Two standout results from state and federal Cook Inlet lease sales June 21 were Hilcorp Alaska LLC - the only bidder in the sales - picking up what is, for Cook Inlet, frontier exploration acreage, and the fact that the federal government offered, and received bids on, outer continental shelf acreage off Alaska.
The sales, Alaska’s annual areawide Cook Inlet lease sale and the federal Bureau of Ocean Energy Management’s Cook Inlet lease sale 244, brought in combined bids of almost $4 million. Bids for both sales were opened in Anchorage June 21, with the state doing its usual live bid reading and BOEM - for the first time in an Alaska sale - reading bids online.
Hilcorp took six tracts in the state sale and 14 in the BOEM sale.
Alaska Division of Oil and Gas Director Chantal Walsh said after the sale that she was pleased with Hilcorp’s continued interest; she also said she was pleased to see bids in the sale. The state attracted no bids for its Cook Inlet sale in 2016.
While bidding in Cook Inlet areawide sales has varied widely, over the past dozen years the sale has routinely attracted bidders, with almost half a million acres attracting bids in 2011, the high-interest point in recent years.
In its other offering of the day, the Alaska Peninsula areawide sale, the state attracted no bidders, but that area has only sporadically attracted bidders since it was first offered in 2005. It drew bidders in that first sale and again when it was next offered in 2007, but since then the only bids received in annual offerings were in 2014.
Six bids in state sale
Hilcorp bid on six tracts in the state sale, 26,822 acres, for a total of $922,392.30. The tracts included two between the Hilcorp-operated Pretty Creek and Beluga River units on the west side, three tracts at Kalgin Island in the southern part of Cook Inlet and one tract off the southern end of the Hilcorp-operated Ninilchik unit, straddling the shoreline south of Ninilchik.
In the state sale Hilcorp paid the most per acre, $38.10, for tract 754, off the southern end of the Ninilchik unit, for a total of $171,540.30, but it paid the most per tract, $199,652 ($35.15 per acre) for the most northerly of the Kalgin Island tracts.
In the BOEM sale, Hilcorp bid a total of $3,034,815 on 14 tracts, some 76,615.5 acres. The farthest north are two tracts in outer continental shelf waters off Ninilchik. The company also bid on one tract offshore Cosmopolitan, a block of three tracts in mid-inlet south of Anchor Point and a larger block of eight leases to the southwest.
The company bid the most per tract, $474,582 each, for two tracts in the most southerly block.
Federal leasing
“Today was the first time in nearly a decade that parcels off Alaska have been leased,” Vincent DeVito, counselor to the Secretary for Energy Policy, said in a statement after the sale. “This is the latest sign of continued industry optimism in the Trump Administration,” he said.
“This sale represents an important step forward for energy development in Alaska,” said Dr. Walter Cruikshank, acting BOEM director. “It demonstrates our commitment to environmentally responsible energy development that provides economic opportunities and generates jobs,” he said.
Sale 244 is the last in BOEM’s 2012-17 five-year OCS leasing program.
Development vs. exploration
“The leases we acquired today help strengthen our ability to continue to provide energy and jobs for Alaskans,” Hilcorp Alaska spokeswoman Lori Nelson told Petroleum News in an email after the sale.
Hilcorp came into the state in 2011 with a purchase of Chevron’s producing Cook Inlet assets, and later acquired Marathon’s Cook Inlet assets, all with the goal of increasing production from mature fields.
While three of the state tracts on which it bid are adjacent to existing company production, the Kalgin Island tracts, 103, 106 and 143, are clearly exploration prospects, with only one of the three tracts having ever been drilled.
Champlin Petroleum drilled the 11,350-foot Beard State 1-11 well on tract 103 in 1984; it was plugged and abandoned.
Two wells have been drilled on leases adjacent to those on which Hilcorp bid.
Hunt Oil drilled Kalgin Island State 1 to 14,509 feet in 1966 east of tract 143 in 1966. That 14,509-foot well was plugged and abandoned in 1966. Hunt Oil also drilled Oldman’s Bay State 1 in 1966 south of tract 106; that 12,483-foot well was plugged and abandoned in 1966.
While the federal blocks off Ninilchik and Cosmopolitan are close to production, the larger blocks in the southern inlet are clearly exploration acreage.
- A copyrighted oil and gas lease map from Mapmakers Alaska was a research tool used in preparing this story.
