We have been waiting for 25 years for another ANWR lease sale. Now, it has been scheduled for Jan. 6, 2021. Is Alaska ready? So far, there has been no indication from the producers of an intent to bid on the tracts. We hope some of the smaller independent producers will bid, but we haven’t heard from Exxon, ConocoPhillips or Hilcorp. BP has already left Alaska.
Opposition to exploration in the Arctic has been the rallying cry for the national environmental groups for years. Major banks have indicated that they would no longer fund oil and gas development in there. Fortunately, the bank regulators, the Comptroller of the Currency, issued a mandate that our banking system must be accessible to everyone on an equal basis.
The oil and gas industry contributes over 70% of our state’s revenue. We first got ANWR approved for a lease sale back in 1995. Authority was given by a favorable vote in both the U.S. Senate and the House through the efforts of Rep. Don Young, Sen. Ted Stevens and me. Unfortunately, the environmental groups persuaded President Clinton to veto the bill.
Now, through the efforts of Young, Sullivan and Murkowski, and with the support of President Trump, Congress has again passed a bill in support of leasing. Trump has made quite a point of declaring that the United States is finally energy independent in oil and gas production.
When opportunity knocks, we can’t just pull the covers over our heads and hope that someone else will help us out. I have been in contact with numerous Alaskans, including former governors, in expressing our concerns over the prospect of having a federal lease sale with no bidders.
It would be a shame to allow this resource for which the state has fought so long and hard to be abandoned.
I urge the Dunleavy Administration to have the state present at the lease sale and to bid on a portion or all of the leases with bids meeting at least the minimum. Such an effort can be coordinated by the state’s Department of Natural Resources and the attorney general’s office. If there are other bidders, then the state bids are unnecessary.
But if there are no bidders on the lease sales at all, Alaska will likely never be able to develop our oil and gas potential from ANWR. Funding for the bid need not be difficult. The bid could be funded from acquired revenue receipts or reserve accounts or by the Permanent Fund. Trading investment dollars for developing valuable revenue producing leases, which when operational could generate a handsome return to the investors.
I encourage all Alaskans to urge the Dunleavy Administration not to pass up this opportunity. We can’t wait for another 25 years
What if the state or its agency were to bid on all or a portion of the 36-year ANWR leases? The intent would be to first assess the prospects for sub lease or resale. The leases would then be removed from federal jurisdiction. This should free the ANWR issue from some of the constant barrage from national environmental groups who are hellbent on stopping any sales — even though the lease sale authorized only 1.6 million acres of the 18 million acres of ANWR.
If the new Biden Administration attempted to halt development of the newly acquired state leases, the state could counter with a charge of “taking” and sue for recovery and damages.
Options for the state to consider might include submitting the loan request to the banks that already have a financial relationship with the state of Alaska and the Permanent Fund. The loan could be collateralized by the newly acquired leases.
In soliciting interim loan funding from the money center banks, it should be noted that they have gone on record indicating that they no longer wish to finance development of oil and gas projects in Alaska’s Arctic because of pressure from the environmental community. Yet, a recent policy statement by the U. S. Comptroller of the Currency mandated that federal banking institutions cannot discriminate in regional areas.
Should the banks choose to maintain their reluctance and decline, the state could file discrimination lawsuits and seek full recovery as well as damages for lost revenue.
A more practical solution would be if a state agency such as AIDEA were the successful bidder, the state would obtain the leases at 50% off as the federal government is required to remit 50% of federal lease sales back to the state. This action could be accomplished by a simple vote of AIDEA’s Board of Directors. The state, by having control of the newly acquired leases would have the security of knowing that it could generate further sales and revenues as the market improved.
On occasion, I have suggested to the administration that they seriously consider such a proposal.
Frank Murkowski is a former U.S. senator, eighth governor of Alaska and a retired banker. Columns, My Turns and Letters to the Editor represent the view of the author, not the view of the Juneau Empire. Have something to say? Here’s how to submit a letter to the editor or My Turn.
