The Arctic National Wildlife Refuge (ANWR) was approved for oil drilling in 2017’s tax reform bill. And it was decided that a small portion of the land would be auctioned off. However, the ANWR auction ended up being a colossal failure as no major oil company showed up.
There were a total of 22 tracks of land to bid on, and only 11 of them received bids. The kicker was that the majority of the bids were all from the state of Alaska in the form of the Alaska Industrial Development and Export Authority (AIDEA).
These bids were to ensure that the state itself can lease the land for drilling in case any plots were not sold.
Where Were the Oil Companies?
For decades, oil companies and the state of Alaska have been fighting to allow drilling. Thus, it may have come as a shock to Alaskan officials when none were present.
However, it makes perfect sense as this might be the worst possible time for an oil auction.
Oil prices have been down all year as a result of lower demand due to the pandemic. As a result, these companies are down billions of dollars and are even beginning to divest from oil itself in favor of renewable energy.
There is also their reputation on the line. Many of these big oil companies are working on changing their image due to younger investors. Drilling in a wildlife refuge is not going to win them any favors in this department.
And finally, this rushed auction was a result of the administration change in the White House. President-elect Biden has openly said he is opposed to the drilling, which could mean regulatory barriers for drillers.
It’s a big risk and with oil prices so low, the payoff just isn’t there.
Major Banks Are Also Opposed
To date, every major American bank has stated that it will not support drilling. This cut off an important source of money for any companies interested and could ruin relationships between a company and bank.
As you can imagine, that is a very bad thing.
Thus, there was very little incentive for any major oil players to attend the ANWR auction.