North Slope, Beaufort Sea areawide sales set for Oct. 23

State Division of Oil and Gas will consider use of gravel for exploration in southern area of North Slope, similar to exception which may be granted in Brooks Range Foothills

Kristen Nelson

PNA Editor-in-Chief

The director of the Alaska Department of Natural Resources’ Division of Oil and Gas — after consultation with the director of DNR’s Division of Mining, Land and Water and the Alaska Department of Fish and Game — may allow the use of gravel for exploration projects in the North Slope Foothills.

DNR Commissioner Pat Pourchot said in a July 24 decision supplementing the 1998 North Slope areawide best interest finding that the same change made in mitigation measures for the Foothills sale would be made for the southern portion of the North Slope lease sale.

The state allowed gravel to be used for exploration in the Foothills in mitigation measures for the 2002 Foothills oil and gas lease sale and, at the request of Anadarko Petroleum Corp., is also allowing consideration of gravel in the southern North Slope lease area.

Pourchot said in the decision that “gravel roads and pads may be allowed for exploration in the southern portion of the sale area, in certain limited and site-specific circumstances, and on a case-by-case basis, when no feasible and prudent alternatives exist.”

Topographic grade main challenge

But in the just-published supplement to the finding DNR said the southern portion of the North Slope, “in contrast to the coastal plain, is an area of greater topographic relief with well-developed drainage, ridges, exposed outcrops and few lakes. This system of ridges and valleys may, in some circumstances, make access to exploration sites problematic.”

The main challenge is the grade, which “could create a potentially unacceptable and unsafe operating condition” requiring gravel in some portions of the road access.

Since the 1998 finding was issued, DNR said it “has become aware that, in the southern portion of the sale area, in certain limited circumstances, a gravel road or pad could be the only feasible and prudent alternative to conduct certain exploration activities.”

DNR said mitigation measures never prohibited gravel and it “is clarifying that, with respect to leases issued pursuant to the North Slope Areawide 2002 sale, gravel roads and pads may be allowed for exploration in certain limited and site-specific circumstances…” in specific areas in the southern portion of the lease sale area.

One very pricey Beaufort Sea tract

Cash bonus bids are a minimum of $10 an acre for all tracts in the North Slope areawide sale. In the Beaufort Sea sale, one tract 079 at the edge of Point Thomson has a minimum bonus bid of $100 an acre; minimum bonus bid for all other tracts in the sale is $10 an acre.

Royalty rates for the North Slope leases vary: state and Arctic Slope Regional Corp. tracts 520 through 916, 919, 920, 922, 923, 925, 926, 928 through 935, 937 through 1145 and 1147 through 1225 have a fixed royalty rate of 16.66667 percent.

Leases on state-ASRC tracts 917, 918, 921, 924 and 927 have a sliding scale royalty of 16.66667 percent to 33.33334 percent.

All other North Slope areawide tracts leased will have a fixed royalty rate of 12.5 percent.

All tracts in the North Slope areawide sale have terms of seven years.

In the Beaufort Sea sale, leases on tracts 40 through 77, 500 through 554 and 556 will have a fixed royalty rate of 12.5 percent. Leases on tracts 133, 134, 136, 137, 139, 140, 142, 143, 145, 146, 148, 149, 151 through 154 and 156-499 will have a fixed royalty rate of 16.66667 percent. Leases on tracts 78 through 132, 135, 138, 141, 144, 147, 150 and 155 will have a fixed royalty rate of 20 percent.

Terms of leases vary in the Beaufort Sea sale. Leases on tracts 40 through 77, 500 through 554 and 556 will have a term of 10 years; leases on all other tracts will have a term of seven years.

Bids will be opened beginning at 8:30 a.m. Oct. 23 at the Wilda Marston Theater in Anchorage.