OPINION: The state should not buy oil leases in the Arctic

I once put the safety cap upside down on a can of bear spray, a mistake I won’t make again. Such lessons, of course, come from experience; don’t throw money at fixing a piece of junk, and never buy a car without looking under the hood. I fear Alaska is not learning these lessons.

The Board of Directors of the Alaska Industrial Development and Export Authority just approved spending up to $20 million of Alaska’s money on leases for the Arctic National Wildlife Refuge before the Bureau of Land Management has even announced what will actually be available for lease. This means we Alaskans have to pay a bill before AIDEA even knows what we can buy with our money. AIDEA already tried this in 2021 and lost badly.

Congress passed a law in 2017 requiring the federal government to include portions of the Arctic National Wildlife Refuge in two lease sales by the end of 2024. The original bill projected $1.8 billion in revenue from these sales. That’s not quite the case: the first leasehold sale (offered in 2021) became vacant. No major oil companies participated, generating less than 1% of expected revenue. AIDEA itself has spent $12 million on leases. This investment proved even worse when the leases were later canceled due to shortcomings in the Trump-era leasing program. AIDEA has since spent millions more fighting in the courts. What did we ultimately get from the first Refuge lease sale? A multi-billion dollar bill, no results, and stalled funds that could have gone to emerging companies, renewable energy, and Alaska’s next generation.

But maybe I’m being unfair. After all, approving funds for the lease sale could just be responsible budgeting, right? The problem here is that little information and a poor track record make this a bad investment, while the downsides threaten not only our money, but also land, water, communities and the economy.

The Arctic National Wildlife Refuge encompasses more than a million acres of coastal plain, home to about 200 species of birds that migrate to all 50 states, nearly a quarter of a million caribou, polar bears, tundra plants, wild rivers and, yes, millions of barrels of oil. How many? AIDEA will say there are an estimated 7.6 billion barrels of oil in the coastal plain (between 4.3 billion and 11.8 billion, according to the US Geological Survey). That’s a lot of oil, but says nothing about how expensive it would be to recover the oil. Chevron and BP have confidential data from the only test wells ever drilled. Neither company showed up for Refuge’s lease sale the first time. BP sold out Alaska, while Chevron and Hilcorp a A $10 million loss just to get out of the private leases in the Refuge. It seems we risk a classic to buy a lemon.

The free market has deemed sanctuary leases worthless at best and extremely costly at worst.

So a state-owned company using public money has lost millions of dollars, continues to spend good money after bad on legal fees, and has still not produced a single drop of oil from the Refuge. Lottery tickets are not a pension plan. So it’s surprising to me that the AIDEA board wants to commit another $20 million for the second lease for Refuge, which will be offered in December. The board’s approval for this came after a last-minute meeting with limited public comment or notice. Investing in lease sales follows the example of AIDEA 39 years of entrepreneurship26 projects lose $5 billion in state money. Half of these projects have not created permanent jobs.

Or as they say: madness is doing the same thing twice and expecting different results.

Although no oil jobs have resulted from AIDEA’s leasing project for Alaskans, AIDEA does employ a number of out-of-state attorneys. AIDEA has not recouped any money from the 2021 lease sale, but has already signed seven indefinite-term legal contracts for up to $985,000 in state money. In fact, AIDEA has thought about it another resolution this past week, which, if passed, AIDEA Executive Director a blank check to hire as many lawyers as desired. It also included litigation costs as a possible use of the $20 million it approved for Arctic Refuge spending. Including litigation costs of this magnitude in a lease purchase obligation makes it clear that AIDEA is well aware of the likely issues facing their new foray into Arctic oil. This feels to me not like a good faith effort to pursue economic development, but like another lottery ticket at the expense of land, wildlife, and Alaska’s future.

So let’s summarize:

1) We don’t know what will be included in the upcoming Arctic National Wildlife Refuge lease sale.

2) There is no public evidence that vast quantities of oil exist, or that any oil reserves that do exist can be economically recovered from the Refuge, let alone from the unknown leases.

3) Lease sales provide open opportunities for development companies in the oil sector; they were not at all interested in the first sale.

4) Previous state investments in Refuge leases have cost Alaska money.

Why are we doing this?

A market shift away from refuge development is no reason to support an outdated idea. Another $20 million in state money is a drop in the bucket toward the $1.8 billion lease sale goal and feels more like a hopeful gamble than a well-considered investment.

I wonder if AIDEA has genuine intentions to develop Arctic Refuge oil, or if they are instead playing politics with Alaska’s money. The Refuge has become a mascot for Alaska’s oil future. It is also home to the largest caribou migration in the Arctic, providing crucial habitat in an intact ecosystem reserved for wildlife. All this happens against the backdrop of a increasingly clear must move away from fossil fuels. If we double down on the economic incentive of the past, we are rolling the dice on a future we cannot afford. We must invest in economic resilience and diversification: small businesses, communities and the resources needed to support renewable energy growth. This lease sale is the latest chapter in a battle for conservation that dates back fifty years. And that’s the case with any conservation battle. They are never over, they are only postponed. We have a good idea of ​​what is at risk, but all we have are political guesses about what we might gain.

The point is, whether or not you think we should develop oil reserves in the Arctic Refuge is a very different question than whether or not a state-owned company should spend millions of our money on a political agenda. The public interest is not served by pushing through outdated projects that industry has already rejected at the expense of what makes our state great: it is not beneath the country, but beneath the country itself.

Let’s not make the same mistake twice.

Alexander Lee is an associate professor of philosophy at Alaska Pacific University.

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