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BOEM’s final notice out for Cook Inlet sale; bid reading online
Kristen Nelson Petroleum News
The federal Bureau of Ocean Energy Management issued a final notice of sale for its Dec. 30 Cook Inlet lease sale on Nov. 28. BOEM said it will offer 193 blocks, some 958,202 acres in the northern portion of the Cook Inlet planning area.
The Inflation Reduction Act of 2022 required BOEM to hold the sale by Dec. 31.
(See map in the online issue PDF)
Opening and reading of bids will begin at 10 a.m. Alaska Time Dec. 30. Bid reading will be accessible via a link on www.boem.gov/ak258, BOEM said.
The final environmental impact statement for the sale was published in October.
BOEM said economic terms of the sale are designed to ensure a fair return to taxpayers while encouraging diligent development.
Primary lease term is 10 years. minimum bid is $25 per hectare or fraction thereof. (There are 2.47 acres in a hectare.)
The annual rental rate is $16 per hectare (or fraction) until the start of year eight, when the rent increases to $24 per hectare or fraction.
The royalty rate is 18.75%, with a minimum royalty of $24 per hectare.
Inflation Reduction Act While the main focus of the Inflation Reduction Act, signed by President Joe Biden in August, was big ticket items - reduction of health care costs, growth of renewable energy and increased corporate taxes - the bill included a few pages addressing federal oil and gas lease sales.
The act reinstated Outer Continental Shelf Lease Sale 257 in the Gulf of Mexico, for which bids were received in November 2021, and also required three other OCS lease sales to be held, including sale 258 in Cook Inlet, to be held and required the Cook Inlet sale to be held by Dec. 31, 2022.
The Cook Inlet sale was included in the 2017-22 oil and gas leasing program for the OCS, but BOEM said in May that it would not be held because of the lack of industry interest.
BOEM received no bids in a May 2004 Cook Inlet lease sale and following that the U.S. Department of the Interior decided to include the Cook Inlet planning area as a “special interest sale,” which would be held if there was industry interest reflected in responses to a call for information.
A record of decision for the Cook Inlet sale was issued in January 2017 and the IRA directed that Lease Sale 258 be held in accordance with that ROD.
Most recent leasing The most recent federal Cook Inlet sale to draw bids was Sale 244, held in 2017, with 14 leases awarded to Hilcorp: two offshore Hilcorp’s Ninilchik unit, one offshore BlueCrest’s Cosmopolitan unit and two groups of leases, 11 in total, in mid-Cook Inlet between Iniskin Bay and Kachemak Bay. These leases expire Sept. 30, 2027.
Last summer, BOEM approved an application from Hilcorp to conduct geohazard surveying over four of the company’s Cook Inlet lease blocks. The agency’s records show a 3D marine geohazard permit was issued to Hilcorp for Cook Inlet work on Aug. 11, 2021, with valid permit dates through Oct. 31, 2021. That work is shown as completed, as is another 3D marine geohazard survey in the summer of 2019. The company received a permit for work in the summer of 2020, but BOEM records show no activity on that permit, presumably due to the pandemic.
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