THE EXPLORERS 2004: Burlington Resources drops Alaska leases

Kay Cashman

Petroleum News

In mid-2004, Burlington Resources dropped the 183,000 acres it won in Alaska’s first areawide North Slope Foothills lease sale in May 2001 for just under $2 million.

An annual rent payment of $367,002 was due on the 32 leases on July 1, 2004, but Burlington elected not to pay it.

“There were several factors involved in our decision,” Burlington Resources Houston spokesman James Bartlett told Petroleum News Aug. 13, 2004. “The Alaska gas line appears to be at least seven to eight years away and it already has plenty of gas behind it and in the interim we would have incurred carrying the cost if we had retained the leases. There is a lot of opportunity in other areas of the world. Alaska is unlikely to become a core area for Burlington any time soon.”

The state’s lease rents are progressive: $1 an acre the first year; $1.50 the second; $2 for the third year; $2.50 in the fourth year; $3 in the fifth and following years, so the rental payment would have continued to increase.

Ellen DeSanctis, Burlington’s vice president of corporate communications, said after the 2001 sale that its bids were a low-risk way to enter an emerging gas opportunity: “We are trying to get a toehold in some opportunities in the far northwest of North America that would be in concert with our efforts in the Mackenzie Delta to build a position in what could be future opportunities in North American, particularly gas.”