State issues revised exploration license

Kristen Nelson

Petroleum News

The Alaska Division of Oil and Gas has issued a revised exploration license for the Houston area. An original license was offered May 1 (see story in May 13 issue of Petroleum News).

The license application dates to 2007; the original applicants were Samuel H. Cade, Daniel K. Donkel and LAPP Resources Inc. LAPP Resources principal Dave Lappi died in 2011 and Cade and Donkel assumed control of the proposal, which was for some 21,240 acres near Houston and Willow, north and east of the Parks Highway, with a $500,000 work commitment and a term of 10 years.

The exploration license offered to Cade and Donkel is for some 18,698 acres, has a five-year term and a $750,000 work commitment.

In the revised license, dated May 17, the division discussed the differences between the application and the license it was offering. It said that while the application requested a 10-year term, recent licenses have been shortened to four or five years “in order to encourage timely exploration and to expedite the gathering and return of data regarding the state’s resources.”

The division also said the shorter term is appropriate for this license because it is on the road system and close to support infrastructure and support services.

“There are fewer technical barriers to exploration that would necessitate the maximum term available, as proposed by the licensees,” the division said.

On the dollar amount of the work commitment, the division said the “amount was adjusted to reflect the current economic climate and likely costs to conduct a field program sufficient to realize usable data,” with proposed activities in the proposal “including remote sensing; geological, geochemical, and geophysical studies; and exploration drilling.”

The division also noted that the original license application was for natural gas only and was amended in 2015 to include both oil and gas but without an increase in the proposed work commitment.

“The expanded scope of the license was also a factor in the decision to increase the work commitment to $750,000,” the division said.

The applicants have 30 days from the issuance of the revised license to accept it.

- KRISTEN NELSON