Day: June 5, 2026

A controversial oil and gas lease sale in the Arctic National Wildlife Refuge drew one big bid Friday from an independent Anchorage-based natural gas producer, along with a smattering of other bids from a state economic development agency.

HEX Energy LLC, which produces natural gas in Cook Inlet but has never operated on the North Slope, bid $1.7 million for a single lease bordering state territory on the western edge of the refuge’s coastal plain.

In all, five of the 58 tracts on offer received bids, all from HEX or the Alaska Industrial Development and Export Authority, the state government’s economic development agency. HEX was the apparent winner of two tracts in total, while AIDEA was the winner of three, according to preliminary results. High bids for the sale totaled $3.74 million.

The sale was held under requirements of the sweeping tax and budget bill passed by Congress last year and known as the “One Big Beautiful Bill Act.” The law mandates at least four ANWR lease sales through 2035, each offering at least 400,000 acres.

It was the third lease sale since 2021. In the first of those lease sales, held in the last days of the first Trump administration, no major oil companies bid and AIDEA was the main participant. In the second lease sale, held in 2025 in the last days of the Biden administration, there were no bids. AIDEA still holds six leases it acquired in 2021, but the agency has not done any exploration work on them.

The tract for which HEX bid $1.7 million is the same one that drew the only oil company bid in the first ANWR lease sale held on Jan. 6, 2021. In that sale, Regenerate Energy, a subsidiary of Australia-based 88 Energy Ltd., bid $770,000. At the time, the company said it bid on the lease because it was close to a prospect called Yukon that it was exploring on adjacent state land. Regenerate Energy relinquished the lease in 2022.

After Friday’s sale results were revealed, development supporters and opponents had contrasting reactions: drilling boosters celebrated the results, while drilling opponents characterized the sale as a flop similar to the previous ANWR auctions.

Trump administration officials deemed the sale a success.

“While the history of this area is long on policy, a new era of active leasing and exploration is just beginning to unfold,” Kevin Pendergast, Alaska state director for the BLM, said in wrapup comments at the conclusion of the bid reading.

“We look forward to learning more about the subsurface of the area as leaseholders pursue exploration and ultimately to the next phase when, like the NPR-A to the west, this area’s full potential begins to be revealed and responsible development takes shape,” he said, referring to the National Petroleum Reserve in Alaska, which is also managed by the BLM and where there is active oil development and production underway.

In a statement, BLM Director Steve Pearce contrasted the Trump administration policies to those of the Biden administration.

“This lease sale is another important step toward restoring American Energy Dominance and responsibly developing the vast resources Congress directed us to make available in the Coastal Plain,” Pearce said. “The previous administration did everything in its power to discourage industry from development in the Coastal Plain. The strong industry interest we saw today reflects confidence in Alaska’s resource potential and the Trump administration’s commitment to providing certainty for investment.

Inupiat organizations based on the North Slope, the majority of which support oil development in the refuge because of its potential economic benefits, also characterized the sale as successful.

Among them is the Arctic Slope Regional Corporation, the Inupiat-owned regional corporation that holds mineral rights in about 90,000 acres within refuge boundaries.

“Today’s lease sale in the Coastal Plain sets the stage for strengthening the North Slope economic foundation and Iñupiaq cultural self-determination for generations to come,” Rex Rock Sr., Arctic Slope’s president and chief executive officer, said in a statement.

Opponents of oil development in the refuge said the sale was an economic bust that indicated the futility of trying to drill for oil in an area prized for its environmental value.

Opponents include the Gwich’in Steering Committee, which represents Gwich’in Athabascan tribal members in northeastern Alaska and northwestern Canada that have long opposed oil development in the region.

“The results of today’s lease sale speaks for itself. Yet again, no major oil and gas companies showed up to bid, because they know that drilling in the Arctic Refuge is a losing proposition,” Kristen Moreland, executive director of the Gwich’in Steering Committee, said in a statement. “We will continue to fight the Trump administration’s leasing program, and work with our friends and allies to protect this sacred and irreplaceable landscape from development of any kind.”

