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Vol. 17, No. 46 Week of November 11, 2012
Providing coverage of Alaska and northern Canada's oil and gas industry

$15 million in sales

State, feds both hold lease sales; North Slope brings in most at $11.5 million

Kristen Nelson

Petroleum News

The State of Alaska and the federal government opened bids for four oil and gas lease sales Nov. 7 in Anchorage, with preliminary results from the sales showing apparent high bids totaling some $15.1 million. The majority of that, more than $14.2 million, came from three state areawide lease sales — Beaufort Sea, North Slope and North Slope Foothills. The U.S. Department of the Interior’s Bureau of Land Management brought in $898,901 from its National Petroleum Reserve-Alaska lease sale.

This is the second year the Alaska Department of Natural Resources, Division of Oil and Gas, has coordinated its fall lease sales, formerly held earlier in the year, with BLM sales. Bill Barron, director of the division, said after the sale that coordination of the state and federal sales allows bidders to assemble positions on both state and federal acreage without fear that bidding in an earlier sale would signal their interest to competitors. Ted Murphy, associate state director for BLM in Alaska, said after reading bids at the NPR-A sale that BLM will continue to coordinate its sale with the state and said the next sale would probably be in the last quarter of 2013.

NPR-A

BLM offered 398 tracts in the sale, some 4.5 million acres, in the northeast and northwest NPR-A planning areas, and attracted two bidders, Woodstone Resources LLC of Houston and NordAq Energy Inc., who bid on 14 tracts, 160,088 acres.

In last year’s NPR-A sale BLM attracted 20 bids on 17 tracts from three bidders with apparent high bids of $3.6 million on almost 120,000 acres.

NordAq had the most bids in the sale and took the most acreage, bidding on 12 tracts totaling 137,293 acres for bids ranging from $5.13 to $6.14 an acre, for a total of $750,700 in bids. Minimum bid on these tracts was $5 an acre.

The NordAq tracts are in two blocks in the northwest planning area, one block of six tracts on the western edge of the available tracts south of Peard Bay; the other block of six tracts is on the eastern edge of the northwest planning area, south of Admiralty Bay.

NordAq, which is currently working Cook Inlet properties, was also a bidder in the state’s Beaufort Sea areawide sale.

Woodstone bid on two tracts in the northeast planning area, adjacent to acreage the company acquired in last year’s NPR-A sale when the company took three tracts, 34,293 acres. Woodstone had the highest per-acre bids, $6.49 and $6.51 per acre, in this year’s NPR-A sale, bidding $74,100 on an 11,410-acre tract and the same amount on an 11,385-acre tract, for a total of 22,795 acres and total bids of $148,200. The tracts Woodstone acquired in the two sales are in southern NPR-A, adjacent to acreage held by Anadarko, Petro-Canada and BG. The minimum bid on tracts in this area of the sale was $5 an acre.

Woodstone, which bid in the state’s North Slope areawide sale last year, was also a bidder in this year’s North Slope sale.

Woodstone President Warren McFatter told Petroleum News after last year’s sale that the privately owned company has oil production in the Bakken and Eagle Ford and is also engaged in Gulf Coast exploration in Texas and Louisiana.

North Slope Foothills

Last year the North Slope Foothills sale attracted no bidders, but this year Anadarko Petroleum bid a total of $961,920 for eight tracts, 46,080 acres, paying from $11 to $39 an acre, an average of $20.88.

The tracts are southeast of Umiat adjacent to state acreage held jointly by Anadarko (33.34 percent), Petro-Canada (33.33 percent) and BG (33.33 percent). Foothills acreage is generally believed to be gas prone, and this acreage sits astride a proposed gas pipeline route running southeast from Umiat.

The minimum bid for North Slope Foothills tracts was $10 an acre and all tracts have a 10-year term.

Beaufort Sea

The state’s areawide Beaufort Sea sale attracted 26 bids from five bidders or bidding groups on 26 tracts, a total of 99,200 acres with $1,781,307.20 in apparent high bids. The 2011 Beaufort Sea sale drew 89 bids on 78 tracts with 281,095 acres sold and $6,874,656.80 in high bonus bids.

NordAq Energy was the major bidder in this year’s sale, with bids on 15 tracts, 69,760 acres, for a total of $1,185,384. NordAq’s bids included three at the high-per acre bid for this sale, $29.89 an acre. The tracts surround NordAq’s existing acreage in state waters in Smith Bay north of NPR-A (see page 1 NordAq story).

