be held before the end of this year.

Last year, the Biden administration canceled oil and gas leases issued to the agency by the prior administration in 2021, after determining that an environmental review and decision leading up to that first-ever lease sale in the refuge had not followed the law.

A resolution at the Alaska development agency’s board meeting Wednesday, if approved, would allow the agency to spend up to $20 million to bid on tracts in the refuge in the second lease sale, according to a proposed item on the agenda.

The second lease sale for the refuge is supposed to take place by Dec. 22, according to the 2017 Tax Cut and Jobs Act.

“The law requires a second lease sale, and we have repeatedly said we will follow the law,” said Melissa Schwartz, a spokesperson with the U.S. Interior Department, on Tuesday.

The Alaska development agency’s resolution says the federal government is in the process of issuing a supplemental environmental review and record of decision that will lead to the lease sale.

Schwartz said she did not “have any updates on timing” for the release of that environmental review.

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Executive Director Randy Ruaro would be authorized to evaluate and submit the bids, according to the resolution.

Ruaro said in an interview Tuesday that it’s possible the Biden administration meets the deadline for the second lease sale, but adds requirements making it impossible to develop for oil production.

“The idea is to continue to support our leases that were awarded legally but that were canceled, and to be ready for a Record of Decision that’s coming soon for this next sale,” he said.

That includes being ready for potentially onerous conditions associated with the sale that the agency might view as illegal, he said.

The Alaska development agency originally acquired seven 10-year leases covering 370,000 acres in the refuge’s coastal plain in 2021. The agency was the main bidder in the sale, which significantly underperformed expectations of many drilling advocates. It generated no bidding by major oil companies.

The Alaska development agency has sued the Biden administration in federal court to revive the canceled leases, and the state of Alaska has intervened in the case.

Background paperwork associated with the agency’s resolution says that early this year, the agency received a $16.5 million refund for the canceled leases.

With that money returned, the agency has spent $1.8 million on expenses associated with the first lease sale, the documents show.

A good chunk of those costs are for litigation fees, Ruaro said.

The Northern Alaska Environmental Center in Fairbanks, which is opposed to drilling in the refuge, alerted its members to the board resolution on Monday in an email, urging its members to call in or submit comments.

The Alaska development agency provided little notice of its plans before considering the resolution, according to the alert from Sean McDermott, Arctic program coordinator for the center.

“It is deeply troubling that AIDEA intends to approve another $20 million to bid on oil and gas leases in the Arctic National Wildlife Refuge’s coastal plain later this year,” McDermott said in a prepared statement Tuesday. “AIDEA is spending even more of Alaskans’ money suing the Department of the Interior for canceling its previous leases in the same area.”

“With decisions like these, AIDEA is continuing to work against Alaskans’ best interests,” he said. “Clearly, the AIDEA Board is determined to squander public funds on development projects that don’t make sense for the state or for the well-being of our communities.”

If passed, the measure will result in the agency “wasting more of Alaskans’ money” on litigating bad investments, he said.

The refuge’s coastal plain, where the lease sale was held, contains an estimated 10.4 billion barrels of “technically recoverable oil” on average, the Congressional Research Service reported this summer, though how much and how easily the oil can be drilled is still unclear. That’s based on 1980s-era seismic data that could be updated with three-dimensional seismic studies, the agency says in the paperwork.

“Although valuable for understanding the area’s general geologic characteristics, the data can be improved by detailed mapping of structural and stratigraphic prospects,” the paperwork says.

The state agency says that oil production in the refuge, if that can ever be achieved, would generate many billions of dollars in income to the state and the Alaska Permanent Fund, and support thousands of direct and indirect jobs, the resolution says.