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Trump Administration Auctions Arctic National Wildlife Refuge To Oil Drillers

AILSA CHANG, HOST:

And now a story you may have missed during last week's storming of the U.S. Capitol. The Trump administration achieved one of its biggest environmental reversals. It auctioned off leases to drill oil in Alaska's Arctic National Wildlife Refuge. It's one of the country's most pristine places, home to migrating caribou, birds and polar bears. But the sale was a bust. Tegan Hanlon of Alaska's energy desk joins us now to explain.

Welcome.

TEGAN HANLON, BYLINE: Hi. Thanks for having me on.

CHANG: Well, thanks for being with us. OK, so the Trump administration has pushed for the sale for three years. I mean, Republicans have pushed to allow drilling in this refuge for decades. What exactly happened here?

HANLON: So the sale received a striking lack of interest. As a former federal gas official told me, it was a dry hole, a bust. About half of the area up for leasing got no offers at all. No major oil companies submitted bids. Instead, just two small companies each picked up one lease, and the rest of them went to the state of Alaska. There's a state-owned economic development corporation here that was the highest bidder on nine leases.

CHANG: But what I don't get is, you know, the refuge is thought to contain a lot of oil, right? So why wasn't there more demand?

HANLON: Well, industry analysts have said there's multiple reasons. A major one is the opposition to drilling in this place. There are ongoing lawsuits fighting the Trump administration's oil leasing program. They're filed by environmental groups and the Gwich'in, which is an Indigenous group that hunts the caribou that commonly give birth in the refuge. And they say the leasing program is rushed and legally flawed. There is also just the high cost of doing business in the Arctic compared to, say, Texas. And there's the uncertainty about future oil demand and the changing presidential administration. Here's how Larry Persily, a former federal gas official for Alaska, put it.

LARRY PERSILY: So betting your company on billions of dollars on oil in a high-risk environment on the Arctic, besides for all the grief you're going to take from the public, from shareholders, from investors, that's a big gamble. Companies just don't have the appetite for that anymore.

HANLON: And one more point - money from this lease sale was meant to offset President Trump's tax cuts back in 2017. But this sale will raise just a small fraction of the amount the government had hoped.

CHANG: OK. So the industry didn't really show up, but you said the state of Alaska actually stepped in to buy up leases. What are they going to do with that, you think?

HANLON: Right. So there's actually quite a bit of political support in Alaska for drilling in the refuge. They say it's a way to create more state revenue, more jobs. So the basic idea is that the state buys these leases, which last for 10 years and can be renewed, and it could just sit on them and wait for market conditions to improve. And then it would have to partner with the oil industry to do that actual drilling.

CHANG: OK. Well, President-elect Biden has said he opposes drilling in the Arctic Refuge. So can he do anything about the leases that have already been sold?

HANLON: It's not clear yet what exactly Biden will do. We know that normally, leases could take months to finalize. But we expect the Trump administration to try and rush them through before Biden takes office. One option is Biden could try to buy back those leases when he's in office, though that's kind of unusual. Also, once a company has an oil lease, they still have a lot of permits and approvals. So industry analysts say a Biden administration could hold up that permitting process. And it's also still possible a federal court could intervene.

CHANG: That is Tegan Hanlon of Alaska Public Media.

Thank you.

HANLON: Thanks so much. Transcript provided by NPR, Copyright NPR.