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2nd ANWR 1002 lease dropped because development not possible
Kay Cashman Petroleum News
The U.S. Bureau of Land Management’s Alaska office told Petroleum News on Aug. 22 that Knik Arm Services LLC requested to have its 48,603-acre lease in the ANWR 1002 Area “rescinded and its bonus bid and lease rental payments refunded.” (See 1002 lease map in the pdf or print version of this issue of Petroleum News.)
On Aug. 16 BLM “rescinded and cancelled the lease” and directed the federal Office of Natural Resources Revenue, or ONRR, to refund the company’s full bonus bid and lease rental payment.
Consistent with Section 20001 of the Tax Cuts and Jobs Act, which former President Donald J. Trump signed into law in December 2017, the payments from Knik Arm Services were split between the state of Alaska and the federal government. ONRR will refund the company’s full bonus bid ($1,622,260) and first year rentals ($486,030) and will recoup the state’s 50% share by deducting it from future oil and gas payments owed to the state, BLM’s Alaska office told PN.
The timing and details of these deductions will be determined in discussions with the state per ONRR’s regular process for refunds, BLM said.
Knik Arm Services is the second of three leaseholders from the January 2021 ANWR 1002 Area oil and gas lease sale to cancel its lease.
About three months ago, Regenerate Alaska, a subsidiary of 88 Energy, surrendered their 1002 Area lease and asked for refunds from BLM.
The third leaseholder, the Alaska Industrial Development and Export Authority, acquired seven leases in the January 2021 lease sale. It is suing federal officials over what it calls improper actions that are preventing lease activities. AIDEA picked up the leases to preserve drilling rights in case oil and gas companies did not come forward to bid given the then-new Biden administration’s negative position on oil and gas development.
The Alaska Department of Commerce, Community and Economic Developments’ Division of Corporations shows Knik Arm Services LLC (formerly known as Knik Arm Services Limited) as 100% owned by its member/manager Mark A. Graber of Austin, Texas.
In its 2022 biennial report for the year ending Dec. 31, 2021, Knik Arm Services listed its purpose as ownership and management of real estate.
Graber praises AIDEA Per an Aug. 23 Associated Press story Graber invested about $2 million into his lease and for a first-year lease payment. He said he had wanted to hold onto his lease in hopes that AIDEA prevailed in its lawsuit and that oil development would produce royalties for his company. But he said the fight over the leases could take years.
“I wish AIDEA all the success in the world. They are doing something that is in the interest of Alaskans and the U.S., for that matter," he said.
Alan Weitzner, executive director of AIDEA, was quoted by AP as saying the decision by Knik Arm Services does not change the corporation’s plans.
“There’s too much at risk not to (pursue exploration), when we talk about the potential for jobs and economic development for the state,” Weitzner said.
The second title of H.R. 1, the Tax Cuts and Jobs Act, authorized the surface development of up to 2,000 federal acres of the 1002 area within the 19.3 million acre Arctic National Wildlife Refuge and required two 1002 lease sales by the end of 2024. The January 2021 lease sale was the first of the two mandated sales.
- KAY CASHMAN
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