AIDEA to bid on ANWR leases

The leaders of Alaska’s development bank moved the state a big step closer towards being an active oil industry player late Dec. 23 when they approved spending up to $20 million on bids for Arctic National Wildlife Refuge oil leases.

The Alaska Industrial Development and Export Authority board of directors unanimously passed a resolution giving the authority’s executive director Alan Weitzner the go-ahead to split up the $20 million among various bids on the 22 ANWR coastal plain tracts the Bureau of Land Management is set to offer in the pending lease sale. Bids were due Dec. 31 and will be opened Jan. 6.

While it would be unique for a state-owned corporation to actively bid on federal oil leases, the statute establishing the authority broadly permits it to enter into lease agreements, including with other governments, for project development. Board chair Dana Pruhs said AIDEA was created for participating in opportunities exactly like the ANWR lease sale.

“Our goal is to partner with private industry to ensure that these types of development projects that deliver tangible, economic benefits for all Alaskans move forward,” Pruhs said.

The U.S. Geological Survey officially estimates there could be in the range of 10 billion barrels of recoverable — not necessarily economic — oil under the coastal plain but very little on-the-ground exploration work has been done over the broad area.

Specifically, the resolution allows AIDEA management to evaluate the available coastal plain tracts that range from about 34,000 to 60,000 acres each and determine whether or not to place bids of $25 per acre on any of them. The authority plans to pay for the leases out of its roughly $1.3 billion Revolving Fund; the resolution also allows $20 million to move out of the Revolving Fund to the Arctic Infrastructure Development Fund that was established but never seeded by the Legislature in 2014.

Former Govs. Bill Walker and Frank Murkowski in recent newspaper op-eds advocated for the state to make minimum bids on the leases to ensure progress could continue to be made towards developing any oil and gas they may hold even if oil companies opt not to bid on any or all of the politically-charged acreage.

Under the concept, the state, through AIDEA, could sell or otherwise transfer the leases to a private enterprise for further evaluation and keep the leases active without the risk of outbidding other entities.

Murkowski, who was invited to speak to the AIDEA board prior to a lengthy public comment period, wrote in an email to the Journal that he believes the upcoming lease sale could be the only legitimate shot the state and the industry have at securing and subsequently developing the coastal plain.

That’s because although the 2017 tax bill mandates BLM to hold another lease sale by late 2027, it is unclear if another Republican administration will control the parameters of the sale and Democrats have indicated a strong desire to kill the ANWR leasing program if they can gain control of Congress and repeal the law as well.

In response to questions about how the authority’s potential participation in the lease sale — and the possibility of a second shot at acreage following more careful examination — might impact other bidders’ plans, AIDEA spokeswoman Colleen Bryan wrote that there is no way to know which tracts will receive bids.

AIDEA would have the opportunity to withdraw its bid if a tract received another bid and authority officials have not discussed their plans with any oil companies, according to Bryan.

She added that it’s unclear at this point what AIDEA leaders might do and they are currently evaluating the available tracts.

BLM Alaska officials pulled 10 tracts covering approximately 475,000 acres from the final sale offering on Dec. 18, a day after the close of the lease nomination period. The agency initially offered nearly all of the more than 1.5 million-acre coastal plain in 32 tracts in sale documents published Dec. 7.

The $20 million would give AIDEA enough to bid on up to 800,000 acres at the minimum qualifying amount.

The vast majority of public commenters during the AIDEA board meeting opposed the idea of an arm of the state participating in a federal lands lease sale; some cited the need for state resources to be spent elsewhere, while Murkowski noted the State of Alaska would ostensibly get a 50 percent rebate on its bids based on the authorizing language in the tax bill.

The Tax Cut and Jobs Act directs half of the coastal plan lease bid, rent and royalty revenue to the State of Alaska.

Gov. Mike Dunleavy said in a prior interview with the Journal that he would prefer private industry lead the bidding but encouraging coastal plain exploration should continue to be a priority of the state.

Other commenters questioned the validity of the action stemming from an unrelated disagreement between Dunleavy and legislators.

Also on Dec. 23, the Legislature, via an 11-1 vote by the Legislative Council, decided to sue Dunleavy to invalidate the governor’s acting but not confirmed boards and commissions appointments, including AIDEA board member and former Sen. Anna MacKinnon.

MacKinnon serves as the designee for the Revenue Commissioner Lucinda Mahoney’s seat on the AIDEA board. Mahoney is one of the appointed but not confirmed administration officials.

When the Legislature quickly recessed in late March during the onset of the pandemic it passed a bill extending the normal confirmation deadline for the governor’s appointees until the day before the start of next session Jan. 19 or 30 days after the public health emergency issued by Dunleavy in March expired, which happened on Nov. 15.

Because the Legislature never took up Dunleavy’s appointments for the year before they expired under the extended deadline, they are not valid, according to the complaint filed by the Legislative Legal Division attorneys.

Dunleavy contended in Dec. 16 letters to House Speaker Bryce Edgmon and Senate President Cathy Giessel that his boards and commissions picks who have not been confirmed “continue to serve under valid appointments” and he would be exercising his constitutional authority to continue their appointments. He plans to reappoint the unconfirmed individuals by Feb. 3, Dunleavy also wrote.

The Legislative Council, chaired by Kodiak Republican Sen. Gary Stevens, is also seeking to have Juneau Superior Court Judge Phillip Pallenberg prohibit Dunleavy from reappointing the allegedly ineligible appointments until the start of the next session as well.

Elwood Brehmer can be reached at [email protected].

12/30/2020 - 8:22am