Alaska Diary | Private company relinquishes oil and gas lease in arctic refuge, leaving AIDEA as sole tenant

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Another private company relinquished its lease in the Arctic National Wildlife Refuge, leaving an Alaskan agency as the sole tenant seeking to pursue controversial plans for oil and gas exploration on the refuge’s coastal plain.

Knik Arm Services, a small real estate and rental company, has requested termination of its 49,000-acre 10-year lease and reimbursement of its lease payments, the Bureau of Land Management said in a statement Monday. The agency said it would honor that request.

Oil company Regenerate Alaska, the only other private company to bid for the federal government’s lease sale in 2021, also gave up its lease earlier this year.

The exit of the two companies leaves only the Alaska Industrial Development and Export Authority, a state agency, to continue oil and gas exploration in the refuge. The agency has acquired seven leases covering approximately 370,000 acres and is suing the federal government for suspension of the lease.

The departure adds to questions about the prospects for oil drilling in the refuge’s 1.6 million acre coastal plain.

A Republican-led Congress approved the lease sale in 2017, but the Biden administration suspended the leases and is revising the lease program. The Department of the Interior has called the sales process developed under President Donald Trump legally flawed.

Knik Arm Services filed its lease cancellation request on Tuesday, the Bureau of Land Management said in a statement.

“The office is directing the Office of Natural Resources Revenue to repay the full bonus offer (from the company) and payment of rent,” the agency said Monday.

Mark Graber, owner of Knik Arm Services, said he invested about $2 million in his lease and for a first-year lease payment.

Graber said he had hoped to keep his lease in the hope that AIDEA would win his case and that oil development in the Arctic refuge would yield valuable royalties for his business for years to come.

But it has become increasingly clear that the fight over leases could go on for years, hurting the value of his investment, he said.

“It’s only tipping more and more to the negative and there are better opportunities in the world,” he said, referring to financial investments and the prospect of a quick resolution. “I wish AIDE all the success in the world. They are doing something that is in the interest of Alaskans and the United States, for that matter.

AIDEA, which funds development in Alaska, bought its leases to preserve drilling rights in case oil companies don’t come forward.

Alan Weitzner, executive director of the state agency, said the departure of Knik Arm Services did not change the agency’s plans to continue oil exploration at the refuge.

“There’s too much risk not to (continue exploration), when we’re talking about the potential for jobs and economic development for the state,” Weitzner said.

Separately, Hilcorp and Chevron last year canceled their interest in separate, older leases within the boundaries of the refuge, on a small parcel of land owned by an Alaska Native corporation. These oil companies spent $10 million to terminate their agreement with Arctic Slope Regional Corp.

Groups opposed to drilling in the refuge welcomed the departure of Knik Arm Services. They said oil development in the refuge, if allowed, would exacerbate global warming by developing more fossil fuels, while endangering valuable wildlife habitat in the refuge, such as the calving grounds of the herd of Porcupine caribou.

The Wilderness Society said in a statement that the lease program, which also includes a second lease sale before Dec. 22, 2024, was expected to generate $1.8 billion in lease offers and payments over a decade, for that Alaska and the federal governments go their separate ways. . But with both companies gone, the only sale made to date brought in less than $10 million, a tiny fraction of what was expected.

The Gwich’in Steering Committee, which represents 15 Gwich’in communities in Alaska and Canada, said in a statement that the departure of companies from the refuge shows that drilling there is not worth the economic risk and liability. The group said many banks and insurance companies have said they will not support drilling in the refuge.

“These lands are sacred and we, the Gwich’in people, will never give up the fight to protect the Arctic refuge,” said Bernadette Demientieff, the group’s executive director. “We call on congressional leaders and President Biden to recognize the rights of Indigenous communities who are being neglected in Alaska and to repeal the oil and gas program in the Arctic refuge.”

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