Vol. 26, No.3 Week of January 17, 2021
Providing coverage of Alaska and northern Canada's oil and gas industry

Slope sales draw $7M

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Great Bear top bidder at $3.3M, Oil Search at $2.1M, Lagniappe at $1M

Kristen Nelson

Petroleum News

The Alaska Department of Natural Resources’ Division of Oil and Gas unveiled results from its North Slope, Beaufort Sea and North Slope Foothills areawide sales Jan. 13, with the Slope drawing some $6.8 million and the Beaufort just over $200,000 in bids; there were no bids in the Foothills sale.

There were also no overlapping bids among the 112 the state received for the North Slope sale and three for the Beaufort Sea sale.

Both North Slope and Beaufort Sea sales saw increases in the number of tracts receiving bids, acres sold and number of bidders compared to the 2019 fall sales, the division said.

“This is good news for Alaskans,” said division Director Tom Stokes. “We look forward to working with these companies to ensure Alaska’s future in energy development.”

Many of the tracts receiving bids have been previously leased and have well or seismic data available. “This means new bidders will be able to leverage available data to refine exploration targets to develop our resources for the benefit of all Alaskans,” the division said.

The state switched to online bidding last year, initiating that process with its 2020 Cook Inlet and Alaska Peninsula areawide sales. This is the first time the North Slope area sales have been held online.

Great Bear Petroleum Ventures II bid the most in the North Slope sale, $3,274,329.60 on 66,240 acres, 46 tracts, 47.8% of the dollars bid for an average of $49.43 an acre on 36.1% of the acreage.

Great Bear also had the highest per-acre bids in the sale, bidding over $100 an acre on four tracts.

Oil Search Alaska LLC bid $2,090,347.20 on 46 tracts, 66,240 acres, 30.5% of the dollars bid for 36.1% of the acreage, paying an average of $31.56 per acre.

Lagniappe Alaska had bids totaling $971,468.8 on 33,280 acres, 14.2% of the dollars bid for 18.1% of the acreage, an average bid of $29.19 an acre.

A new player, Arctic Circle Exploration LLC, bid $510,873.60 for 17,920 acres, 7.5% of the dollars bid for 9.8% of the acreage, an average of $28.51 per acre.

Hilcorp North Slope, the Hilcorp entity which took over as operator at Prudhoe Bay, was the only bidder in the Beaufort Sea sale, with bids totaling $206,379.36, each of its bids at $27.27 per acre.

Filling in around acreage

Great Bear took tracts in the vicinity of its Talitha unit south of Prudhoe along the Dalton Highway, with the highest bids for tracts immediately abutting the company’s Talitha unit on the west.

Great Bear is a Pantheon Resources company. In a statement after the sale Pantheon said the leases are in two areas “contiguous to our current acreage on our northwestern, western, and eastern boundaries.”

Talitha “contains four independent geological horizons, each with different reservoir trap geometries, qualities and risk profiles,” all four of which were penetrated by Pipeline State No. 1, a historic well on the company’s acreage, Pantheon said. “Today’s lease acquisition included acreage affecting the resource potential across these zones including the resource potential of the SMD horizon” which the company will access in the Talitha A well.

Oil Search Alaska took tracts south and east of existing company acreage, including an unleased block in the middle of existing company acreage.

“The awarded tracts are adjacent to the Company’s existing lease holdings and represent an opportunity to strengthen our land position in an area where we have had exploration success,” Amy Burnett, U.S. media and communications manager for Oil Search told Petroleum News in an email. She said Oil Search is among the top three leaseholders in Alaska, “and our participation in the state is further demonstration of our commitment to the state.”

Lagniappe took tracts north of its existing acreage on the eastern side of the Slope, including tracts immediately south of Badami.

Bill Armstrong, head of Lagniappe, told Petroleum News that after the sale the position Lagniappe and Oil Search hold in the eastern block is some 340,000 acres.

“We’re essentially taking what we have learned about the Nanushuk at Pikka and extending the play eastward,” Armstrong said. “Drilling depths are a little deeper but the reservoir rocks and oil quality are better.”

Armstrong called the Nanushuk play “the hottest onshore oil play in the world” and said “our activity in today’s lease sale rounds out our land position.

“On our lease position there have only been three wells drilled - three wells in a 530 square mile area. All three had good oil shows and - arguably - bypassed pay on logs.”

“It is amazing how underexplored the North Slope is,” Armstrong said.

Arctic Circle Exploration’s tracts are a group west of the Dalton Highway and south of Prudhoe, most formerly held by Eni.

The LLC, formed in August, is out of Kansas and has a familiar name as manager member - Will Darrah, the son of Bo Darrah, one of the group, including Bart Armfield, who formed Alaska Venture Capital Group in the late 1990s.

Will Darrah told Petroleum News after the sale that the leases Arctic Circle took are “just an entry, our core acreage. We’ll be picking up more.” He said Armfield will be the company’s man on the ground in Alaska.

Darrah said they plan to drill, but first they want to make sure they have all the science to pick drilling locations. He said they may eventually shoot seismic but said have access to some of Eni’s seismic in the area.

The three Beaufort Sea tracts on which Hilcorp North Slope bid are adjacent tracts off the northern edge of the Prudhoe Bay unit.

- Kay Cashman contributed to this story

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