State reprioritizes issuance of oil and gas leases

Kristen Nelson

Commissioner of Natural Resources Pat Pourchot said Feb. 2 that the state has reprioritized issuance of oil and gas leases, moving competitive oil and gas leases (on which the state stands to realize some $10.5 million) ahead of non-competitive shallow gas leases (from which the state will realize only $529,200).

In a Feb. 2 letter to Sen. John Torgerson, Pourchot said that the state’s shallow gas leasing program has not been suspended.

The commissioner said that he has authorized the Division of Oil and Gas to “reprioritize its workload with respect to issuing oil and gas leases. This reprioritization of title and adjudication work will have the effect of slowing down the process of issuing shallow gas leases” but will accelerate the issuance of leases for Cook Inlet, North Slope and Beaufort Sea areawide competitive oil and gas lease sales held last year, Pourchot said.

Pourchot noted that the income the state will receive from the balance of bonus bids and first year’s rental for leases from the three competitive sales “is approximately 15 times greater than that it will receive from the shallow gas leases.”

Both programs, he said, use the same seven employees for processing applications, adjudicating leases and doing the required title work.

“Part of the problem,” he said, “was created when the shallow gas legislation authorized no additional funding for that program’s implementation.”

The commissioner also said that the time it takes to do the required title work and adjudication varies from area to area of the state, “depending on the complexity of land ownership. Most of the shallow gas leases are in the most complex areas. Therefore, it takes more staff time and effort to issue a typical shallow gas lease than a North Slope or Beaufort Sea conventional lease.”