On Thursday, the administration of US President Donald Trump announced the first drilling rights auction in the Arctic National Wildlife Refuge, Alaska. This announcement pushes the auction process forward faster than anticipated, and faster than most drilling auctions.

It comes as a result of Trump’s 2017 ‘Tax Cuts and Jobs Act’, which removed environmental protections. It also mandated two licence auctions of at least 400,000 acres each, in an area known as the Coastal Plain.

The US Bureau of Land Management issued its standard ‘call for nominations’ on 17 November. This asks extraction companies which areas they would like to see on offer and remains open for 30 days. After this, the Bureau would internally discuss the potential boundaries of licenses.

Instead, the Trump administration has announced the sale two weeks into the nominations period. On Monday, the Bureau will post its Notice of Sale, setting the auction up for 6 January. This puts the auction two weeks before the inauguration of President-elect Joe Biden. Without the unusual intervention, the auction would have fallen around the same time as the transition of power, on 20 January.

However, licences are not immediately issued following auctions, so purchasing companies could still lose out to a change in the presidency. Joe Biden has vocally opposed using Alaskan nature reserves for fossil fuels, and issuing leases to the purchasers would likely fall to his administration.

Trump’s team have previously said it aims to “light too many fires to put out” before President-elect Biden’s inauguration. The timing of these auctions, which Biden has opposed, may indicate an aim to stir controversy.

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Consequences of a last-minute drilling auction in Alaska

Bureau of Land Management Alaska state director Chad Padgett said: “Oil and gas from the Coastal Plain is an important resource for meeting our nation’s long-term energy demands and will help create jobs and economic opportunities.

“The law makes oil and gas development one of the purposes of the refuge, clearly directing the Secretary of the Interior, acting through the Bureau of Land Management, to carry out a competitive leasing program for the potentially energy-rich Coastal Plain.”

However, yesterday’s announcement follows a statement by a Bank of America spokesperson earlier this week, saying the bank would not finance Arctic drilling.

Earlier this year, Goldman Sachs, Morgan Stanley, Chase, Wells Fargo and Citi all announced similar policies. This means that there are now no major US banks willing to finance Arctic drilling.

Aside from this, Moody’s Analytics energy economist Chris Lafakis told CNBC, the estimated price of extraction in the area stands at over $100. With oil currently sitting below $50 per barrel, and capital expenditure cuts remaining in place, the leases seem a risky investment.

Lafakis continued: “It is unlikely to reverse the long-term decline in Alaska’s oil production, which has been hampered by competition from cheaper-to-produce oil from Texas and North Dakota since the development of hydraulic fracking technology in the early 2000s.”

The Trump administration recently stripped protections from Alaska’s Tongass National Forest nature reserve, allowing logging to begin. However, this contrasts with decisions around the Pebble Mine in south-west Alaska, where environmental concerns caused the project to halt.