(Bloomberg) -- The Trump administration is auctioning off Arctic drilling rights just two weeks before a new president is inaugurated, giving oil companies a once-in-decades shot at potentially crude-rich territory in northeast Alaska that environmentalists say imperils a fragile wilderness.
The Bureau of Land Management was set to begin opening sealed bids for 10-year leases in the Arctic National Wildlife Refuge’s coastal plain Wednesday afternoon, less than a day after a federal judge rejected environmental groups’ pleas to halt the auction.
The biggest mystery around the sale has been who will participate, given the current economic environment, regulatory uncertainty and steep public opposition to Arctic drilling. Companies once viewed as potential bidders for Arctic acreage have slashed spending this year as the coronavirus pandemic eroded crude demand and prices.
Participants must pony up hundreds of thousands of dollars to nab leases they may never get to use, given President-elect Joe Biden’s vow to permanently protect the refuge. Though the Biden administration has little power to revoke leases once they are issued, it can block permits essential to mounting any activity on the tracts.
Even so, conservationists have identified a handful of little-known oil explorers they say could vie for coastal plain drilling rights. Speculators could seek leases with plans of selling them later. And the Alaska Industrial Development and Export Authority, a state-owned economic development corporation, last month approved spending $20 million on coastal plain leases.
Colorado-based Armstrong Oil and Gas Inc. also could seek to expand its foothold in Alaska. The company, founded by wildcatter Bill Armstrong, has a history of costly, successful bets on Alaska’s North Slope -- even netting a 3-billion-barrel discovery there in 2017.
Bidders in Wednesday’s sale are required to offer at least $25 per acre. With tracts ranging in size from 23,446 to 59,410 acres (9,488 to 24,042 hectares), the smallest possible winning bid is $586,150.
Environmentalists and Native Alaskans, including Gwich’in people who consider the area sacred, say industrial oil development would threaten one of America’s last truly wild places as well as the calving caribou, migratory birds and Arctic foxes that rely on it.
Congress mandated two coastal plain oil auctions by Dec. 22, 2024, as a way to pay for the 2017 tax cuts, based on expectations that the lease sales and oil development would yield more than $2 billion in revenues over a decade.
Results won’t be final immediately. Winning bids must be vetted in a government review process that typically takes months, though Trump administration officials are racing to formally issue the leases before Biden is sworn in Jan. 20.
©2021 Bloomberg L.P.
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