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State evaluates Susitna basin license Exploration license is in area licensed to Forest Oil in 2003; because competing proposals being sought, applicant not released Kristen Nelson Petroleum News
A former exploration license area in the Susitna basin north of Anchorage is again attracting interest.
The area, west of the Parks Highway and Talkeetna, was held by Forest Oil from 2003 to 2007.
The Alaska Department of Natural Resources, Division of Oil and Gas, said in a notice published May 23 that it intends to evaluate an exploration license proposal for the area which it received April 29.
Because the division is requesting competing proposals, the name of the applicant and the provisions of the proposal are confidential.
The area is some 408,060 gross acres, the division said, and consists of state-owned land within township 26 north, range 6 through 10 west; township 25 north, range 6 through 10 west; township 24 north, range 6 through 10 west; and township 23 north, range 8 through 10, Seward Meridian.
Peters Creek is at the northern edge of the area, which is west of Talkeetna and Trapper Creek.
The division said a successful exploration license holder will have the exclusive right to explore for oil and gas on state land in the license area for up to 10 years, and may convert some or all of the acreage to standard oil and gas leases upon completion of the work commitment specified in the license.
Before issuing a license, the division must find that an exploration license in the area would be in the state’s best interest.
Comments on the exploration license proposal, competing proposals and new information for the best interest finding are due by July 1.
2003 best interest finding A 2003 best interest finding covers this license area and blocks to the south and west, described as Susitna licenses 1, 2 and 3. Best interest findings are good for 10 years. The license 1 area formerly held by Forest Oil is the most northerly; license 2 to the south is held by Pacific Energy Alaska, the company which acquired Forest’s Alaska assets and is now bankrupt. The seven-year license for this area began Nov. 1, 2003, and expires this year.
The third license area, to the west of license 1 and license 2, was proposed by Clearflame Resources, but the company did not accept the license when the state offered it.
There has been very little oil and gas exploration in the Susitna basin, which is the northern extension of the Cook Inlet basin in the Susitna River valley.
Nine exploration wells and four core holes have been drilled in the basin, all plugged and abandoned as dry holes, although some had minor gas shows.
Program to expand exploration The exploration license program was established to promote exploration outside of the state’s established producing areas — the North Slope, the Beaufort Sea and Cook Inlet — and areas included in the state’s areawide leasing program are excluded from exploration licensing. Instead of putting money into competitive bidding for leases, applicants commit money to a work program on the exploration license acreage.
Applicants may propose exploration licenses each April or the DNR commi sioner may at any time issue a request for proposals for an area the commissioner designates.
Exploration licensing areas must be between 10,000 and 500,000 acres. Proposals must describe the area, state the minimum work commitment in dollars, describe the amount and form of a security to be posted based on the projected cost of the planned exploration work and include the term of the license, unless that is specified by the commissioner.
Once the commissioner has determined that a license should be awarded, the successful licensee will be determined by a sealed-bid process with the license awarded to the applicant committing the most dollars to an exploration program.
In addition to posting a bond in the amount of the work commitment, a license fee of $1 an acre is required.
The term of the license can be up to 10 years and based on satisfactory completion of the work commitment, the licenses area can be converted to oil and gas leases with an annual rental of $3 per acre. If less than 25 percent of the work commitment has been completed by the fourth anniversary of the lease the license will be terminated and the remainder of the security forfeited to the state.
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