Arctic Oil and Gas Leasing

May 8, 2020 | 2 min read | Print Article

2017 brought sweeping changes to the federal tax code and included massive tax cuts worth more than $1.8 trillion over a decade. In an effort to offset these costs, Congress opened the Arctic National Wildlife Refuge (ANWR), known as the 1002 Area, to oil and gas leasing for the first time. Although Congress estimated new revenue from the leases would total $1 billion, based on our analysis of potential revenues from leasing the 1002 Area, we concluded the $1 billion-dollar figure was nothing but a pipe dream. Realistically, we estimated taxpayers could expect about $9-$14 million from oil and gas leasing in ANWR, or less than 2 percent of projected revenues.

The lease sale held on January 6, 2021 yielded more dismal result than we predicted, bringing in around $8.2 million in bonus bids and rent revenues for federal taxpayers, or less than 1 percent of the revenue that Congress estimated. The return on leasing in ANWR does not justify the administrative costs and the potential liabilities that come with drilling in the region. Taxpayers are better served by limiting leasing in the region. The FY2022 reconciliation process is an opportunity to repeal leasing in the Arctic National Wildlife Refuge and protect taxpayers from potential liabilities. Read our issues brief to learn more about fiscal concerns with leasing in ANWR.