Lease sale in Alaska petroleum reserve draws modest interest

A federal sale of oil leases in the National Petroleum Reserve-Alaska has again drawn a modest response.

The Bureau of Land Management on Wednesday received 16 bids on 16 tracts covering 272 square miles (705 sq. kilometers), the Alaska Journal of Commerce reported .

The BLM had offered 254 tracts on more than 4,375 square miles (11,330 sq. kilometers).

Federal officials said the modest bidding could be attributed to the lack of access to the most prospective areas. BLM received seven bids in a 2017 lease sale.

Environmental groups oppose expanded drilling in the reserve west of Prudhoe Bay. They say oil development will imperil caribou herds, polar bears and ecologically significant wetlands used for breeding by migratory waterfowl from around the world.

The bids ranged from $57,000 to $216,000 per lease and took in $1.13 million. Half will go to the state of Alaska through revenue sharing. Most leases sold are near areas that ConocoPhillips is exploring and developing.

Assistant Interior Secretary Joe Balash in a call with reporters said the 2018 results were encouraging. The lack of bidding, he said, compared with more active bidding on nearby state lands, underscores the need to review the land-use plan of the reserve.

The petroleum reserve was created in 1923 by President Warren Harding as the Naval Petroleum Reserve and set aside as an emergency oil supply for the Navy. It covers 35,625 square miles (92,269 sq. kilometers), about the size of Indiana.

Congress in 1976 renamed the reserve and transferred administration to the Interior Department.

Former Interior Secretary Ken Salazar in 2013 announced a management plan that split the reserve's acreage roughly in half between conservation areas and land available for petroleum development. Salazar said oil companies would have access to nearly three-fourths of the estimated economically recoverable oil in the reserve.

The plan increased conservation areas from 12,968 square miles (33,587 sq. kilometers) to 20,860 square miles (54,027 sq. kilometers), including additional land around Teshekpuk Lake, a renowned habitat for migratory waterfowl.

Last December the U.S. Geological Survey increased its mean recoverable oil estimate for the reserve to nearly 8.7 billion barrels.

Balash announced Nov. 20 that BLM would start a process to revise the 2013 land use plan with the goal of opening additional areas of the reserve for oil and gas leasing.

Matt Lee-Ashley of the Center for American Progress, a liberal think tank, in an email announcement called the lease sale another "major flop," trading wilderness for lease bids averaging $6.50 per acre.