A bidding partnership of 25 percent Dan Donkel and 75 percent Samuel Cade took 12,800 acres for $295,936, paying $26.12 an acre for most tracts. Samuel Cade bidding by himself took three tracts, 7,680 acres, for $200,601.60, paying $26.12 an acre for those tracts. A bidding partnership of 25 percent Dan Donkel and 75 percent Wiley Lowe took one 640-acre tract for $10 an acre. The Donkel and Cade acreage ranges from the Badami area to the east to the Endicott area on the central North Slope.

Repsol E&P USA picked up a single tract adjacent to a large block of their holdings north of the Colville River unit and Realeza del Spear Ltd. Partnership out of Midland, Texas, picked up a single tract near Kaktovik.

North Slope areawide

The North Slope areawide sale, the big sale of the day at $11.5 million, had a wide range of bidders. The state received 98 bids on 88 tracts from 12 bidders or bidding groups on 165,179 acres. Last year’s sale drew 219 bids on 161 tracts from 13 bidders or bidding groups and brought in $11,836,735.64 in high bids on 289,434 acres.

The Kuparuk River unit owners — ConocoPhillips Alaska, BP, Chevron and ExxonMobil, had the highest per-acre bid of any of the sales, $451.77 an acre, for a 2,560-acre tract at the southern edge of Kuparuk, paying a total of $1,156,531.20. That same bidding group paid $210.87 an acre ($539,827.20) and $204.87 an acre ($503,775.33) for two 2,560-acre tracts on the western edge of the unit. Those three tracts accounted for $2.2 million of the $11.5 million the state brought in from the North Slope areawide sale.

But the largest bidder at the sale was 70 & 148 LLC, with 16 apparent high bids totaling $3,138,707.20 on 36,480 acres, with bids ranging from $25.11 to $113.11 per acre. This Armstrong subsidiary has been establishing positions and bringing larger players into the state for a number of years, most recently Repsol. The acreage 70 & 148 LLC picked up in this sale is south and west of Kuparuk in three large blocks.

ConocoPhillips, bidding by itself, was the sale’s third-largest bidder, with $2,053,222.40 in apparent high bids on seven tracts, 17,920 acres, with bids ranging from $27.37 an acre to $171.93 an acre. One of these tracts is south of Kuparuk; the other six are in a block adjacent to ConocoPhillips acreage along the Colville River south of Nuiqsut.

Repsol E&P USA was apparent high bidder on 24 tracts, 39,040 acres, bidding $1,588,759 with per-acre bids ranging from $25.10 to $73.03 per acre. The company took a large block, 20 leases, south of Kuparuk, one lease west of Kuparuk and three leases east of Kuparuk. All of the tracts were adjacent to existing Repsol acreage.

AVCG took five tracts, 12,800 acres, for a total of $996,992, bidding $77.89 an acre for all tracts. The tracts are in a block southeast of the Tofkat unit operated for AVCG by Brooks Range Petroleum Corp. and south of the company’s large acreage position between the Kuparuk River and Colville River units.

Great Bear Petroleum Ventures II took 24,448 acres in 17 tracts for $637,214.40, paying $26.03 per acre for each of the tracts, which are on the southern edge of the company’s extensive holdings where it is currently drilling to develop shale oil.

Paul Basinski of Houston, Texas, took four tracts for $276,709.80, bidding against Great Bear for three of them with a range of prices from $27.54 to $72.54 an acre. The tracts Basinski took include the site of 2005 coalbed methane test well drilled by the Department of the Interior, the U.S. BLM No. 1 Franklin Bluffs.

Woodstone Resources LLC took seven tracts, 10,080 acres, for $267,120, paying $26.50 per acre on each tract. The tracts are adjacent to two blocks, nine tracts, on which Woodstone was apparent high bidder in last year’s North Slope lease sale. The area, well south of existing production, contains sites of three old exploration wells: Itkillik Unit 1, Nora Fed 1 and Susie Unit 1.

Savant Alaska took one tract, 2,560 acres, for $103,424, paying $40.40 an acre. This tract is adjacent to a block of Savant acreage near the Arctic National Wildlife Refuge which contains the BP-drilled Yukon Gold well.

A bidding block of J. Andrew Bachner 90 percent and Keith C. Forsgren 10 percent took two tracts, 4,480 acres, for $130,412.80, bidding $29.11 an acre for both tracts. The tracts are south of Nuiqsut along the Colville River.

The 25 percent Donkel and 75 percent Cade bidding group bid $66,877.20 on a 2,560-acre tract between Kuparuk and Prudhoe; Cade bid $37,612.80 on a 1,440-acre tract in the southeastern area of the sale. Both tracts are the site of old wells.



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