Year in Review: Long-sought ANWR sale tops 2020 in oil and gas

  • From left, Arctic Slope Regional Corp. chairman Crawford Patkotak, ASRC Executive Vice President of External Affairs Richard Glenn, ASRC board member Glenn Solomon of Kaktovik and Sayers Tuzroyluk of Point Hope spoke during a pro-drilling rally supporting opening the Arctic National Wildlife Refuge at the Dena’ina Civic and Convention Center on Feb. 11, 2019, in Anchorage. (Photo/Bill Roth/Anchorage Daily News)

Trump administration officials nearly waited until the last minute to make it happen, but opening bids for an Arctic National Wildlife Refuge coastal plain lease sale will be one of the first things Bureau of Land Management Alaska officials do in 2021.

BLM Alaska leaders announced Dec. 3 that the hotly contested lease sale will be held Jan. 6. Barring a last-minute court injunction from one of the several lawsuits filed against BLM for its environmental evaluation of the lease sale, it will be held before the Biden administration could do anything to stop the bidding. At least two lease sales are required under the 2017 Tax Cuts and Jobs Act.

Interior Secretary David Bernhardt signed the record of decision approving BLM’s plan to lease all of the available acreage in the 1.5 million-acre coastal plain Aug. 17, allowing the agency to move ahead with the final administrative procedures to hold the sale.

Several Alaska Native and conservation organizations sued the Interior Department earlier this year on the grounds that the environmental impact statement and subsequent agency decision approving the leasing plan was rushed and ignored numerous environmental considerations. Those lawsuits are pending.

Earlier this month BLM leaders announced they plan to offer nearly all of the 1.5 million acres parsed into 32 tracts ranging from approximately 34,000-60,000 acres each. The acreage will come with a 10-year lease term and minimum bids must be for at least $25 per acre.

Industry advocates and Alaska’s congressional delegation continue to stress the anticipated economic boon coastal plain oil development could be for the state. They insist that despite current prices the potential large oil pools some geologists believe are likely under ANWR could attract significant long-term investment in the North Slope.

2. Ballot Measure 1 rejected

Alaska’s oil industry notched another win at the ballot box Nov. 3 when voters rejected a citizen-led initiative to significantly raise oil taxes by a 15 percent margin.

Known as the Fair Share Act, or Ballot Measure 1, the initiative would have raised both the gross minimum and net profits tax rates on the largest oil fields on the North Slope: currently Alpine, Kuparuk and Prudhoe Bay.

The nearly 55,000-vote margin against the oil tax initiative was in sharp contrast to the 2014 referendum to repeal Senate Bill 21, the tax system Ballot Measure 1 sought to replace.

The Republican-backed oil tax survived 2014 primary election vote by approximately 10,000 votes and a 5 percent margin.

Public opposition to the ballot measure reached beyond the oil industry, partly because the pandemic took the bottom out of oil markets just as a proposal to significantly raise state taxes was making its way to the ballot.

Typically non-political business groups such as the Alaska Economic Development Corp. formally opposed Ballot Measure 1 and the OneAlaska campaign against it raised nearly $25 million, while Vote Yes for Alaska’s Fair Share generated approximately $1.3 million to promote the initiative.

The election result does not mean the issue of oil taxes is settled in the Legislature, however, as even some traditional industry backers have said some change to oil taxes will likely have to be a part of a broader fiscal plan. It remains to be seen how strict Gov. Mike Dunleavy would be in adhering to his strong opposition to any new taxes should that situation arise.

3. Prudhoe Bay transition

In typical Hilcorp fashion the biggest move the company has ever made was finalized quietly when it took over operations at Prudhoe Bay July 1. The transition from BP to Houston-based Hilcorp Energy was the practical end to BP’s decades-long run in Alaska.

Hilcorp has since increased production in November approximately 15,000 barrels per day compared to last year, with daily production averaging 305,000 barrels last month.

In December the Regulatory Commission of Alaska approved the sale of BP’s 49 percent stake in the Trans-Alaska Pipeline System to Hilcorp, nearly a year-and-a-half after the $5.6 billion deal was announced in August 2019.

As part of the deal, BP retains the financial responsibility to dismantle TAPS and restore the disturbed area commensurate to its prior ownership stake in the pipeline.

4. Willow gains approval

One of the largest North Slope oil prospects in decades received clearance from the federal government for development Oct. 26 when Interior Secretary David Bernhardt signed a record of decision approving ConocoPhillips’ $6 billion Willow project master development plan.

The remote oil prospect in the National Petroleum Reserve-Alaska west of the established North Slope fields was discovered in 2016 and ConocoPhillips now believes it can produce up to 160,000 barrels of oil per day.

BLM approved construction of three drill sites, a processing facility and ancillary infrastructure and said plans for two more drill pads and subsequent roads and pipelines could be reviewed later.

Interior leaders have since been sued by conservation groups over the veracity of the agency’s environmental impact statement for Willow, but ConocoPhillips Alaska representatives have said early construction could begin next year if other regulatory approvals are granted.

5. NPR-A plan gets overhaul

As the Bureau of Land Management worked to approve one oil development in the National Petroleum Reserve-Alaska, agency officials also generated plans to open more of the 23 million-acre reserve to industry over the year.

ConocoPhillips’ Willow project gained federal approval in August, and in late June BLM Alaska leaders announced their intent to make 18.7 million acres of the NPR-A available for oil and gas leasing under the agency’s preferred alternative in the final environmental impact statement for the NPR-A Integrated Activity Plan.

The new plan would add 6.9 million acres to the area open for leasing, or about 100,000 acres more than was evaluated under the most liberal leasing option discussed in the draft NPR-A land-use EIS released last November. Currently, about 11.8 million acres, or a little more than half of the reserve, is available for leasing by industry under the NPR-A plan finalized by the Obama administration in 2013.

The plan would open the entire Teshekpuk Lake Special Area in the northeast portion of the reserve — an area of particular importance to both industry for its oil potential and conservation and subsistence interests for its waterfowl and caribou-rearing habitat — to leasing.

It would also eliminate the Colville River Special Area, which provides habitat protections over 2.4 million acres adjacent to the river as well. The Colville River makes up much of the eastern boundary of the NPR-A.

12/16/2020 - 9:14am