ANWR lease sale draws almost no competition, no big oil companies

The lease sale for oil and gas exploration tracts on the coastal plain of the Arctic National Wildlife Refuge (ANWR) drew no big oil companies and almost no competitive bidding Jan. 6.

The main bidder, with 11 bids, was the Alaska Industrial Development and Export Authority (AIDEA), a public corporation owned by the state government.

No other organization made more than one complete bid, while three incomplete bids were submitted. Regenerate Alaska Inc. offered the high bid on one tract, and Knik Arm Services LLC offered the high bid on another tract.

The lease sale was held by the Bureau of Land Management within the Interior Department.

The sale drew an aggregate of about $14 million in bids, almost all of it from the state government corporation. By contrast, the last sale of exploration leases in the Gulf of Mexico drew $135 million in bids and was dominated by large oil companies (OGJ Online, Nov. 18, 2020).

AIDEA offered the only complete bid on nine of the 11 tracts where it bid. An incomplete bid was offered on a twelfth tract.

A lease sale typically does not bind a bidder to develop a site alone, which means AIDEA potentially can turn around and offer investment stakes in its leases to companies, turning its individual bids into consortium operations. Such a strategy could invite the big oil companies into the arena.

But as of Jan. 6, no large oil companies were interested.

Lease sales on the coastal plain of ANWR were mandated by the Tax Cuts and Jobs Act of 2017. The law required that two lease sales be held within 7 years of its enactment. For each lease sale, the royalty rate was set at 16.67%, and the bonus, rent and royalty payments were to be equally divided between the state and federal governments.