Oil company backs out of lease in Arctic National Wildlife Refuge
The only oil company that bought a single lease in the Arctic National Wildlife Refuge early last year has canceled its lease, according to the U.S. Interior Department.
The move by Regenerate Alaska is the latest example of the industry stepping away from possible oil and gas development in the 19-million-acre refuge.
Hilcorp and Chevron have also canceled their interest in separate, older leases, on a small tract of Alaska Native corporation-owned land within the refuge’s boundaries. Those oil companies spent $10 million to exit their deal with Arctic Slope Regional Corp.
Regenerate Alaska, a subsidiary of Australia-based 88 Energy, purchased its lease in the federal government’s first sale in the refuge’s 1.6-million-acre coastal plain. The Trump administration held the sale in its closing days in January 2021.
Regenerate was one of just three entities to vie for the 10-year leases in the sale, which attracted no major oil companies.
The company bid about $800,000 to lease 23,000 acres along the western boundary of the refuge’s coastal plain, on a sliver of acreage near the Canning River and state land. It’s the area in the refuge that’s closest to existing oil field infrastructure, with ExxonMobil’s Point Thomson development to the west on state land.
But early last year the Biden administration blocked exploration in the refuge, raising questions about the future of the leases and possible development. The Interior Department suspended the leases for further review after calling the sale process legally flawed. Congress in 2017 required the lease sale.
Regenerate Alaska asked for the cancellation and for its money back, according to a statement from an Interior Department spokesperson on Tuesday.
“The Bureau of Land Management has a well-established procedure to do this, and last month rescinded and canceled the lease, as requested,” the Interior statement said. “The Office of Natural Resources Revenue refunded (the) full bonus bid and first year rentals.”
88 Energy did not respond to requests for comment Tuesday about why it ended the leases. A former 88 Energy official said early last year that if the federal government did not allow development in the refuge, the company would expect repayment.
88 Energy′s departure leaves just two lease holders.
The Alaska Industrial Development and Export Authority acquired seven leases covering about 370,000 acres. The state agency is suing the federal government over the lease suspension.
Knik Arm Services, a real estate company owned by Mark Graber, also picked up a lease in the federal government’s sale.
Graber said Wednesday that he’s holding on to his lease and watching the state’s lawsuit. He hopes to one day find a lot of oil in the refuge, he said.
“There’s no plan to do anything until the lawsuit is resolved and we can move forward,” he said.
With ANWR exploration facing stiff political resistance, other potential developers have looked to oil prospects on state land west of the refuge, and in the National Petroleum Reserve-Alaska, another chunk of federal land in northern Alaska.
88 Energy has projects on those state and federal lands, and last year announced promising results from recent drilling in the reserve.