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Vol. 19, No. 29 Week of July 20, 2014
Providing coverage of Alaska and northern Canada's oil and gas industry

Explorers 2014: Exploration licensing program still draws interest

The state currently has four active and three pending licenses for exploration activities in frontier basins

Eric Lidji

For Petroleum News

The vast majority of oil and gas exploration in Alaska occurs through the annual lease sales conducted in prolific basins, but the state also maintains an exploration licensing program through which companies can propose activities for other areas of the state.

The program requires companies to make specific work commitments in return for access to a set area for a pre-determined length of time, usually five, seven or 10 years. Once the license has expired, the state can end it, extend it or convert it into traditional leases.

The state currently has four active licenses and three pending licenses.

In April 2011, the state issued a 10-year license in the Susitna basin to Cook Inlet Energy LLC. The Susitna Basin IV license covers 62,909 acres and requires a $2.25 million work commitment. In April 2012, the state issued a five-year license in the Susitna basin to Cook Inlet Energy. The Susitna Basin V license covers 45,764 acres and requires a $250,000 work commitment. The two areas are directly north and south, respectively, of the former Susitna Basin II license that Cook Inlet Energy partially converted to leases.

The Susitna basin covers a broad swath of land west of the Susitna River between the community of Skwentna and the Parks Highway communities of Willow and Houston.

Healy basin license

In January 2011, the state issued a 10-year license in the Healy basin to Usibelli Coal Mine Inc. The license covers 208,630 acres and requires a $500,000 work commitment. The license stretches east and west of the Parks Highway near Denali National Park, in the region of the Interior where Usibelli maintains its long-running coal operation.

The license only allows Usibelli to explore for natural gas in the license area, although it can search for both conventional reservoirs and unconventional coalbed methane. The company is hoping to find an energy supply to power its coal mining operations, but said it might be able to export supplies into Southcentral if it discovered a large quantity.

The Denali Citizens Council appealed the license, saying it opposed exploration near communities and areas important for the tourism industry. The case ultimately went to the Alaska Supreme Court, which rejected the appeal in a February 2014 decision.

Usibelli first sought an exploration license in the Healy area in 2004, but the request faced considerable local opposition, including drilling restrictions imposed by the Denali Borough. The opposition delayed momentum on the project for years, but the state eventually overturned those restrictions and ruled in favor of Usibelli in June 2010.

Tolsona Lake area license

In December 2013, the state issued a five-year license in the Tolsona Lake area to Ahtna Inc., the Alaska Native corporation for the Glennallen region. The license covers 43,492 acres west of the community of Glennallen and requires a $415,000 work commitment.

The license is in the Copper River basin, where previous exploration companies, most notably the Texas independent Rutter and Wilbanks Corp., have searched for gas.

The three pending licenses are in the Houston-Willow basin, the North Nenana basin and the Southwest Cook Inlet basin. The state has not released the names of those applicants.



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