ANWR lease sale yielded abysmal results

ANWR, Federal Lease SaleANWR lease sale yielded abysmal resultsANWR lease sale turned out to be a even bigger loser than we estimated

Energy & Natural Resources,  | Analysis
Jan 7, 2021  | 3 min read | Print Article

On Wednesday, the U.S. Department of the Interior reported results from the first of two auctions for leases to develop oil and gas resources in the Coastal Plain of the Arctic National Wildlife Refuge (ANWR) in Alaska. In the sale held by the Interior Department’s Bureau of Land Management, 22 leases covering 1,089,053 acres were up for auction to the highest bidder. As expected, results from the sale were disappointing. Of the 22 available, 11 parcels covering 552,802 acres received bids.

Auction Results

  Offered Sold % sold
Parcels 22 11 50%
Acres 1,089,053 552,802 51%
Of the 11 parcels sold, nine received the minimum acceptable mid of $25/acre, all from the Alaska Industrial Development and Export Authority (AIDEA). The AIDEA, a public corporation authorized by the State of Alaska, stepped in to bid on the leases because of the lack of industry interest. In fact, just two valid bids were submitted by private parties – Knik Arm Services LLC, and Regenerate Alaska. The two companies’ bids averaged $33.22/acre. In total, the sale bids averaged $26.07/acre.Half of all revenues from Coastal Plain leasing are shared with the State of Alaska. In addition to bonus bids, the Bureau of Land Management will collect first year’s rent for parcels with bids. The Department of the Interior will collect just $9.97 million from this lease sale. If the leases are held through 2027, the Department will collect an additional $13.8 million in rent, bringing total federal revenue to $23.8 million. That would be only 2.6% of the $910 million the Congressional Budget Office estimated when the ANWR leasing program was authorized.

ANWR Leasing Revenue from Jan. 6 Auction

Revenue Type Total DOI share Alaska share
Bids $14,412,458 $7,206,229 $7,206,229
Rent $5,528,020 $2,764,010 $2,764,010
Total $19,940,478 $9,970,239 $9,970,239

 

The Coastal Plain Leasing Program was authorized in the 2017 Tax Act (P.L. 115-97). The measure authorized two sales, but any subsequent sale likely won’t bring in much additional revenue. Only 11 parcels in the Coastal Plain are located in an area with high hydrocarbon potential, according to the Bureau. Those eleven received bids in the auction on Wednesday. If the Bureau accepts the bids and the parcels are off the market, a second sale with less attractive parcels is likely to have little to no bidding.

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