Vol. 27, No.40 Week of October 02, 2022
Providing coverage of Alaska and northern Canada's oil and gas industry

Feds set Dec. 30 Cook Inlet sale; state looking at winter 2022 sale

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Kristen Nelson

Petroleum News

There are likely to be two Cook Inlet oil and gas lease sales before the end of the year - the federal outer continental shelf sale mandated in the Inflation Reduction Act of 2022 and a second 2022 state Cook Inlet sale.

The U.S. Department of the Interior said it is required to hold Lease Sale 258 by Dec. 31 and has set a date for Friday, Dec. 30. That is the date the Bureau of Ocean Energy Management will open and publicly announce bids, with the bid opening and reading set for 10 a.m. Alaska time and available for the public at BOEM’s website at via live-streaming video.

(See map for this story in the online issue PDF.)

BOEM is only accepting bids by mail and bids must be received by 10 a.m. Dec. 29.

Interior said after the governor of Alaska has had an opportunity to comment on the size, timing and location of the proposed sale, the Assistant Secretary for Land and Minerals Management will make a decision on how to proceed, and after the sale is approved a final notice of sale will be published in the Federal Register at least 30 days prior to the public bid reading.

BOEM said it will offer up to 224 blocks from roughly Kalgin Island in the north to Augustine Island in the south.

BOEM issued a draft environmental impact statement for the sale in October 2021 and will publish a final EIS and record of decision later this fall.

The agency said it is considering removing 17 outer continental shelf blocks in the northern portion of the Cook Inlet planning area from the sale, 10 which overlap with beluga whale designated critical habitat areas and seven that overlap with northern sea otter designated critical habitat.

Leases issued as a result of the sale will be for a primary term of 10 years, with a minimum bonus bid of $25 per hectare or fraction thereof. There will be an annual rental rate of $16 per hectare or fraction thereof until the start of year eight of the primary lease term or a discovery of oil and gas, whichever occurs first, then an annual rate of $24 per hectare or fraction thereof.

The royalty rate is 18-3/4% and proposed minimum royalty is $24 per hectare or fraction thereof per year.

A geophysical data and information statement is required as part of the bid, including “lists of blocks bid on that used proprietary data and those blocks bid upon that did not use proprietary data”; a table listing required data about each proprietary survey; and live trace maps for each proprietary survey that is identified in the GDIS statement and table.

BOEM said that to ensure the U.S. Government receives fair market value, the agency “will evaluate high bids in accordance with its bid adequacy procedures that are effective on the date of the sale.”

State sale

Derek Nottingham, director of the Alaska Division of Oil and Gas, issued a decision of no substantial new information for the 2022 and 2023 Cook Inlet areawide lease sales Sept. 26.

The division said in the decision that a call for new information was issued Aug. 24 “regarding the proposed winter 2022 and spring 2023 Cook Inlet areawide oil and gas lease sales.”

Previously, the state held one Cook Inlet areawide sale, in the spring.

Department of Natural Resources Deputy Commissioner John Crowther told PN in May that DNR was considering additional Cook Inlet leases later this year and in other years, as part of an effort to find additional sources of energy for powering utilities. He said the state has been working with Railbelt utilities, providing “technical support on the future of Cook Inlet supply.”

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