Top oil and gas players pulling out of Alaska's Arctic National Wildlife Refuge

Bucking political headwinds, oil and gas companies are dropping federal leases in the Arctic National Wildlife Refuge, but the state of Alaska is holding firm on seven leases held by a state development corporation that were won in a January 2021 lease sale held by the US Bureau of Land Management.

Regenerate Alaska, an independent company, has dropped its single 23,446-acre lease acquired in the 2021 sale, a BLM official confirmed June 2.

Earlier in the week BP and Hilcorp Energy acknowledged they have dropped options on leases in a 91,000-acre private Alaska Native-owned enclave in the refuge.

Majors BP and Chevron obtained their option on the Native lands, which are within the federally-managed refuge, in the 1980s after drilling an exploration well, the results of which are still confidential. Hilcorp acquired its rights to the option after purchasing BP's Alaska holdings.

State officials said they intend to hold seven leases on 365,775 acres obtained in the 2021 lease sale by the Alaska Industrial Development and Export Authority, or AIDEA, the state's industrial development finance corporation.

"We are still actively pursuing pre-development planning and permitting for seismic surveys. While (these are) allowed under the leasing program approved by Congress, federal agencies have been actively delaying permitting and access," said Alan Wietzner, AIDEA's executive director.

The state agency has filed a lawsuit against the Department of the Interior to force the issue, with the suit joined by the North Slope Borough, the regional municipal government, and two Alaska Native Corporations, Arctic Slope Regional Corporation and Kaktovik Inupiat Corp., which hold surface and subsurface rights in the 91,000 Native-owned enclave.

"AIDEA has continued to make the annual rental payments on our leases and the federal government has accepted payment for the leases while still denying us access," Wietzner said.

One other federal lease sold in the 1991 sale is still active that is held by Knik Arm Services, a small Anchorage-based development company.

Alaska BLM officials said the agency has suspended "lease operations" on the active leases, meaning they are not processing application for activities like seismic, but have not revoked the leases. The suspension will remain in effect until the DOI completes a revised environmental assessment of leasing in the refuge, they said.

Kaktovik Inupiat Corp., or KIC, is the private village corporation for Kaktovik, a small Inupiat community on Barter Island on the northern coast of the refuge, that was formed under the 1971 Alaska Native Claims Settlement Act, which also conveyed the surface and subsurface rights to KIC and Arctic Slope Regional Corp., the regional development corporation for the northern part of Alaska.

Exploration in the Arctic refuge has been a hot-button issue for decades. Much of ANWR was declared federal wilderness in the Alaska National Interest Lands and Conservation Act of 1980, or ANILCA, but a 1.5-million-acre section along the northern coast was held for further study of its oil and gas potential and possible leasing.

ANICLA required federal agencies to assess the oil and gas potential, which they did, but also that Congress must approve any plan for leasing and exploration.

Congress gave its approval in the 1980s but the action was vetoed by then-President Bill Clinton and efforts to gain approval, mainly led by the Alaska congressional delegation, have been unsuccessful until 2019 when Alaska Sen. Lisa Murkowski engineered its passage as part of federal tax legislation.

Ironically, the petroleum industry has seemed largely ambivalent on the refuge. There's little doubt the area has oil and gas – a large gas and condensate deposit was discovered at Point Thomson, on state lands just across the refuge boundary, and BP made a small oil discovery that actually sits astride the boundary.

However, in the 1991 lease sale held by the Trump administration, no oil companies submitted bids except for Regenerate Alaska, which is an exploration independent.

Alaska officials are patient, however, and are still believers, however. "Fortunately the rocks in the area are highly prospective and that resource isn't going anyway," said Alaska's Commissioner of Natural Resources, Corri Feige.

US conservation groups and their allies in Congress have fiercely opposed leasing in the refuge through the years and the exodus by BP and Hilcorp, and now Regenerate Alaska, are now leading to renewed calls for the entire refuge to be declared wilderness, the most restrictive form of protection allowed under federal law.

President Joe Biden and the US House, under a Democratic majority, may favor that but it stands little chance in the Senate where Alaska's two Republican senators, Murkowski and Dan Sullivan, wield considerable influence.