Several key steps toward drilling in Alaska’s Arctic refuge are due before year’s end

It is the season of ANWR.

On Wednesday, the board of directors for the state-owned Alaska Industrial Development and Export authority approved spending $20 million to pursue legal claims and oil leases in the Arctic National Wildlife Refuge, a stretch of potentially oil-rich North Slope land that has been protected from development for decades.

As soon as Friday, a federal judge in Anchorage is expected to rule whether the Biden administration’s decision to cancel oil leases in the refuge is legal.

On Nov. 5, Americans will decide between Kamala Harris and Donald Trump for president. Trump has repeatedly vowed to pursue drilling in the refuge, while Harris is expected to continue the Biden administration’s opposition.

And in December, the federal government faces a congressionally imposed deadline to hold a second oil lease sale covering land within the refuge.

“I think the next two months are important for the short term, and what type of resource opportunities may be under consideration, as companies make long-term plans and future plans,” said Kara Moriarty, president and CEO of the Alaska Oil and Gas Association.

A long time coming

The Arctic National Wildlife Refuge sits between Prudhoe Bay’s oil fields and the Canadian border. Its coastal plain has long been eyed for oil potential, but the 1980 law that created the refuge states that no exploratory drilling or development can take place without congressional action.

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The state of Alaska, through its congressional delegation, repeatedly tried to pass legislation opening the refuge to drilling, but it didn’t find success until 2017, when the delegation — led by Sen. Lisa Murkowski, R-Alaska, inserted critical language into a tax bill.

“I’m actually very proud of what we were able to do and how we were able to draft that,” Murkowski said in an interview this week.

That language requires the federal government to hold at least two lease sales covering land on the coastal plain. One sale has already taken place, and a second is legally required.

Oil development could generate billions of dollars in economic activity, creating jobs and revenue for the state treasury.

For that reason, drilling in ANWR continues to be a top priority of the state’s elected officials, with Democrats, Republicans and independents all voting to endorse the pursuit.

The North Slope’s local government also supports the effort, as do many people living in and near the refuge. Oil revenue and oil jobs make up a key part of the North Slope’s economy.

Voice of Arctic Iñupiat, a nonprofit formed in 2015 and representing local residents, has repeatedly supported leases in ANWR.

“It’s important from a sovereignty perspective,” Murkowski said, explaining that local residents should be able to make the decision on the issue. “It’s important to the state of Alaska from a resource perspective, and the state’s determination. It is part of the promise to us by our federal government that these lands that were set aside up there were to be reserved for oil and gas development.”

She said that even though the world is shifting away from fossil fuel energy, it still needs oil for other things.

“Why would we not wish to be able to access this resource that is needed, in a place that has the highest environmental standards and safety safeguards, with attention not only towards the environment, but to the worker and and create a base of strength, economic strength for our own country?”

But drilling poses environmental risks — to polar bears, caribou, birds and other wildlife — and environmental groups nationwide have made opposition to ANWR drilling one of their top issues.

The Gwich’in Steering Committee, which represents some people living outside the refuge, has long opposed drilling there. Subsistence hunting of caribou is a central part of Gwich’in culture.

“I think we’re all looking — from conservation organizations to the Gwich’in people and chiefs — everyone is looking for a way to find permanent, long-term protections for the refuge, so there will never be development in there,” said Peter Winsor, the committee’s interim director.

Alaska pushes the issue forward

In the last months of the Trump administration, shortly before the first ANWR lease sale, some state officials became worried that environmental opposition would deter oil companies from participating in the sale.

Former Gov. Frank Murkowski — Lisa Murkowski’s father — was among those who suggested that the state itself should bid on the sale as a backstop.

The Alaska Industrial Development and Export Authority, a state-owned corporation with directors appointed by the governor, stepped up, appropriating $20 million for bid preparation and bidding.

As it turned out, the AIDEA backstop was critical — only one oil company submitted any bids, and AIDEA was one of only three bidders overall.

After the Biden administration assumed control of the federal government, it first suspended, then canceled the leases won by AIDEA.

The other two bidders willingly surrendered their leases, but AIDEA fought on, suing the federal government to challenge the suspension and the cancellation. The state of Alaska supports AIDEA’s positions, as do the North Slope Borough, Arctic Slope Regional Corp. and Kaktovik Inupiat Corp.

Opposing them are Indigenous people who live south of the refuge, outside the borough, as well as local and national environmental groups, Canadians who rely on caribou that live for part of the year in the refuge, and Canadian environmental groups.

“This is a critical time for the Arctic and Alaska. AIDEA’s push to develop the Refuge doesn’t make financial sense, and it goes against decades of community opposition. Community health on both sides of the Alaska-Canada border is at stake,” said Sean McDermott of the Northern Alaska Environmental Center, a group that opposes ANWR drilling.

Some opponents who live outside the refuge have asked to have the coastal plain protected as important for religious and cultural reasons.

That’s been opposed by North Slope residents, including the borough mayor, Josiah Patkotak.

“We will not allow our lands to be co-opted for purposes that serve neither our people nor our future,” he wrote in an opinion column about the issue.

That argument is continuing, and AIDEA’s board voted this week to prepare bids for the second lease sale, but a final go/no-go decision is likely in December, at the board’s next scheduled meeting.

Its support for ANWR drilling and various other projects in Alaska has turned AIDEA into a target for environmental and social campaigns that question the agency’s effectiveness.

