The vast majority of oil and gas exploration activity in Alaska occurs on lands or waters that companies lease from the state or federal governments or from Native tribes.
But the vast majority of Alaska is not available for leasing.
To encourage activities outside of the traditional leasing areas, the Alaska Department of Natural Resources maintains an exploration license program. Every April, the department accepts applications for areas between 10,000 and 500,000 acres. The applicant proposes a geographic area as well as a work commitment and a term limit. The process allows other companies to make competing bids, in an effort to get the best deal for the state.
As of early 2016, according to information available on the Division of Oil and Gas website, the state was overseeing five current licenses (Healy basin, North Nenana, Southwest Cook Inlet, Susitna basin V and Tolsona), two extended licenses (Susitna basin II and Nenana basin), two pending requests (Gulf of Alaska and Houston-Willow basin), two rejected applications (Susitna basin III and Susitna basin IV), one license under appeal (Holitna basin) and one expired license (Copper River basin). Many of those are discussed elsewhere in The Explorers. Others requests are detailed below.
Houston-Willow Basin
Although the licensing program offers acreage across much of Alaska - from Bethel and Dillingham to Valdez and Fairbanks, and also patches around Nome and above the Arctic Circle - interest has tended to focus on a few areas close to existing infrastructure.
One of the two pending proposals fits this model and the other is an anomaly.
The current proposal for the Houston-Willow basin is a new attempt to arrange a program for an area along the Parks Highway, between Houston and Willow.
In April 2007, LAPP Resources Inc. requested a 10-year natural gas exploration license covering around 21,240 acres near Houston and Willow, north and east of the Parks Highway. The proposal included an initial $500,000 work commitment. The plan was to explore for conventional natural gas and possibly shallow gas deposits, if encountered.
The state accepted comments on the proposal in early 2008 and extended the comment period later in the year. After LAPP Resources principal Dave Lappi died in 2011, investors Samuel H. Cade and Daniel K. Donkel assumed control of the proposal. In early 2016, the state once again solicited public comments for the proposed license.
The state had yet to rule on the proposal by the time The Explorers went to print.
The area between Houston and Willow has attracted exploration for decades. In the mid-1950s, Anchorage Gas and Oil Development Co. Inc. drilled several exploration wells in the area after the U.S. Bureau of Mines discovered methane gas there, but the company suspended all the wells before the end of the decade, according to Jack Roderick’s history of oil and gas development in Alaska, “Crude Dreams.” Lappi began evaluating the region for shallow gas and coalbed methane possibilities in the early 1990s. He acquired leases in the area in 1993 and drilled exploration wells between 1998 and 2000.
Gulf of Alaska
The Gulf of Alaska proposal also touches one of the earliest exploration areas in the state.
In early 2015, the state took comments on a proposal from an as-yet-unnamed applicant interested in an exploration license along the coastline of the Gulf of Alaska between the Copper River Delta and the Canadian border. The proposed area stretched from Controller Bay to Icy Bay and includes the Katalla and Yakataga area. The state originally requested comments through July and later extended the period in to August.
Oil seeps were reported in the Katalla region and the north side of Controller Bay as early as 1896, according to Roderick. Commercial activity began in 1900, when Sir Thomas Boverton Redwood encouraged a British consortium to drill an exploration well near Katalla Meadows. The next century featured numerous attempts to develop the region, including the famous Katalla-Yakataga contract of 1951, when a group of investors and an Oklahoma oilman and senator used an obscure provision of federal law to convince the Interior Department to issue a development contract over a large area near Icy Bay.
That effort and others immediately following it were hampered by poor results. A second push in the early 2000s was delayed by challenges by environmental groups. An exclusive federal development contract held by Chugach Alaska Corp. expired in 2004.
The state had yet to advance the proposal by the time The Explorers went to print.
North Nenana
Of the five current licenses, four are discussed in greater detail in specific company profiles for Ahtna Inc., Usibelli Coal Mine Inc. and Miller Energy Resources Ltd.
The state issued a five-year license for the North Nenana basin to Rocky Riley of Tolovana Construction Co. in early July 2015. The license covers 25,294 acres in the Minto Flats State Game Refuge and includes a $500,000 initial work commitment.
The region is some 35 miles west of Fairbanks and just north of the Nenana basin where Doyon Ltd. has been exploring for natural gas in recent years. According to the state, the North Nenana region has “low to moderate potential for discovery of conventional and unconventional natural gas” and the potential for oil “is also considered low.”
