The Trump Administration finalized its plan for drilling in ANWR today. In response, TCS issued following press release:
The Trump Administration finalized its plan today for drilling in the Arctic National Wildlife Refuge despite obvious problems with its estimate of how much revenue it will generate and little interest from an oil industry cutting expenditures during the economic downturn.
Under the assumption that drilling in ANWR would generate $1 billion in revenue to partially offset the $1.4 trillion in tax cuts in 2017, lawmakers enacted a provision to pursue leasing in the Refuge. Taxpayers for Common Sense estimates the proposed leases in ANWR could generate as little as $15 million.
“We raised the red flag in 2017 that drilling in ANWR was nothing but a wasteful giveaway to the oil and gas industry,” said Autumn Hanna, vice president of Taxpayers for Common Sense. “How could anyone believe this idea was put forth in a good faith effort to make a dent in the $1.4 trillion tax cuts? It was a game of smoke and mirrors back then and the situation has only become worse for taxpayers with the COVID-19 crisis and the slide in oil markets.”
To estimate how much revenue two lease sales in ANWR might actually bring in, TCS analyzed every lease sale on Alaska’s North Slope and in the nearby Beaufort Sea over the last 20 years, including sales as recent as last December. In that time, the federal Department of the Interior and Alaska’s Department of Natural Resources held a combined 58 sales for oil and gas leases in the North Slope region. The amounts companies bid for those leases have never remotely approached levels needed for ANWR sales to deliver the promised revenue. Using the average bid of $35 per acre from onshore lease sales over the last five years as a guide, TCS estimates ANWR leasing will generate just $15 million for federal taxpayers, roughly 1.5 percent of what was promised.
Of the 161 leases sold in three 2019 lease sales in the region, not one parcel attracted more than a single bid. Combined, the sales netted just $16 per acre. In 2018 and 2019 state auctions, several leases were offered in waters just off the coast of the ANWR Coastal Plain, and oil and gas companies bid on none of them.
“Disappointing results from past leasing in the region demonstrate an overwhelming lack of competition for developing in the Alaskan Arctic. Oil and gas companies continue to show they are not interested,” continued Hanna.
With oil prices temporarily dipping into the negative territory thanks to the COVID-19 pandemic, it is impossible for the American taxpayer to expect anywhere near a fair return on oil and gas leases in even normally competitive markets. Several oil and gas producers have already gone bankrupt, and many others have cut spending for exploration and development. Many banks and investment firms have already ruled out financing Arctic drilling projects because they are so risky.
“Now during the pandemic it is more clear than ever that pursuing leasing in the ANWR is a fool’s errand. We know taxpayers will lose upfront on the lease sale and then be saddled with the enormous climate and pollution liabilities from drilling in such an extreme environment,” concluded Hanna.