On January 6, 2021, the Department of the Interior’s Bureau of Land Management reported results from the first of two auctions for leases to develop oil and gas in the Arctic National Wildlife Refuge authorized in the 2017 Tax Act. As expected, the lease sale was a bust for taxpayers and failed to bring in the $1 billion in new revenue promised in the tax bill.

There is no fiscal case to be made for leasing in the Arctic Refuge. Since the original lease sale, several developments have further demonstrated little industry interest and poor prospects for any oil and gas development in the area, lowering expected taxpayer revenue for future lease sales.

UPDATE – September 6, 2023

September 6, 2023, the Department of the Interior (DOI) announced the rescission of seven federal oil and gas leases in the Arctic National Wildlife Refuge (ANWR). The leases held by the Alaska Industrial Development and Export Authority (AIDEA), a public corporation of the State of Alaska, represent the remaining leases from the initial auction in January 2021. In its announcement, DOI pointed to serious flaws and legal deficiencies in the underlying analysis for the January 2021 lease sale. Under current law, DOI is required to re-hold the original lease sale and hold a second lease sale by the end of 2024.

UPDATE – August 23, 2022

In August 2022, Knik Arms Services LLC, the only remaining private company with an active lease in the Arctic Refuge, also requested to rescind its lease. Knik Arms Services LLC was created in 2020 with the express purpose of bidding on ANWR parcels which the founder believed to be a great venture. The company acquired its 48,603-acre parcel for approximately $1,622,000. If the company is refunded its full bonus bid and first year rentals, the total revenue from the original sale will be further reduced to just $13.4 million.

* When Congress authorized oil and gas leasing in the Arctic Refuge in the 2017 Tax Act (P.L. 115-97), they claimed it would raise $2 billion, $1 billion for federal taxpayers and $1 billion for the state of Alaska. After it passed, the Congressional Budget Office lowered this estimate to $1.81 billion, or $905 million for federal taxpayers.

* Since the original lease sale on January 6^th, AIDEA withdrew interest in pursuing 2 of their 9 parcels and Regenerate Alaska and Knik Arm Services LCC have both canceled their leases in the Arctic Refuge.

Half of all proceeds from ANWR development is shared with the State of Alaska, resulting in federal receipts of just $6.7 million, or less than three quarters of one percent of the $905 million taxpayers were promised when Congress authorized the sales.

[For post-sale developments, read our issue brief: Fiscal Concerns with Leasing in the Arctic National Wildlife Refuge]

UPDATE – June 3, 2022

In May 2022, Regenerate Alaska, the only oil and gas company that bid during the first ANWR auction, requested to rescind its lease. Regenerate Alaska acquired its 23,446-acre parcel for $771,373. According to the Interior Department, the company was refunded its full bonus bid and first year rentals, lowering the total revenue from the original sale of $19.9 million to $15.5 million.

UPDATE – Jan. 19, 2021:

The lease sale on January 7 sold a total of 11 parcels, nine of which received the minimum acceptable mid of $25/acre, all from the Alaska Industrial Development and Export Authority (AIDEA). AIDEA decided not to pursue two of the nine parcels they bid on. As a result, the total revenue from the lease sale dropped from $19.9 million to $16.5 million and bid revenue dropped from $14.4 million to $12.1 million.

ORIGINAL POST – Jan. 7, 2021:

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.

• Background information on ANWR, the lease sale, and leasing revenue estimates.
• TCS Statement on the Jan 6th ANWR lease sale

Of the 11 parcels sold, nine received the minimum acceptable bid 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.

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.