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Vol. 12, No. 22 Week of June 03, 2007
Providing coverage of Alaska and northern Canada's oil and gas industry

Cook Inlet sale draws bids over wide area

Donkel-Cade bids widespread; Marathon, Renaissance, Aurora fill in around existing properties; newcomer Nordik takes four tracts

Kristen Nelson

Petroleum News

Seven bidders, six successful, participated in the $3.3 million Cook Inlet areawide oil and gas lease sale held by the Alaska Division of Oil and Gas May 23: Aurora Gas LLC; Daniel K. Donkel (25 percent) and Samuel H. Cade (75 percent); Escopeta Oil and Gas Corp.; Marathon Oil Co.; Nordik Energy Partners LLC; Renaissance Alaska LLC; and Samuel H. Cade.

Escopeta, which had only one bid, was unsuccessful, losing to Aurora Gas on tract 438, an onshore west side tract which also drew a bid from Samuel Cade.

Donkel-Cade took the most tracts, 17 of the 22 on which they bid. The state received 54 bids on 45 tracts (see part 1 of this story in the May 27 issue of Petroleum News).

Bids wide ranging

The Donkel-Cade tracts, with apparent high bids totaling $889,843.20, ranged over the sale area, from the northern edge of the sale in the Matanuska-Susitna Borough to a tract offshore the Kenai Peninsula between Anchor Point and Ninilchik.

Samuel Cade bid primarily on the west side in bids he made by himself, with apparent high bids of $672,697.60. On one offshore tract he outbid Renaissance Alaska for a tract north of the North Cook Inlet unit with an $86.66-per-acre bid, the highest in the sale.

Renaissance has been assembling an acreage position at Northern Lights and was apparent high bidder on two tracts at $176,691.20, 5.4 percent of the sale total. It took one tract on the northern edge of the North Cook Inlet prospect — outbidding Cade, to whom it lost an adjacent tract; it also took a tract offshore the west side, northeast of the North Trading Bay unit.

Marathon Oil Co., a major natural gas producer in Cook Inlet, at $782,784, had 24 percent of apparent high bids, taking nine tracts, primarily in a block along the shore of the Kenai Peninsula from north of Ninilchik to north of Clam Gulch, surrounding the Ninilchik unit. Marathon has a 60 percent working interest in Ninilchik and is the operator; Chevron has the other 40 percent.

Nordik Energy Partners, a new entrant, had $584,640 in apparent high bids on four tracts on the Kenai Peninsula, 18 percent of the total, two tracts east of Nikiski and two northeast of Anchor Point on the lower Kenai Peninsula. Nordik Energy’s address in state records matches that of geologist Bob Warthen. Warthen confirmed the connection, but said May 31 he wasn’t yet able to talk about the company and what its plans might be for the acreage it acquired at the May 23 sale.

Aurora Gas LLC, a natural gas producer, was apparent high bidder on three tracts for $147,840, 4.5 percent of the sale total. These are leases the company has previously held west of its Moquawkie gas field on the west side of Cook Inlet.

Renaissance grows prospect acreage

Renaissance Alaska LLC co-founder Mark Landt said after the sale that the company was filling in its position on the Northern Lights prospect.

Renaissance acreage, acquired from Rutter and Wilbanks Corp. at the end of last year (see “ARC invests in Alaska” in the Dec. 10, 2006, issue of Petroleum News), is on three sides of the offshore North Cook Inlet field from which ConocoPhillips Alaska produces gas at the Tyonek platform.

“We have the acreage to the south; we have it to the west and to the east,” Landt said.

“Now we have it to the north.”

Renaissance’s Northern Lights is the former ARCO Sunfish prospect.

“It’s very prospective in this oil-price environment,” Landt said, and Renaissance is working to put together “the critical mass” in offshore Cook Inlet to warrant bringing in an offshore drilling unit.

Cook Inlet does not have a resident jack-up rig for drilling offshore prospects, and bringing a jack-up to Alaska is expensive.

Landt said Renaissance is funded for drilling if it can put a two-year drilling program together to justify the cost of mobilizing a jack-up to Cook Inlet.

Renaissance was the winning bidder on tract 489, bidding $47.21 an acre, the second-highest per-acre bid in the sale and a total of $120,857.60 for the tract. Renaissance bid the same amount on tract 488, just to the east, but lost that to Samuel Cade.

Cade bid $86.66 per acre, the highest per-acre bid in the sale, for the tract, a total of $221,849.60, also the highest total tract bid in the sale.

Tract 489 has a primary term of five years. Specific tracts in this sale had seven-year terms; all others had five-year terms.

Of the tracts Renaissance acquired from Rutter and Wilbanks, five expire Dec. 31, 2008. Three others expire Nov. 30, 2009. Seven leases expire Nov. 30, 2010, and 10 expire Nov. 30, 2013.

In addition to these 25 leases, Renaissance Umiat LLC holds one tract in the Foothills and one tract on the North Slope.

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