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NEWS BULLETIN

March 17, 2004 --- Vol. 10, No. 27March 2004

State considering royalty-in-kind sale of Cook Inlet natural gas

The Alaska Department of Natural Resources is considering a royalty-in-kind sale of its 15 billion cubic feet per year of Cook Inlet royalty natural gas, and is asking for expressions of interest in such a sale.

The department said March 15 that before deciding to move forward with a preliminary best interest finding for a Cook Inlet royalty gas sale, it wants to know what the level of interest would be.

And, because of the “fairly complicated … changing demand-supply situation in Cook Inlet,” it also wants feedback from interested parties who might be affected by such a sale, Will Nebesky, commercial analyst with the Division of Oil and Gas, told Petroleum News March 16.

Nebesky said “multiple parties” have expressed an interest in purchasing state royalty gas. He declined to name those who had expressed an interest, but said the state believes candidates for purchasing royalty gas would include “any of the parties that are presently selling gas and any of the parties in Cook Inlet that are purchasing gas.”

The state is asking for comments on a number of topics, both from those who might be interested in buying the state’s royalty gas, and from those who might be affected by such a sale: whether a party is interested in purchasing royalty gas; length of the contract; volume of gas that should be sold; price provisions or other parameters that should be considered; what individual fields and leases should be considered; transportation considerations; institutional and commercial factors; and potential public advantages and disadvantages.

Comments are due by the close of business April 2 and should be addressed to: Commissioner, Alaska Department of Natural Resources, 550 West 7th Ave., Suite 1400, Anchorage AK 99501.

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