Alaskan oil and gas production has always been a complicated issue, as energy companies want to tap the region’s vast reserves and environmentalists fear irreparable damage to the vulnerable ecosystem. The Biden administration introduced far-reaching protections in Alaska, aimed at preventing new oil and gas exploration and protecting the environment and wildlife. However, since President Trump came into office last year, he has encouraged new fossil fuel development in the region. Yet the response to the most recent energy auction suggests that energy companies remain hesitant to develop oil and gas operations in the Arctic.
Alaska’s oil production has fallen from a peak of around 2 million barrels per day in the 1980s to less than 430,000 bpd today, with production continuously declining since the early 1990s. In 2024, then-President Biden announced plans to restrict new oil and gas leasing on 13 million acres of a federal petroleum reserve in Alaska to protect wildlife endemic to the region. This marked a shift in direction after the Biden administration approved the $8 billion Willow Project by ConocoPhillips on Alaska’s remote North Slope in 2023.
However, in December 2025, Congress voted to repeal the Biden-era policy in a bid to restore leasing to the full Coastal Plain in support of President Donald Trump’s pledge to boost domestic energy development. Trump has aimed to accelerate Alaska’s oil output as part of his energy-dominance agenda. Upon his inauguration as president last January, Trump signed an executive order aimed at attracting investment to develop the state’s oil and gas.
Recent tests of the region bore positive results for energy firms looking to develop Alaska’s untapped oil reserves. Over the last year, confidence in the region has improved in response to Trump’s favourable policies on fossil fuel development and supporting regulatory changes. ConocoPhillips’ CEO, Ryan Lance, stated in April, “It feels like a bit of the Alaska renaissance.”
ConocoPhillips, Shell, ExxonMobil, Santos, and seven other firms set a record in March by bidding nearly $164 million at a federal auction for oil and gas leases within the National Petroleum Reserve in Alaska (NPRA). This demonstrated the willingness of oil majors Shell and Exxon to return to the region.
However, the auction of oil leases in Alaska’s remote Arctic National Wildlife Refuge (ANWR) in June ended with just nine bids, covering just about 10 per cent of the available land. This undermined Trump’s claims of significant investor interest in the region. The auction attracted $3.7 million in bids, almost half of which came from the state of Alaska’s publicly owned economic development corporation, while no international oil firms offered bids.
This follows a trend seen in President Trump’s first term in office, during which time Congress mandated auctions in the region drew little interest. The few leases that were sold were overturned by the Biden administration. This back-and-forth has, unsurprisingly, harmed investor certainty in the region.
However, the severe volatility in oil and gas prices in recent months, owing to ongoing geopolitical challenges, was expected to spur greater investor interest in new operations. The managing director of research firm ClearView Energy Partners, Kevin Book, stated, “We’re in the middle of a massive supply shortfall, and if there was ever a time to look past political and reputational risks, it would be now.”
Yet only two companies – the state-owned economic development corporation, the Alaska Industrial Development and Export Authority, and Alaska-based Hex L.L.C. – bid in the auction, with bids covering around 70,000 acres of the 689,000 acres on offer. Several reasons were offered for the lack of interest, including the complicated logistics of drilling in remote Alaska and the potential for the next U.S. government to change drilling policies in the region.
Senator Edward Markey and Representative Jared Huffman, both of whom sit on environmental committees in Congress, said the results were “an embarrassment for the Trump administration.” In a joint statement, the two congressmen labelled the auction “an insult to our entire country, by sacrificing and selling off America’s public lands for pennies on the dollar.”
While the ANWR is believed to contain around 11.8 billion barrels of recoverable oil, according to the U.S. Geological Survey, the region also has great environmental importance. The ANWR, which has no roads or facilities, is a critical home to migratory and resident wildlife, including North American bears, caribou, and wolverines. In addition, over 200 bird species flock there to nest.
Bobby McEnaney, the director of the NGO the Natural Resources Defence Council, explained, “Drilling in the Arctic Refuge is reckless, and the market keeps confirming it.” McEnaney added, “This is the third lease sale in a row to be a bust, with major oil companies sitting it out. The government spent public money to hold an auction no major company showed up for, and that tells you everything you need to know about the economics here. It is a remote, fragile landscape that is expensive to drill and risky to bet on.”
By Felicity Bradstock for Oilprice.com
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