Manchin's Favorite Federal Offshore Fossil Fuel Lease Sale Flops

Photo of Cook Inlet

A massive federal offshore drilling lease sale in Alaska has, once again, proven wildly unpopular among fossil fuel companies.

Despite at least one lawsuit and fierce opposition from environmental groups, almost a million federally owned acres of Alaska’s Cook Inlet were put up for auction for oil and gas drilling at the end of 2022. That lease sale, numbered 258 and previously canceled, was revived by Joe Manchin.

The West Virginia Senator and coal baron made Lease Sale 258 into a bargaining chip, refusing to vote for the climate-focused Inflation Reduction Act unless the fossil fuel auction was mandated by the bill. And he got his way. The IRA passed but included multiple provisions tying future expansion of wind and solar energy to the continuation of oil and gas drilling—including the re-opening of Lease Sale 258. In response, multiple conservation organizations sued the Interior Department and Bureau of Ocean Energy Management, but the sale went forward anyway.

Yet not even Manchin’s concerted efforts could change a fundamental truth about the land and water up for grabs in the Cook Inlet: nobody really wants to drill there. The initial lease sale was canceled by the feds, not out of concern for the endangered beluga whales that reside there nor the vibrant and sensitive estuarine ecosystem, but because of “lack of industry interest,” as a Department of Interior spokesperson told Earther back in May.

Photo of Joe Manchin

Un-canceling the sale didn’t make it anymore appealing. Just one company, Hilcorp Alaska LLC, submitted a bid at the auction. It offered $63,983 for a single block of the 193 total up for grabs. Someone at BOEM had to draft up this very official, three-page document just to note the lone Hilcorp bid. Contrast that with the next most recent federal offshore auction: A 2021 lease sale in the Gulf of Mexico that attracted 33 companies bidding on a total of 308 tracts.

In a transparent act of political posturing, Manchin held a whole package of federal legislation hostage over a fossil fuel auction that even fossil fuel companies don’t care about. “Lease Sale 258 was a flop,” said Erik Grafe, an attorney with Earthjustice and one of the lawsuit plaintiffs, in a statement. “This is good news for the climate and…the result should stiffen Interior’s spine to stop leasing our public lands for fossil fuel,” he added.

Map of Cook Inlet leases

Now, BOEM will conduct a 90-day evaluation process to determine if Hilcorp’s offer constitutes fair market value. Then, the single plot will likely be added to the company’s Cook Inlet holdings. From there, it’s unclear what will happen to the land.

Hilcorp is already the largest fossil fuel corporation operating in the Cook Inlet basin, and it is the only company to have bought up federal leases within the inlet itself. The company holds 14 pre-existing federal inlet leases, which it acquired in an earlier 2017 Bureau of Ocean Energy Management sale. Yet, more than five years on, the company still hasn’t submitted any exploration plans for those 14 plots, according to a report from the Alaska Beacon. It’s leased them but hasn’t begun developing them. Earther reached out to Hilcorp with questions about its federal leases in the Cook Inlet but did not immediately receive a response.

Even prior to 2017, the Cook Inlet leases were unpopular. The Alaska Beacon also reported that a 2004 federal lease sale in the Cook Inlet drew no bids, and a 1997 auction attracted only two.

The geology of the federally owned land in the Cook Inlet isn’t ideal for fossil fuel extraction, energy economist Roger Marks told Alaska Public Media. “All the production that’s ever occurred in Cook Inlet going back to the 1950s has been on state acreage,” he said. “The geology on state acreage is good. Just under federal acreage, not good.”

Plus, the region’s climate likely doesn’t help. “It’s a harsh environment to operate in due to weather, darkness, ice and other conditions which makes the numerous harms inherent in offshore drilling even riskier,” wrote Kristen Monsell, a senior attorney at the Center for Biological Diversity and another of the lawsuit plaintiffs, in a May 2022 email to Gizmodo. That added risk has led to excess pollution, according to Monsell. On the state and other land that Hilcorp does operate in, the company “has had numerous oil spills and gas leaks in the Inlet from platforms and pipelines; and problems with trying to stop them from actively spilling or leaking due to ice,” she added.

Though Hilcorp might be a lesser-known name among fossil fuel giants, the company does far more than its fare share of harm. Beyond damage in the Cook Inlet, Hilcorp is the single largest methane polluter in the U.S., according to a 2021 New York Times analysis. But the company remains our federal government’s loyal lessee.

It is a small bit of climate good news that Hilcorp was the only company interested in Lease Sale 258, and it’s worth celebrating that most of the Cook Inlet remains un-drilled. But more federal holdings are set to be auctioned off to fossil fuel companies in 2023, in areas far more desirable for drilling than the Cook Inlet. Two embattled Gulf of Mexico sales (259 and 261) are set to go forward this year, also thanks to Manchin’s IRA meddling. If want to avoid the worst consequences of ongoing climate change, continued fossil fuel leases need to end. We’re barreling toward environmental catastrophe, and there is no path forward to a stable and sustainable Earth that includes more oil and gas development.

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