Drilling in the Arctic: Broken Revenue Promises in ANWR

ReportDrilling in the Arctic: Broken Revenue Promises in ANWRRegional lease sales indicate oil and gas drilling in the Arctic National Wildlife Refuge is far from a billion-dollar boon

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The 2017 tax cut included an extraneous provision authorizing the preparation and sale of leases for oil and gas development in the Coastal Plain of the Arctic National Wildlife Refuge (ANWR) in Alaska. Estimated to generate almost $1 billion in revenue, the measure was laughably included as a partial offset to the legislation’s $1.4 trillion price tag. Past oil and gas lease sales in the neighboring area, known as Alaska’s North Slope, indicate these ANWR lease sales will generate only a small fraction of the initial estimate.

Comparable sales on neighboring state land suggest the new leases will generate only $14.7 million—less than two percent of the original offset. Moreover, new leases will expose taxpayers to significant liabilities from future drilling in the ecologically sensitive region.

  • Taxpayers can expect to receive $14.7 – $27.6 million in revenue—just three percent of the original $910 million estimate for drilling in ANWR—based on the average bid price per acre for onshore sales in the Arctic region over the last five years.
  • Over the last 20 years, oil and gas companies leased 12 million acres on Alaska’s North Slope, or seven times the acreage of the entire ANWR Coastal Plain—1.56 million acres. These leases generated a total of $489 million in bids—roughly a quarter of projected revenues for the planned ANWR sales.
  • Of the 72 state parcels offered for lease in the area surrounding the Coastal Plain of ANWR in the last 20 years, only half have been leased. In two 2018 and 2019 state auctions, a few dozen parcels were offered for lease in waters just off the coast of the ANWR Coastal Plain, and oil and gas companies bid on none of them.
  • A recent downturn in the oil sector and increased reluctance from banks to finance arctic drilling projects may further limit the number of producers willing to bid on ANWR parcels and drive down revenues.
  • By releasing its Record of Decision for the Coastal Plain Leasing Program in August 2020, the Department of the Interior has cleared the way for ANWR oil and gas development. The Secretary of the Interior has indicated the lease sales could be held as early as December 2020.

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