Gwich’in tribal members are concerned in large part about impacts to the massive Porcupine Caribou Herd, which crowds into the refuge’s coastal plain to give birth and nurture calves. The coastal plain is a relatively narrow strip of land wedged between the Brooks Range and the Arctic Ocean, a contrast to the much wider flat areas elsewhere on the North Slope.

Another organization, Taxpayers for Common Sense, was among those that criticized the sale on fiscal grounds.

“From two previous failed lease sales that delivered less than 1% of promised revenue, taxpayers already know that drilling in the Arctic Refuge is a bad deal,” Autumn Hanna, Vice President of Taxpayers for Common Sense, said in a statement. “Today’s lease sale is yet another reminder that oil and gas development in the Refuge is high-risk, low reward with zero interest from real industry players. Americans will not see relief at the pump and, instead, face greater risks from the drilling in a sensitive region.”

Several organizations cited the environmental risks of the oil development being pushed by the Trump administration and its allies.

“This administration is brutally sacrificing eons-old habitat for mother polar bears and cubs, calving grounds for caribou and nesting habitat for millions of migratory birds all in the name of  oil and gas gains that may never be realized,” Nicole Whittington-Evans, Defenders of Wildlife’s senior director of Alaska and Northwest programs, said in a statement. 

As drilling opponents vowed to continue their fight to prevent development, AIDEA has been planning to start work on the leases it already holds.

AIDEA last month approved $190 million in spending on its ANWR program, most of which is to support a plan to conduct seismic surveys on its refuge leases.

Seismic surveys use slow-moving vehicles that send sound waves deep into the ground while traversing across the surface. The seismic signals are analyzed to help map out geology and try to identify oil and gas reserves.

Scientists from the University of Alaska Fairbanks have warned that seismic surveys in the refuge coastal plain would cause long-lasting damage to the tundra and permafrost below. In a report issued in 2019, they pointed to unreliable snow cover and lack of freshwater sources for ice roads, leaving tundra less protected against industrial vehicle traffic. That is a contrast with conditions on the western side of the North Slope, where snow cover is more consistent and freshwater sources more abundant, the report said.

HEX, though its current operations are in the Cook Inlet region, has demonstrated ambitions to expand to the North Slope.

The company, which recently consolidated its Cook Inlet-based operations, bid for six tracts in the March lease sale in the National Petroleum Reserve lease sale, but it did not win any of them.

That National Petroleum Reserve lease sale, unlike Friday’s Arctic refuge sale, drew strong interest from larger oil companies with established North Slope operations. The petroleum reserve sale in March drew a record $163 million in high bids, but there is a pending legal dispute about whether some leases were sold legally.

Editor’s note: This story is corrected to reflect the fact that AIDEA was the apparent winning bidder on three tracts and HEX Energy Ltd. was the apparent winning bidder on two tracts. The updated story also includes the $3.74 million sum of total high bids.

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The state’s utility regulators struck down a 69.92% electricity rate increase proposed by the Upper Lynn Canal’s electric utility.

Alaska Power Company, the region’s lone electricity supplier, first sought a rate increase from the Regulatory Commission of Alaska a year and a half ago to pay for a costly replacement of an underwater transmission cable between Skagway and the nearby Kasidaya Hydroelectric Plant. 

The Skagway Borough challenged the increase, arguing that costs should be borne by the company’s shareholders, rather than its customers, and that the company was entitled to “no more than a 5.38% increase in rates.”

After months of testimony and deliberation, the regulatory commission, in a May 13 ruling, sided largely with Skagway, rejecting the company’s proposal. The new rates are not yet set, and Alaska Power must submit new proposed rates based on the findings in the case to the regulatory commission for approval by next week. 

Customers have been paying an interim rate while the case has been open, 40% higher than 2023 rates.

The commission has said the new rate will be lower than that interim rate, and customers will be refunded the difference. 

Jason Custer, the company’s VP of Corporate Development and spokesperson, did not immediately respond to a request for comment.

