Cook Inlet Lease Sale 258 Canceled, DOI Says ‘Disadvantage of Industry’

On May 11, 2022, the Biden administration announced that it would cancel a proposed oil and gas lease deal in federal waters for Cook Inlet. The Department of the Interior issued a statement confirming that it “will not proceed” with Lease Sale 258, as well as two other leases in the Gulf of Mexico (259 and 261 lease sales, respectively). This decision resulted in the closure of more than a million acres in the waters just west of the Kenai Peninsula due to a “lack of interest in the industry”.

Federal law requires the Department of the Interior to adhere to a five-year lease plan for the sale of outdoor leases, such as the 258 Lease Sale. The Office of Ocean Energy Management (or BOEM) is the federal agency within the Department of the Interior responsible for these outdoor leases. BOEM canceled rental sales in Cook Inlet three times, between 2006 and 2010 — also citing a “lack of interest in the industry.”

Cook Inlet’s last federal lease sale (224 lease sale) was five years ago, in 2017. Oil and gas company Hilcorp was the only exhibitor It acquired 14 leases covering nearly 80,000 acres for just over $3 million. It was the first time in 20 years that a company had bid on federal leases in Cook Inlet.

Government rents are a different story. Last June, the state of Alaska sold 3.3 million acres of oil and gas leases in Cook Inlet resulting in eight successful bids from two different companies. For the 258 lease, it will take another five years before it can be reconsidered as a potential lease.

Governor Mike Dunleavy, U.S. Senators Lisa Murkowski and Dan Sullivan issued statements condemning Wednesday’s announcement of the lease termination.

Senator Murkowski stated in a press release dated May 12, 2022, that “citing a ‘lack of interest in the industry’ is nothing more than fiction from an administration shunning energy production in the United States.”

Both Senators Murkowski and Senators Sullivan believed there was no way to gauge whether there was an interest, because these leases were not open to bidders. Most companies choose to keep their interests confidential.

“You really don’t know unless the actual lease is on what industries you’re interested in, and which aren’t,” said Liz Mering, advocacy director for Cook Inletkeeper. She said the historical oil and gas development of Cook Inlet has raised many logistical considerations.

“We have high winds, harsh, long winters, high tides, and all of these things, which make it less attractive to a lot of industries,” Mering said.

In an April 6, 2021 interview with KBBI’s Josh Crone, Mering said there had been an overwhelming public comment on the rent sale.

“So we had a public comment period in December with the release of the Environmental Impact Statement in October and then it ended on December 13, [2021]Mering continued.

“Nearly 93,000 people took the time to comment on this lease. In fact, 99.98% of them expressed their concern and concern about our fishing, our tourism, our land, our waters, our beluga whales and all the things we live here. I love very much here.”

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