State wants all NPR-A acreage offered

Also recommends specific areas, such as tracts near and adjacent to state acreage and to existing leases at boundaries of NPR-A

Kristen Nelson

Petroleum News

The Alaska Department of Natural Resources wants BLM to offer all available National Petroleum Reserve-Alaska tracts in this year’s lease sale.

But the Bureau of Land Management plans to offer only selected tracts, and on June 21 asked for tract nominations and comments for its upcoming NPR-A sale.

DNR Commissioner Dan Sullivan, in a July 21 letter to Bud Cribley, director of BLM’s Alaska State Office, said the State of Alaska “supports making all tracts available in the lease sale to allow industry the ability to bid on and secure lease areas that will make exploration and development activities economically and logistically feasible.”

Sullivan said the state will be offering some 15 million acres in its own October sales, and expects that will be the largest oil and gas lease sale in the United States this year.

“We would prefer that the federal government, not Alaska, hold our country’s largest oil and gas lease sale in 2011,” he said.

In a series of NPR-A lease sales beginning in 1999 BLM offered all available tracts in the northeast or northwest planning areas of the reserve, rather than asking for nominations of tracts to be included.

Alaska switched from nominations to areawide oil and gas lease sales beginning in 1998, doing best interest findings for broad areas such as the North Slope, state waters in the Beaufort Sea and Cook Inlet and then offering all unleased acreage in each area annually.

BLM started signaling early this year — at a time when it did not expect to hold another lease sale until about 2013 — that it was planning to ask for nominations from industry of areas of interest, rather than making all tracts in an area available.

Ted Murphy, BLM’s Alaska deputy state director for the Division of Resources, told Petroleum News in a February interview that having industry share with BLM what lands are of interest is “a critical aspect of developing the National Petroleum Reserve.” He said large blocks were offered historically because it was difficult to get a handle on what was of interest to industry.

BLM said in June that it planned to hold a lease sale in NPR-A by the end of 2011 and annually after that, following a mid-May statement by President Barak Obama that he intended to increase U.S. domestic energy production.

Specific areas important

“We recommend offering tracts near and adjacent to these areas to make it more efficient for industry to explore and develop areas where known oil and gas plays straddle State and federal lands,” Sullivan said.

That includes all available tracts on the eastern boundary of NPR-A along the Colville River, the areas along the most southern portion of NPR-A and tracts along the Beaufort Sea.

He also recommended offering tracts near and adjacent to current leases and noted that the state has proposed a road connecting the Dalton Highway to the Gubik gas field and the Umiat oil field to facilitate access for exploration and development. Sullivan said there are existing NPR-A leases over the Umiat field, and said the state believes tracts adjacent to those leases may be of “increased interest” because of the proposed road and an eventual export pipeline.

Tracts in areas of high oil potential were also recommended. In addition to the Umiat field, those areas include the Beaufortian Rift trend and the Cretaceous Brookian trend, he said.

In addition, discovery of the Alpine oil field east of NPR-A “demonstrates the potential reserves that may be found to the west along the Jurassic age Barrow Arch,” Sullivan said.

“Relatively new seismic exploration along the northeastern portion of NPR-A has resulted in discoveries that appear to follow a trend that continues to the northeast, across the Teshekpuk Lake area, all the way to the northern coast,” he said.