Senate Energy and Natural Resources Committee Chairman Lisa Murkowksi (R-Alaska) released legislation Wednesday that would open Alaska’s Arctic National Wildlife Refuge to oil and gas drilling for the first time in a generation by calling for at least two major lease sales over the next decade.
The budget measure directs federal officials to auction off mineral rights in areas encompassing at least 400,000 acres each in the refuge’s coastal plain, also known as its “1002 area.” The measure requires at least a 16.67 percent royalty rate and dictates that the revenue would be evenly split between the federal government and Alaska.
Surface development on the coastal plain must not span more than 2,000 acres, according to the bill.
Murkowski, who has scheduled a markup on the bill for Nov. 15, said the measure represents “a tremendous opportunity for both Alaska and our country.”
The Congressional Budget Office estimated in a report published Wednesday that such sales, the first of which must take place within four years of the bill’s enactment, would raise nearly $1.1 billion over the next decade. The money would help offset tax cuts Republicans hope to enact as part of a broader tax reform bill.
“Estimates of bonus bids for leases in ANWR are uncertain,” the CBO cautioned, noting that potential bidders would compare the opportunity costs of drilling there to other spots around the globe. It added that it did not anticipate the federal government would collect any royalties before 2027, given the time it takes to launch such operations.
Environmentalists have questioned those projections, noting that recent sales on Alaska’s North Slope have failed to produce the level of revenue that would generate that much money. Given the costs of exploration in the Arctic, oil prices typically must be at least $70 a barrel to justify drilling. Right now, West Texas crude is selling for just under $57 a barrel.
Opponents of drilling note that Congress has held off authorizing exploration in the refuge for more than three decades, partly out of concern that it could damage the habitat for polar bears, caribou, migrating waterfowl and other species. President Barack Obama called on Congress to designate it as wilderness, which would permanently bar energy exploration there, and ordered the U.S. Fish and Wildlife Service to manage it as wilderness in the interim.
Adam Kolton, executive director of the Alaska Wilderness League, said in a statement that it could give oil buried beneath the refuge “to China and other countries hungry for exports.”
“It would allow roads, pipelines, gravel mines and well pads to be erected across the entire birthing grounds of the Coastal Plain, where caribou calve and where polar bear mothers den,” Kolton added.
But Republicans see the drilling measure as a crucial way to raise revenue for their broader budget bill, and the idea enjoys support from the Trump administration. The Interior Department is exploring whether to allow seismic exploration in the 19.6 million-acre refuge for the first time in more than 30 years, but only Congress can greenlight oil and gas drilling there.
Alaska’s junior senator, Dan Sullivan (R); its sole House member, Don Young (R); and its governor, Bill Walker (I), released a joint statement with Murkowski endorsing the bill.
“Much like Midwestern states harvest the resources that grow on the ground, like wheat and corn, Alaska must harvest the resources in our ground,” Walker said.
The American Petroleum Institute’s upstream director, Erik Milito, said in a statement that studies suggest the refuge’s “coastal plain holds the largest undeveloped conventional oil resources to be found in the U.S., and projections show that increased production over the long-term is exactly what we need to meet domestic and global demand.”
Moving the legislation through the budget process means Republicans can pass it with just 50 votes, with Vice President Pence casting the tie-breaking vote. In a vote last month aimed at blocking the Senate Energy and Natural Resources Committee from authorizing drilling in the refuge, Sens. Susan Collins (R-Maine) and Joe Manchin III (D-W.Va.) each broke party ranks, giving Republicans a 52-to-48 vote edge.
On Thursday, Sen. Maria Cantwell (Wash.), the top Democrat on the Senate Energy Committee, told reporters that her side would try to win over votes by warning senators that the bill could pave the way for drilling in national refuges elsewhere in the country.
“The question is, what’s next? What other wildlife refuge in America are they going to mandate drilling in?” Cantwell asked. “And your area, and your state, might be next.”