Posted January 17, 2018 8:47 p.m. EST
OIL COMPANIES MAY FEEL NO URGENCY IN ALASKA
federal land Congress, in approving a sweeping tax overhaul, opened the Arctic National Wildlife Refuge to oil and gas drilling, betting that energy companies would be willing to brave the harsh conditions of northern Alaska and generate royalties to help offset the costs of tax cuts.
But lawmakers could be disappointed. If the recent history of another patch of oil-rich federal land not far from ANWR - the National Petroleum Reserve Alaska - is any indication, they could be in for a long wait before the money comes rolling in.
The Department of Interior last month had held a lease sale for the National Petroleum Reserve Alaska, but only 1 percent of the 10.3 million acres offered received bids. The combined bids only totaled $1.2 million.
The lackluster auction is another example that government policy alone won't drive oil and gas production as the price of oil remains the driving factor. Recent auctions of offshore tracts have also generated only modest interest with oil prices, now in the low $60-range, making investments in less expensive onshore shale fields such as the Permian Basin more attractive.
Congress is hoping to reap $1.1 billion from ANWR over the next decade, but the short drilling season and high costs of development in a low-price environment may tamp down oil companies' interest in exploiting ANWR tracts.
But Kara Moriarty, director of the Alaska Oil and Gas Association, recently cautioned against making comparisons between the National Petroleum Reserve Alaska and ANWR.
In an interview with the Associated Press, she said ANWR holds 10 times the oil and gas deposits of the National Petroleum Reserve Alaska.
"They may both be in Alaska," she said, "but the reserve estimates are night and day."
Late last month, however, on the same day President Donald Trump signed the tax bill, the Department of Interior released findings that the National Petroleum Reserve Alaska and surrounding lands contained 8.7 billions barrels of crude - more than five times what was estimated in 2010.
That brings it close to the levels scientists believe are contained within ANWR. The most recent U.S. Geological Survey in 1998 put ANWR's oil reserves at between 5.7 billion and 16 billion barrels.
But even if oil companies buy ANWR leases, they won't necessarily start drilling, said Niel Lawrence, an attorney with the Natural Resources Defense Council, a national environmental advocacy group.
"The industry likes to open up land and lock it up, said Lawrence. "But that doesn't mean they'll produce on it."