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Vol. 15, No. 50 Week of December 12, 2010
Providing coverage of Alaska and northern Canada's oil and gas industry

Apache dominates Trust Land sale; $1.23M in high bids a record

Apache Alaska Corp. dominated the most successful oil and gas lease sale on record for the Alaska Mental Health Trust Authority.

Twenty-one bids on 17 tracts, a total of $1.23 million in high bids, were opened in Anchorage Dec. 8 at the Trust Land Office.

The agency received bids on 64,240 acres of the 110,800 acres offered.

Apache Alaska took all but one lease, losing that one to Buccaneer Alaska LLC which at $51.10 had the sale’s highest per-acre bid.

Apache took some 62,972 acres with $1,165,863 in high bids, ranging from $10.50 to $28.50 per acre, an average of $18.51 per acre.

Apache bid on all the tracts receiving bids in the sale, losing a single tract to Buccaneer for $64,774.36.

Apache took tracts in three areas: a block of seven tracts north of Anchorage and west of Point Mackenzie on the west side of Cook Inlet; a block of four tracts in the Nikiski area, primarily north and northeast of that community; and a block of five tracts inland between Kenai and Soldotna.

The tract Buccaneer took is immediately north of Kenai.

Land available, good state sale

The Trust Land Office held its first lease sale in 2001, and held sales annually through 2007, when a sale drew no bids. The best prior sale was in 2004, when 17 tracts drew $768,042 in high bids.

The trust held sales consecutively for a number of years, said Mike Franger, senior resource manager for minerals and oil and gas at the Trust Land Office, prior to the bid opening.

The trust stopped holding annual sales after 2007 due to a combination of waning interest in the Cook Inlet basin and the fact that the trust had most of its land leased up, Franger said.

Over the years leases expired or became available again, so the trust had acreage available.

“And after the state’s sale in May we were pretty encouraged because it looked like there was some interest again back in the inlet,” he said.

Recent state Cook Inlet oil and gas lease sales had dropped from $1.78 million in 2007 for 45 tracts with seven bidders, to $572,598 in 2008 for 18 tracts with six bidders, down to $80,678 in 2009 with four tracts and four bidders.

This year, however, the state’s Cook Inlet sale brought in $2.42 million with 35 tracts sold and nine bidders or bidding groups.

Apache planning seismic

Apache is new to Cook Inlet. It acquired almost 200,000 acres of state oil and gas leases in the Cook Inlet basin this summer, onshore and offshore, from Samuel H. Cade, Daniel K. Donkel, Monte J. Allen, Douglas A. Barr and Daniel J. Donkel — with Cade the majority, and in some cases the sole — owner in most of the leases and Daniel K. Donkel a partner in most.

Apache Alaska has told state officials it plans to acquire one or more 2-D seismic surveys in the Cook Inlet area early next year, a test program “to evaluate new nodal technology seismic recording equipment” and test seismic acquisition parameters in preparation for a planned 3-D program.

After its acquisition of state oil and gas leases last summer, Apache spokesman Bill Mintz said it was too early for the company to discuss its Cook Inlet plans, but in August company managers were in Anchorage sounding bullish about the new acreage.

The company’s focus is on oil, officials said in an interview, and believes there is tremendous potential in Cook Inlet.

Apache said it approached the Donkel group about the acreage it acquired and has also talked to others with acreage in the area.

The company said in August that its intent was to build on the acreage it acquired this summer.

—Kristen Nelson

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