Only 1 Bid Received for Alaska Offshore Oil Sales

Fishing boats entering Cook Inlet via the Kenai River, Kenai, Alaska on July 1, 2020. Beeblebrox via Wikimedia Commons/CC BY-SA 4.0

The U.S. government recently held an auction for the right to drill oil and gas offshore in Cook Inlet, Alaska, for which it received only a single bid.

The auction, held by the Bureau of Ocean Energy Management (BOEM) on Friday, offered leases for 193 blocks totaling around 958,000 acres. However, it only received a single bid for one block in the amount of $63,983 submitted by Hilcorp Alaska LLC which covers an area of 5,693 acres.

“The Cook Inlet lease sale terms include stipulations to protect biologically sensitive resources, mitigate potential adverse effects on protected species, and avoid potential conflicts associated with other inlet users,” according to a Dec. 30 BOEM press release.

“Following today’s sale, the bid will go through a 90-day evaluation process to ensure the public receives fair market value before a lease is awarded, and a Department of Justice review of antitrust considerations.”

Hilcorp is the largest privately held oil and gas exploration firm in America. It already has oil and gas drill leases in the onshore areas of Cook Inlet that stretches from Anchorage to the Gulf of Alaska. The Cook Inlet region is the oldest oil and gas-producing basin in Alaska, going back to the 1950s.

Administration Flip-Flop

The Biden administration had canceled auctioning off the Cook Inlet region for oil and gas drilling back in May, with the Interior Department claiming there was a “lack of industry interest in leasing in the area.”

The decision had triggered strong opposition, especially from former Vice President Mike Pence who questioned the cancellation at a time of elevated gas prices.

In November, Biden declared at a rally that there would be “no more drilling.” However, earlier in August, the administration had to agree to auction off the Cook Inlet area to get the support of Sen. Joe Manchin (D-W.Va.) in passing the Inflation Reduction Act. This led to the Dec. 30 auction.

According to estimates by the Interior Department, the 193 blocks that were put up for sale could produce almost 300 billion cubic feet of natural gas and 200 million barrels of crude oil during the period of the lease agreements.

The current government has leased very few acres of land for drilling. In the first 19 months of the Biden administration, the Interior Department had only leased 126,228 acres of land. The last president to lease less than 4.4 million acres during the first 19 months in office was Richard Nixon.

Environment, Economy

Environmental groups have protested against leasing the Cook Inlet area for oil and gas drilling. A Dec. 30 press release by environmental group Inlet Keeper claims that the lease fails to take into account issues like climate change, marine life, and the life of various communities.

The 958,000 acres that were put for lease are “essential” to subsistence gathering, commercial and sport fishing, and tourism for the local economy, the organization stated.

Hilcorp is a company with “repeated violations” of regulatory and environmental requirements and “should not be allowed” to drill in a “biologically diverse and critical area,” it argued.

In a statement, Hilcorp said that it was proud to work towards revitalizing natural gas production in the Cook Inlet region, an area which is depended upon by two-thirds of Alaskans for power and heat, according to Fox.

“We look forward to continuing to responsibly produce Alaskan oil and natural gas, create Alaskan jobs and contribute to the state’s economy for decades to come.”