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Cook Inlet areawide sale draws $2.4 million from 10 bidding groups Bids from Big Lake in north to Anchor Point area on Kenai Peninsula; ARCO outbids four others for tract at Starichkof prospect Kristen Nelson PNA News Editor
Ten bidding groups were apparent high bidders on 46 tracts, 199,040 acres, for a total of $2.4 million at the state’s first areawide Cook Inlet oil and gas lease sale, held April 21 in Anchorage.
Ken Boyd, director of the Department of Natural Resources Division of Oil and Gas, said that 59 bids were received on 51 tracts, but that five of those tracts were among the 70 tracts listed in a suit filed by environmental groups to have tracts deleted because of beluga whales. State superior court Judge Sigurd Murphy issued an order April 20 preventing the state from issuing leases on the 70 tracts until pending litigation is settled.
Boyd said bidders on those tracts had the option of having the bids returned to them or could leave the unopened bids with the division until the litigation is settled. A precedent was set for this in Cook Inlet Sale 78, he said, when a lease sale was enjoined after bids were received. All bidders in that sale, Boyd said, elected to leave their bids with the division until litigation was settled.
Boyd also noted that title work for areawide sales is done after the sale and only on those tracts receiving bids and actual acreage in tracts will be less than that estimated. The total of winning buds will be less than the estimated $2,423,241.60, because the total bid for each tract is based on the number of acres in the tract.
Highest bid $307,699.20 ARCO Alaska Inc. bid on only one tract at the sale, but that was the highest bid, $307,699.20, and the highest bid per acre, $53.42. The tract, 804, also received the most bids, five, of any tract at the sale. Other bidders on the tract included Unocal, Forcenergy Inc. and Escopeta Production Alaska Inc. The tract is offshore along the southern Kenai Peninsula north of Anchor Point, at the southern end of a group of seven tracts held by ARCO, Anadarko Production Co. and Forcenergy and a single tract held by Mobil and others at the Starichkof prospect where Pennzoil drilled two wells in 1967. One of the wells was plugged and abandoned; the second is suspended and the Mobil tract is held by that well, which was certified by the state as capable of production in 1967.
The successful well, the 1 Starichkof State well, was a vertical hole drilled to a depth of 12,112 feet which produced 57 barrels of 20.5 degree API oil from the Hemlock formation on a 24-hour test. The second well, the 1 Starichkof State Unit, was drilled some two miles to the north-northwest on a tract presently held by ARCO Alaska, Anadarko and Forcenergy. That well found water in the Hemlock formation and was plugged and abandoned after being drilled to a depth of 8,775 feet.
Cost estimates done at the time of discovery estimated paying quantities of oil would occur at 52 barrels per day — but that paying quantities evaluation is based only on transportation and operating costs, and does not include investment required to drill wells and build production facilities and pipelines.
ARCO Alaska spokesman Ronnie Chappell told PNA April 22 that the tract rounds out the company’s land position in the area. “We do have a prospect,” Chappell said. There are no plans for a well this year. ARCO would evaluate all options for a drilling program first, he said, and would be in the community discussing its plans. “This is how we’ll approach it,” Chappell said. “If the merger goes through this will obviously be an opportunity that BP will evaluate.”
Unocal takes most acreage Unocal was apparent high bidder on 57,600 acres — 29 percent of acres receiving bids, bidding $486,259.20, an average of $8.44 an acre. Unocal took a single track north of Kasilof on the Kenai Peninsula immediately south of two existing Unocal-Forcenergy tracts southeast of the Kenai gas field operated by Marathon Oil Co. and nine tracts running from north of Big Lake to Knik in the Matanuska-Susitna Borough north of Anchorage. These tracts are adjacent to and west of tracts which Unocal already has in the area. On one of the tracts which it already holds Unocal plans to re-enter and test gas zones in the ARCO 1 BLT Big Lake well, a 6,200 vertical hole drilled in 1992.
Unocal spokeswoman Roxanne Sinz told PNA April 22 the company estimates that when title work has been completed its acreage from this areawide sale will be closer to 39,000 acres and that the actual cost will be around $315,000. Sinz said that Unocal will be looking for gas on the block of tracks it acquired in the Big Lake to Knik area. It is, she said, a separate prospect from the company’s Pioneer unit coalbed prospect, which is in the Houston to Wasilla area.
Escopeta of Houston Escopeta Production Alaska Inc., headquartered in Houston, took 43,520 acres, 22 percent of the acreage, with apparent high bids of $480,326.40, an average of $11.04 an acre. Escopeta took two tracks in the Susitna area on the west side of Cook Inlet, two tracts west of Tyonek and eight offshore tracks north and northwest of Nikiski.
The tracts near the mouth of the Susitna are northeast of gas fields in the area: Stump Lake, Ivan River and Lewis River, all managed by Unocal, and adjacent to existing Forcenergy leases. The tracts west of Tyonek are south and southwest of ARCO-Anadarko tracts at the Moquawkie gas field and north of the Unocal-operated Nikolai gas field.
The most southerly of the Cook Inlet tracts Escopeta acquired in the sale are off East Foreland and Port Nikiski adjacent to Unocal’s South Middle Ground Shoal field and, to the south, adjacent to a lease held by Forcenergy east of the Redoubt Shoal unit operated by Forcenergy. The six other Cook Inlet tracts acquired by Escopeta are east of the Middle Ground Shoal field operated by Cross Timbers Oil Co. and the North Middle Ground Shoal field operated by Unocal.
Forcenergy, Marathon Forcenergy took three tracts offshore south of Tyonek, some 7,680 acres, for $208,640, an average of $27.17 an acre. The tracts are southeast of the Unocal-operated Granite Point field. Two of the southern extension ARCO-Phillips Sunfish exploration wells were drilled on these tracts in 1993.
Marathon took two tracts, some 11,520 acres, for $205,574.40, an average of $17.85 an acre. One of the tracts is onshore at Clam Gulch; the other is offshore north of Ninikchik. The Clam Gulch acreage is northeast of the Falls Creek gas field. The tract near Ninikchik is adjacent to other Marathon acreage.
In Cook Inlet, Warren Z. Buck of New Mexico took nine tracts, some 21,120 acres, for $117,126.40, an average of $5.55 an acre. Most of the tracts are in the Trading Bay area with one tract along the shoreline of the northern Kenai Peninsula.
Two local bidding groups, Wagner et al. and Wagner/Allen et al., took one 5,760-acre tract each adjacent on the south and southwest to Forcenergy’s Redoubt Shoal unit for $5.14 an acre, $29,620.80 each. Anchor Point, north of Homer Ron Wilson of Houston took three onshore tracts for $345,600 onshore north-northeast of Anchor Point, approximately 17,280 acres, an average of $20 an acre.
Phillips Petroleum Co. took four tracks onshore northeast of Anchor Point, some 23,040 acres, for $212,774.40, an average of $9.24 an acre.
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