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Cook Inlet sale draws bids on 4 tracts; no takers for Peninsula
The Alaska Division of Oil and Gas had no bidders at its Alaska Peninsula areawide oil and gas lease sale, held May 20 in Anchorage.
It did receive five bids on four tracts, 7,685 acres total, in the Cook Inlet areawide sale, with $110,009.65 in apparent high bids.
The state held its first areawide Alaska Peninsula sale in 2005 and received $1.1 million for 37 tracts. The next sale, in 2007, had one bidder and saw the sale of one tract. As with this year’s sale, there were no Alaska Peninsula bidders in the 2008 sale.
This year’s Cook Inlet turnout was the smallest since the state began offering the acreage in annual areawide sales in 1999.
The peak year for Cook Inlet areawide sales was 2006, when the state received $2.86 million in high bonus bids and sold 71 tracts.
Last year’s Cook Inlet areawide sale drew more than half a million dollars in high bonus bids, with 18 tracts sold.
$1,527 per acre William C. Kilpatrick had the highest per-acre bid at the sale, $1,527.05 an acre, a total bid of $7,635.25 for five-acre tract 597 which is surrounded by Ivan River unit acreage. According to state records Kilpatrick currently holds no oil and gas lease acreage.
The minimum required bid at the Cook Inlet sale was $10 an acre except for tract 597, for which the minimum bid was $1,000 an acre.
Jonne Slemons, division section chief for oil and gas leasing, said at the bid reading that Ivan River unit operator Chevron has filed an application to exclude tract 597 from an Ivan River participating area, but the application is not yet complete.
Alaskan New Energy LLC took two tracts, bidding $15.33 an acre for tract 244 and $13.33 an acre for tract 251, adjacent tracts off West Forelands in waters south of the Trading Bay unit, a total of $73,369.30.
Alaskan New Energy has no current state acreage position.
A bidding partnership of 50 percent Nick Stepovich, 25 percent Daniel R. Gilbertson and 25 percent Alaska LLC, took tract 349, bidding $11.33 an acre, a total bid of $29,004.80, for the acreage south of the Kitchen Lights unit in mid-Cook Inlet.
The three were part of a bidding group that took an onshore tract northwest of West Forelands in the state’s 2006 Cook Inlet areawide lease sale.
Chevron applies to take tract out of PA Cook Inlet tract 597 is completely surrounded by leases included in the Ivan River unit and Chevron has filed an application to exclude the five-acre tract from the participating area.
The April 15 application from Chevron is for revision of the Ivan River gas pool No. 1 participating area and for establishment of separate participating areas for the Tyonek and Sterling-Beluga formations.
A producing gas well was drilled at the field in 1966 and shut-in; the unit was approved in 1967 and was contracted in 1969 when the Ivan River gas pool No. 1 participating area was formed. Chevron said in its application that the participating area was “established on the basis of the known aerial extent of the Tyonek formation.”
Based on well data and seismic interpretation, the Ivan River unit was expanded and the Gas Pool No. 1 PA was revised in 1978.
The Ivan River unit 44-36 well was spud and completed as a Sterling-Beluga producer in 1993.
Unocal had been the operator at Ivan River and when it merged with Chevron in 2005 Chevron legacy seismic data became available.
New well drilled recently A new well was drilled this past winter, Chevron told the state, and data from that well along with previous seismic and well data allowed the company to outline separate participating areas for the Tyonek and Sterling-Beluga formations.
In its application Chevron said both the Ivan River unit agreement and state regulations require separate participating areas for separate pools or reservoirs, except where all unit owners agree to combined production. State regulations require separate participating areas for separate formations “except where there is consent by and among the commissioner and all working interest owners.”
To date, production from separate formations in the Ivan River unit has been allocated to one common participating area, but the company said it “does not consent to this allocation methodology, and desires to establish separate participating areas for the Tyonek and Sterling-Beluga formations.”
Chevron said creating separate participating areas is consistent with the approach the state took in a recent decision on the Stump Lake unit, when the state separated the Stump Lake gas pool No. 1 participating area into two participating areas, the Beluga and Sterling gas PA and the Tyonek gas PA.
—Kristen Nelson
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