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Bidding to win
Phillips and Anadarko take most tracts at NPR-A lease sale; TotalFinaElf spends most, bidding $53 million for 20 tracts, 17 west of exploration Kristen Nelson PNA Editor-in-Chief
Existing players in the National Petroleum Reserve-Alaska took the largest number of tracts at the Bureau of Land Management’s June 3 lease sale, but a company new to the NPR-A, TotalFinaElf E&P USA, dominated the dollar side of the sale, accounting for more than 83 percent of the apparent high bids, $53,144,770 of $63,144,770. (See lease sale map on page 19.)
BLM received 69 bids for 60 tracts, 579,269 acres, a total of $65,765,392. Eighteen of the tracts receiving bids were for what BLM has designated high potential — the northeastern corner of the sale area — with tracts averaging 5,760 acres, a minimum required bid of $25 an acre and a 16.67 percent royalty rate. The majority of tracts receiving bids, 42 of the 60, are in the lower potential area, where tracts average 11,520 acres, the minimum required bid was $5 an acre and the royalty is 12.5 percent.
TotalFinaElf had the highest bid for a single tract, $10,188,480, $887.81 per acre, and the highest bid per acre, $889.67, for a tract on which it bid a total of $10,187,590. (See related story and map about TotalFina Elf on page 2.)
Another new player in the NPR-A, EnCana Oil & Gas (USA) Inc., took five of the six leases on which it bid for $974,236.
Phillips Alaska Inc. and Anadarko Petroleum Corp., both of whom acquired leases in the first northeast area NPR-A sale in 1999 and have already drilled exploration wells, took 34 of the 39 leases on which they bid, spending $9,609,000, 15 percent of high bids.
In all, six companies and individuals in seven combinations bid $65.8 million. No bids from BP, Chevron BP Exploration (Alaska) Inc., which took leases in the 1999 sale and drilled two winters ago at the Trailblazer prospect in NPR-A, did not participate. BP has said it plans to focus its North Slope activity around existing infrastructure. The other major 1999 participant not bidding in this sale was Chevron USA Inc., which partnered with BP and Phillips in the earlier sale.
Arctic Falcon, which holds an NPR-A lease at Umiat, was the only unsuccessful bidder, losing out in a bid for an adjacent tract, L-006, to a partnership of Paul L. Craig and Peter S. Zamarello. Craig and Zamarello lost to Phillips-Anadarko on a second bid, a 240-acre outrider from other tract acreage near the mouth of the Colville River adjacent to the Colville River unit in which Phillips and Anadarko are partners.
Phillips and Anadarko, bidding in differently weighted partnerships (Phillips 60 percent, Anadarko 40 percent; Phillips 56 percent, Phillips Alpine 22 percent, Anadarko 22 percent; and Phillips 78 percent Anadarko 22 percent) took 34 tracts, and paid more than a million each for two tracts adjacent to acreage the companies hold but west of wells drilled since the 1999 sale.
Twenty-three of the Phillips-Anadarko leases, including the million-plus tracts (H-94 $1,157,000 and H-95 $1,851,000) extend the companies’ existing NPR-A acreage to the north and west. In the northwest corner of the sale, the companies picked up one tract adjacent to a block of tracks west of Teshekpuk Lake. Middle of area attracts bidders Nine of the Phillips-Anadarko leases are part of a band of leases taken across the middle of the sale area, where no bids were received in the 1999 sale. Three bidding groups took 17 tracts in this area, south and west of recent exploration drilling.
The middle portion of the sale is where Phillips and Anadarko were outbid by EnCana on two tracts (L-154 and L-155).
The five tracts on which EnCana was apparent high bidder are south and southwest of the areas where Phillips, BP and Anadarko have drilled.
TotalFinaElf also bid in this area, outbidding EnCana on one tract, L-156 ($1,734,480 to $93,293), and also the apparent high bidder in two other tracts. Different than 1999 Bids in the 1999 sale were concentrated in the northeast corner of the sale area adjacent to the Colville River unit where Phillips and Anadarko are developing the Alpine field.