At the heart of the dispute was a question of who would be held liable for the underwater cable damages, which occurred in 2019. The repair project, finished in 2023, cost a total of $12.3 million, of which $8.1 million was covered by an insurance payout. 

The company had argued the lack of full insurance coverage was due to COVID-19-related inflation and supply chain issues that unexpectedly increased the cost of cable replacement. 

Skagway Borough lawyers argued that the company had the responsibility of maintaining an insurance policy able to cover the full cost of a replacement, and that any uninsured costs were therefore the company’s to bear. 

The regulatory commission sided with that argument, pointing to 2011 emails in which company executives discussed estimates of the cable’s replacement cost at $13.6 million. That was well above the $8 million of insurance coverage the company maintained from 2011 through 2019. 

According to the commission’s decision, a different 1997 commission order required the company — specifically Alaska Power’s Goat Lake Hydro subsidiary, which operates the Upper Lynn Canal’s hydroelectric facilities — to fully insure infrastructure as a condition of its status as a public utility. The commission also rejected some of the company’s other rationale for the nearly-70% increase. The company had included in its rate proposal the cost of two pieces of now-offline infrastructure: the Lutak hydroelectric plant, which has been shut down since 2020 landslides, and an undersea transmission cable that was installed in 1998. 

State regulations require that for infrastructure costs to be paid for by customers, the infrastructure must be “used and useful in providing utility service during the period the rates are in effect.” 

In proving the infrastructure was used, the company argued that the Lutak plant would provide generation capacity for future demand or energy storage increases in the region. It also pointed to repairs being done to the plant that would enable it to come back online. As for the damaged, but still in place 1998 cable, the company argued it served as a backup should the currently-used cable fail. 

The commission rejected those arguments and ruled the costs of the two pieces of infrastructure not be included in rates. On the Lutak plant, the commission called future demand and storage increases cited by the company “prospective and uncertain.” For the 1998 cable, the commission’s decision called it “illogical” that the cable would be too damaged to use, liable to fail without warning, but also still useful as standby equipment. 

Even with the rate case now largely settled, there remain questions about the company’s energy infrastructure. The now-replaced cable at the heart of the case is currently not insured, and Alaska Power Company vice president Jeffrey Rice testified that the company has been “unable to find an insurer that will provide insurance for the cable system at a reasonable cost.” He also acknowledged that the company had not attempted to insure the cable since 2022. 

Meanwhile, the equipment seems to be in a somewhat precarious position. According to Rice’s testimony, the undersea cable that connects Haines to hydroelectric plants is facing a “growing risk” of failure. On top of aging equipment, his testimony said the cables traverse terrain in the Lynn Canal unusually deep and difficult for short transmission cables.

In the event of such a failure, the company “would immediately need to raise significant capital,” and “customers in the Haines service area would be forced to pay higher power costs related to APC’s diesel generation, which would cause significant rate shock,” Rice wrote. 

With the current lack of insurance, the regulatory commission is recommending creating a dedicated repair and replacement fund for the equipment, funded by both shareholders and customers. Pending a future commission decision, Lynn Canal ratepayers will likely see a new surcharge for the so-called R&R fund. The commission is also requiring the company look for insurance on the cable system at least once per year. 

There may also be other costs for Haines residents from the borough level: mayor Tom Morphet is proposing the borough government voluntarily contribute to the Skagway Borough’s legal fees on the rate case. 

In the last three years, Skagway taxpayers have spent $911,000 in legal fees opposing Alaska Power Company rate increases for the entire Upper Lynn Canal, without any contribution from the Haines Borough. A motion by Morphet for Tuesday’s assembly meeting proposes a $64,000 payment by the borough. 

“We are compelled by good faith and the dictates of honor to share some portion of the cost of these efforts,” wrote Morphet in a memo this week. 

The post Rate hike rejected, residents to be refunded for portion of electricity increases appeared first on Chilkat Valley News.

Former Governor Bill Walker proposes a one-time $10,000 PFD in 2027 in exchange for ending the annual dividend program.