Oil lease sale for National Petroleum Reserve sees little interest

An oil lease sale for the National Petroleum Reserve-Alaska saw limited interest, despite more land being offered than ever before. (Photo by Bob Wick, courtesy BLM)

This year, in a move heralded by Interior Secretary Ryan Zinke as “large and unprecedented,” the Trump administration offered the most land ever to oil companies in Alaska’s National Petroleum Reserve. Nine hundred tracts, totaling more than 10 million acres, were up for bid.

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But at the annual lease sale held today, oil companies bid on only seven tracts. The sale lasted less than 10 minutes.

In a call with reporters after the sale, Ted Murphy of Bureau of Land Management said there’s never a guarantee that oil companies will be interested.

“We never know exactly how industry is going to react to the number of tracts made available,” Murphy said. “Lease sale interest is unpredictable.”

Oil companies ConocoPhillips and Anadarko jointly bid on all seven tracts that sold. The acreage they bid on is located in the eastern part of the Reserve, near land Conoco is already leasing and developing.

No other companies placed bids at the federal sale. The sum of all bids was just over $1 million — an underwhelming result compared to last year’s sale for the Reserve, which raked in close to $19 million.

Tim Bradner, co-publisher of the Alaska Economic Report and a longtime oil and gas observer in the state, said it’s possible ConocoPhillips is already leasing the lion’s share of the available land in the Reserve with the most oil potential. Bradner said oil companies do see potential in other parts of the Reserve — commonly called NPR-A — but that land is currently off limits.

“The really good stuff in the NPR-A, from a geologic perspective, was not on the table this morning,” Bradner said.

Much of that land surrounds Teshekpuk Lake. The Obama administration decided not to allow oil development there because it’s habitat for migratory birds and caribou. Environmental groups want that land to stay protected, but the Trump administration is considering opening up more of the area to oil development.

There was also lease sale for state land and waters on and near the North Slope today; officials saw that as a big success. The state received over $21 million dollars in high bids. That’s over $3 million more than last year’s sale, which was also considered a success.

“We feel that the competitive nature of today’s bidding is very, very good for the state of Alaska and it rings loudly that people are interested,” Chantal Walsh, director of the Alaska’s Department of Natural Resources’ Division of Oil and Gas, said.

The Spanish oil company Repsol was of the most aggressive bidders at the state sale. Repsol is one of the companies behind a 1.2-billion-barrel oil discovery announced on the North Slope this spring. Many of Repsol’s bids were south of that discovery.

Elizabeth Harball is a reporter with Alaska's Energy Desk, covering Alaska’s oil and gas industry and environmental policy. She is a contributor to the Energy Desk’s Midnight Oil podcast series. Before moving to Alaska in 2016, Harball worked at E&E News in Washington, D.C., where she covered federal and state climate change policy. Originally from Kalispell, Montana, Harball is a graduate of Columbia University Graduate School of Journalism.

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