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Vol. 11, No. 22 Week of May 28, 2006
Providing coverage of Alaska and northern Canada's oil and gas industry

Alaska sales score $6.7M

Foothills draws $1.85 million, best sale since 2001; Cook Inlet nets $4.8 million

Kristen Nelson

Petroleum News

The state pulled in almost $6.7 million at two lease sales in Anchorage May 24: $1.85 million at its sixth North Slope Foothills sale, the best since the first areawide sale there in 2001, which drew $9.8 million; and $4.8 million in Cook Inlet, the best areawide sale since the Cook Inlet areawide sale program began in 1999, and the best Cook Inlet sale since 1993, when $65 million was bid in the aftermath of ARCO Alaska’s 1991 Sunfish oil discovery, later found to be noncommercial.

North Slope Foothills leases attracted primarily independents, while the Cook Inlet sale attracted a split between independents and investors, with inlet producers picking up some tracts.

Bill Van Dyke, acting director of the Alaska Division of Oil and Gas, said at the bid opening that the state received 45 bids on 45 tracts in the Foothills sale, a total of 246,400 acres out of 7.6 million acres.

A partnership of Anadarko Petroleum 33.34 percent, Petro-Canada (Alaska) 33.33 percent and BG Alaska 33.33 percent took 43 of the Foothills tracts, bidding $1.7 million, 92.4 percent of the sale’s bids.

The companies already have a 2.1 million acre position in the foothills. London-based BG’s Alaska subsidiary, BG Alaska E&P Inc., became a one-third partner with Anadarko and Petro-Canada in the area in January.

Two bidding partnerships, one Samuel Cade 75 percent, Dan Donkel 20 percent and Bruce Webb 5 percent, and the other Cade 75 percent and Donkel 25 percent, each took one tract.

Fifteen of the Anadarko/Petro-Canada/BG tracts, and both the Cade/Donkel/Webb and Cade/Donkel tracts, are at the western edge of the sale area, next to the National Petroleum Reserve-Alaska, beginning at the sale boundary north of Umiat and tracing the NPR-A boundary southwest for more than 30 miles.

The remaining Anadarko/Petro-Canada/BG bids include five tracts on the northern edge of the sale area east of Umiat; 12 tracts near existing leases southeast of Umiat, eight tracts adjacent to existing leases west of the trans-Alaska pipeline corridor and four tracts adjacent to the pipeline corridor.

Widespread Cook Inlet bidding

Cook Inlet tracts receiving bids ranged from the Matanuska-Susitna Borough in the north to the southern Kenai Peninsula in the south, and included west side onshore tracts as well as offshore tracts in the mid-inlet and on the northwestern edge of the peninsula.

In the Cook Inlet areawide sale the state received 93 bids on 72 tracts, Van Dyke said, a total of 366,720 acres of 4 million acres in the sale area.

Four bidding groups associated with investor Dan Donkel accounted for 31 percent of the Cook Inlet lease sale, some $1.5 million, taking 20 tracts.

The bidding groups took a lease on the northern border of the sale in the Matanuska-Susitna Borough, two tracts at Anchorage, seven tracts on the west side, one tract in the mid-inlet, a tract north of Port Nikiski on the Kenai Peninsula, seven tracts in the mid-peninsula area and a tract at Ninilchik.

Benchmark Oil and Gas Co., a Houston-based newcomer to the Alaska oil patch, was the apparent high bidder on 20 tracts, with $1.2 million for 25 percent of the sale total. Twelve of the Benchmark tracts are on the lower Kenai Peninsula, one southeast of Anchor Point and the other 11 running north to south along part of the lower eastern boundary of the sale area. Two of the company’s leases are northeast of Clam Gulch and the remaining six are along the shoreline at the northern end of Kenai Peninsula.

Rutter and Wilbanks came in third, with apparent high bids on eight tracts for a total of more than $530,000, 11 percent of the high bid total.

Marathon Oil picked up five tracts in the Seldovia-Soldotna mid-Kenai Peninsula area, where the company has production, with bids totaling almost $375,000.

An investor group of Gavora/Stepovich/Gilbertson took three tracts for a total of just under $220,000, one on the northern edge of the sale area in the Matanuska-Susitna Borough and two on the west side.

Investor Monte J. Allen took three tracts for $195,000, two at Kalgin Island and one shoreline tract on the west side.

California-based Alaskan Energy Alliance won 10 tracts in the 2005 Cook Inlet lease sale and took six this year, with bids totaling more than $165,000.

Forest Oil made the highest per-acre bid at the sale, $45.51 an acre, a total of $116,505.60, for tract 285 in Cook Inlet at North Middle Ground Shoal. Forest holds the tract to the north; Rutter and Wilbanks, which holds the tract to the west, bid $41.43 per acre for the tract, which had five bidders. Escopeta bid $34.11 an acre. Rutter and Wilbanks was the winner at tract 284 to the west of 285, beating out three other bidders at $21.22 an acre. Most leases went for prices in the teens. The minimum bid for Cook Inlet was $10 an acre.

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