“We’re definitely planning a larger campaign against AIDEA,” Winsor said.

Through ads, talking to Alaskans, and lobbying legislators, the goal is “basically try to work towards dismantling this whole colossus of a mistake that AIDEA is,” he said.

Critical court decision could come by Friday

Even as AIDEA and others prepare for the second lease sale, U.S. District Court Judge Sharon Gleason is expected to release a key legal decision about the legality of the Biden administration’s suspension of the first sale’s results.

Attorneys representing AIDEA and the federal government have agreed that a decision by Friday is important because if the first lease sale is canceled, that land could be put up for lease again during the second sale.

If Gleason’s ruling doesn’t cancel the first sale, it could clear the way for AIDEA to begin seismic surveying and other preliminary work on its leases in the refuge.

To date, only a single exploratory well has been drilled in the refuge, and the results from that work weren’t promising, The New York Times said in 2019.

Seismic data could remove the veil of uncertainty, showing where — and how much — oil exists within the coastal plain. That could attract oil companies’ interest in the area.

But regardless of how Gleason rules and who wins the upcoming decision, an appeal to the 9th Circuit U.S. Court of Appeals — and possibly to the U.S. Supreme Court — is expected, and the legal issues likely will take years to resolve.

In the meantime, the march toward a second lease sale will continue.

Second sale, required by federal law

When the Biden administration suspended the first ANWR leases, it began a new environmental study, a first step toward the second lease sale required by the 2017 law.

Initially, the Interior Department said that supplemental study would be done at the start of 2024. It’s now been delayed twice, with officials now saying in legal documents that it won’t be done until the “fourth quarter” of the year.

As a result, the next two months are likely to be filled with a series of incremental steps: the final version of the environmental study, a 30-day waiting period, a final record of decision, then official notice of the sale and the sale itself.

The timelines for all of this put the federal government right up against the legal deadline for the second lease sale.

“My real fear is, they will, quote, follow the law, but they will have so fouled up this process toward the end, that they may technically be able to say they met the requirements of the law, but they’ve run out the clock,” Murkowski said.

“I’m not feeling optimistic about where we are despite the clear intent of the law. And that’s where I get so frustrated,” she said.

An Interior official told the Anchorage Daily News this week that it still intends to hold the second sale. Drilling proponents think the second sale will happen, but they expect rules that make development almost impossible.

“We’re not really putting a lot past them, but we think there will be a sale. The conditions of the sale, we’ll have to keep a real close eye on,” Ruaro told AIDEA’s board on Wednesday.

“We’re hoping that it’ll be as restrictive as possible,” said Winsor of the Gwich’in Steering Committee.

As in the first sale, there’s a key unanswered question: Amid the restrictions and uncertainty, who will bid?

AIDEA is almost certain to make offers, but it isn’t clear whether anyone else will agree to shoulder the economic, legal and political unknowns that accompany a successful bid.

One of the biggest uncertainties is likely to be resolved by the time of the sale — this year’s presidential election.

Presidential election’s consequences are big for ANWR

If Kamala Harris wins the presidential election next month, observers expect her to continue the Biden administration’s approach to ANWR.

“If Harris gets in there, I think we’ll be in position to do much more protection for the Arctic and work on things that we honestly need to work on, like tourism and the blue economy, and things that go away from not just oil and gas,” Winsor said. The “blue economy” is a term for the sustainable use of ocean resources.

Speaking to the AIDEA board on Wednesday, Ruaro said, “If it’s a continuation of the current administration, they oppose development in ANWR. They’ve made that very clear. … So that sets up a very, probably protracted litigation scenario.”

Donald Trump, conversely, has repeatedly said he wants to keep ANWR open for drilling. He’s made the issue one of the refrains of his campaign stump speech and reiterated his support this week in a phone call with Nick Begich, Alaska’s Republican candidate for U.S. House.

“We’re gonna tap the liquid gold that’s under there, and we’re gonna drill, baby, drill. We’re going to make Alaska rich and prosperous with jobs all over the place,” Trump said.

Even if Trump wins and presses ahead with ANWR leasing, a successful oil development would take years, if not decades, to begin production.

And that’s only after a lot of “ifs” are answered — if there’s oil to be drilled, if the cost of drilling is low enough to make it economically viable, if the legal issues can be resolved, if the state and federal governments stay supportive.

Given those uncertainties, will ANWR ever be developed?

“It is hard, but I can guarantee you that one way it will not ever be developed is if there are no leases that are made available,” Murkowski said.

“No,” said Windsor. “(Oil companies are) not interested, and there are no banks or insurance companies left that will finance or insure anything in the refuge. They think it’s too risky. They don’t want to have bad publicity.”

Moriarty said it’s too soon to tell. During the Obama administration, it seemed far-fetched that there would be oil development in the National Petroleum Reserve, but work continued and it eventually happened, she said.

“I don’t know that you want to take what we believe to be, at a minimum, 10 billion barrels of recoverable oil off the table for discussion indefinitely,” she said, citing a figure that’s close to the average estimate in federal studies.

“Do I think that ANWR is going to be developed overnight, when the companies are currently focused on state land and the Pikka project and the Willow project and things to the west? Probably not. But do we want to take the potential off the table indefinitely? I don’t think so.”

Originally published by the Alaska Beacon, an independent, nonpartisan news organization that covers Alaska state government.