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State wants comments on new Bristol Bay sale area; sale would be held this fall Alaska Division of Oil and Gas issues preliminary best interest finding for Alaska Peninsula areawide oil and gas lease sale Petroleum News
The Alaska Department of Natural Resources Division of Oil and Gas has issued the preliminary best interest finding for the proposed Alaska Peninsula areawide oil and gas lease sale. The division expects to release a final best interest finding July 27, and if a decision is made to hold the sale, a sale announcement, public notice and instructions to bidders will be available at that time.
The sale would be held in conjunction with the North Slope and Beaufort Sea areawide sales in October. Public comment on the preliminary best interest finding closes May 15. The finding is available on the division’s Web site at: www.dog.dnr.state.ak.us
The proposed sale area includes 3.5 million acres onshore and 1.5 million acres in offshore state waters and stretches from the Nushagak Peninsula in the north, down the north side of the Alaska Peninsula to the vicinity of Cold Bay. The Alaska Peninsula is approximately 500 miles long and ranges from 25 to 100 miles in width. Some past leasing activity In 1902 an oil well was drilled near Puale Bay on the western side of the Alaska Peninsula, the state said, but the initial well was not successful and by 1906 the area had been practically abandoned. In 1920 when Congress opened Alaska’s public lands to oil prospecting after a 10-year hiatus, the Puale Bay area again became the focus of leasing, but these leases were eventually cancelled.
Twenty-six oil wells have been drilled on the Alaska Peninsula since 1903, the latest, the Amoco Becharof No. 1, in 1985. One offshore stratigraphic test well was drilled in 1983, the ARCO North Aleutian COST Well No. 1.
The state of Alaska first made land in the Alaska Peninsula area available for oil and gas leasing in 1960, but only five isolated tracts in the Nushagak Bay and Alaska Peninsula areas were leased. Offshore acreage was offered in 1968, and although leases were issued, no offshore wells were drilled in the lease area.
In a 1984 lease sale, 278,939 acres were leased and the Amoco Becharof well was drilled. It was a dry hole.
A federal offshore sale was held in 1983, after the state of Alaska protested a 1980 sale proposal and it was upheld in court.
The Minerals Management Service Alaska Outer Continental Shelf Region prepared an environmental impact study covering 5.6 million acres, and 121,747 acres were leased in a 1988 sale, with 23 leases issued. In response to the 1989 Exxon Valdez oil spill, oil and gas development in Bristol Bay was halted by moratorium in 1989. The leases were relinquished following a 1995 settlement agreement. Gas shows Eight shallow wells were drilled near two different seeps prior to 1925, and 18 wildcat wells were drilled to depths between 5,000 feet and 15,000 feet on the Alaska Peninsula, targeting Mesozoic or Tertiary prospects.
The state said many of these wells “had significant shows both from coalbed methane and thermogenic origins,” with oil shows evident in three wells in the Point Moller region. These were the Pan American Petroleum Corp. David River No. 1, the Gulf Sandy River No. 1 and the Pan America Petroleum Corp. Hoodoo No. 1.
ARCO drilled the North Aleutian COST No. 1 well in federal waters in 1983, reaching 17,000 feet.
The Amoco Becharof No. 1, completed in 1985, had significant gas shows in the Tertiary section.
The state said no Alaska Peninsula wells to date have flowed commercial quantities of oil. Oil potential moderate to low; gas moderate to high The state said hydrocarbon potential for the northern coastal plain between Becharof Lake and a narrow strip of coastline opposite Cold Bay is expected to be moderate to locally high for gas and low to moderate for oil.
Both structural and stratigraphic traps are expected, the state said, and there are several significant oil and gas seeps present along the southeastern flank of the peninsula, “some of which occur along the crests of large anticlines.”
The state said source rock data indicate most of the Tertiary organic shales are gas prone. The source or sources of oil shows in the Point Moller region could be from deeper Mesozoic strata, and there are sands that could form reservoirs in both the Tertiary and Mesozoic.
“Of special note,” the state said, “are sandstones and conglomerates of the Neogene Milky River and Bear Lake formations which have reservoir parameters very capable of supporting oil or gas production.”
The state believes “the greatest geologic risk for the Alaska Peninsula appears to be reservoir quality.” Non-marine and marine sandstone units were formed “from eroded volcanic and plutonic rock units that upon burial may give rise to pore plugging cements and clays.”
Seismic data for the peninsula “is somewhat limited and of old vintage,” the state said, and seismic acquisition and processing will be needed to define prospects.
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