In that sale Phillips and Anadarko in partnership, Anadarko bidding alone and a BP-led bidding group which included Phillips and Chevron, bought a continuous block running northwesterly from the Colville River to south of Teshekpuk Lake.
The Phillips and BP-led bidding groups also took a smaller block of tracts at the northwest corner of the sale west of Teshekpuk Lake, Arctic Falcon took a tract at Umiat and Anadarko took two adjacent tracts at the southern edge of the sale.
The large leaseholders have explored since that sale, and the government has taken another look.
The U.S. Geological Survey’s newest assessment of hydrocarbon potential in NPR-A, released in May, said the agency believes Alpine-type rock extends across the top of the NPR-A to the coast.
“About 80 percent of the technically recoverable oil resources are likely to occur in northern NPR-A within plays that are westward continuations of the geologic trends that host Alpine, Fiord, Tarn, Meltwater and Nanuq oil pools, just east of NPR-A,” USGS research geologists Ken Bird and David Houseknecht said in the agency’s assessment.
The Alpine trend is believed to be most prospective, Bird told PNA in a May interview, with some 7 billion barrels expected to be technically recoverable.
Much of the leasing in this sale — extending already leased areas to the west — appears to fall in the area the USGS believes contains the most potential for oil. The agency believes areas to the south are deeper and that the main potential there is for gas. Tracts in the middle portion of this sale may be in the area USGS believes is deeper and be gas-prone rather than oil-prone. Eleven tracts at a million plus TotalFinaElf spent more than a million dollars each on 11 tracts, one in the mid-portion of the sale area, the other 10 to the west of existing acreage in the northern area of the sale. Bidders took tracts farther west in the 1999 sale, but the TotalFinaElf bids extended the farthest to the west in this sale.
TotalFinaElf outbid Phillips and Anadarko on three tracts extending the existing leased area to the west (L-193, $1,254,690 to $461,000; L-210, $10,187,590 to $231,000; L-211, $5,117,480 to $351,000).
The highest single bid, $10,188,480, was for 11,476 acres ($887.81 an acre) for L-199, one of seven tracts west of existing acreage for which TotalFinaElf spent more than $1 million a tract.
TotalFinaElf’s second highest bid, $10,187,590, was for tract L-210 in this same group, 11,451 acres ($889.67 an acre), the highest bid per acre in the sale. Bidder statistics Breaking the sale up by partnership percentages doesn’t change the position of TotalFinaElf as the dominant bidder. The company, bidding alone, acquired 228,754 acres, 39.49 percent of the acreage which received bids, for $53,144,770 in apparent high bids, 83.28 percent of high bids, for an average price of $232.32 an acre.
Phillips was second, both in acreage acquired and in dollars spent. Its share of tracts acquired in its partnerships with Anadarko — Phillips has 78 percent on some tracts and 60 percent on others — is 185,662 acres, 32.05 percent of acreage, for $6,860,520, 10.75 percent of apparent high bids, an average price of $36.95 an acre.
Anadarko acquired 96,373 acres, 16.64 percent of acreage, for $2,748,480, 4.31 percent of high bids, an average of $28.52 an acre.
EnCana acquired 56,980 acres, 9.84 percent of the total, for $974,236, 1.53 percent of high bids, an average of $17.10 an acre. Craig and Zamarello, 50-50 partners, each acquired 5,750 acres, 0.99 percent of acreage, for $41,745, 0.07 percent of dollars, an average of $7.26 an acre.
1999 sale statistics Totals for the 1999 lease sale were high bids of $104,635,728 and total bids of $124,951,166. Six oil companies, BP, Anadarko, Chevron, Phillips Petroleum Co., ARCO Alaska Inc. and R3 Exploration submitted 174 bids on 133 tracts in the 1999 sale; the highest bid per acre was $3,655 by ARCO and Anadarko.
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