The Alaska Department of Natural Resources has approved the first oil and gas lease extensions under a law passed by the Legislature earlier this year.
In a statement this morning DNR said the extensions were on five North Slope leases held by Repsol E&P USA Inc. which were set to expire in July and August.
The company was granted a two-year extension on the five leases and is required to drill at least one new well within two years and post a performance bond of $100,000.
“There are times when a lessee, having invested significant funds and work in a shorter-term lease, needs just a little more time to bring the lease into production. A one-time extension can buy the operator that extra time, but they have to show they’ve been diligently working to explore and develop the lease, they have to be willing to commit to completing additional work to prove up the lease, and they may have to be willing to post a performance bond,” DNR’s Division of Oil and Gas Director Bill Barron said in a statement.
House Bill 198, sponsored by Rep. Kurt Olson, R-Soldotna, allows the state to grant one-time extensions for the primary term of a lease if it is in the best interest of the state and if the initial term of the lease is shorter than 10 years.
Barron called the bill “... a win-win. It accommodates short drilling windows, allows the state to require work programs during the primary term of the lease, encourages ongoing work to be completed, and increases the probability of bringing leases to production.”