Oil companies decline to bid for Arctic Refuge drilling rights
(Bloomberg) – Oil companies declined to bid in a U.S. government auction to drill in the Arctic National Wildlife Refuge, as industry interest wanes in a region that’s rich with crude but difficult to develop.
The Interior Department said it received no sealed bids for the auction mandated by Congress before those offers were set to be opened Friday. It marked the second time in four years an auction of oil and gas leases in the refuge’s 1.6-million-acre coastal plain flopped, coming after a 2021 sale held under President-elect Donald Trump drew just 11 high bids, most of which were lodged by an Alaska economic development corporation. Ultimately, all of the leases sold in that 2021 auction were forfeited, with two relinquished and seven others canceled by Interior.
The industry’s no-show this week underscores the legal, social and economic challenges of drilling in the Coastal Plain, despite U.S. Geological Survey estimates the region might hold between 4.3 billion and 11.8 billion barrels of technically recoverable crude.
“The lack of interest from oil companies in development in the Arctic National Wildlife Refuge reflects what we and they have known all along: There are some places too special and sacred to put at risk with oil and gas drilling,” said Laura Daniel-Davis, the acting deputy Interior secretary.
The idea of tapping the 19-million acre refuge for its potential oil bounty has tantalized Washington for decades. Oil industry allies and advocates have long championed lease sales in ANWR as a way to boost production on Alaska’s North Slope and supply more crude to the Trans Alaska Pipeline System that provides a vital conduit for crude.
Yet companies that lay their eyes on the region would come up against more than just reputational risks. Developing the area would require they overcome costly logistical challenges, navigate intense permitting requirements and deal with opposition from environmental groups, analysts have warned.
The high costs and challenges of Arctic oil development — most vividly demonstrated by Shell Plc’s struggles to mount exploratory drilling in the Chukchi Sea more than a decade ago — led energy companies to forfeit drilling rights in U.S. Arctic waters north of Alaska too, despite the potentially 27-billion-barrel bounty.
