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Oil and gas lease sale of 200,000 acres set by Mental Health Trust for Sept. 26 Acreage is all in Cook Inlet basin, adjacent to previous leasing, exploration or production Kristen Nelson PNA Editor-in-Chief
The Alaska Department of Natural Resources Mental Health Trust Land Office will hold a competitive oil and gas lease sale Sept. 26 covering approximately 200,000 acres of trust land in the north and west Cook Inlet basin.
The trust issued a best interest decision for this acreage July 12, and said that land not leased in this initial sale may be offered at a future date without additional public review, unless the terms and conditions of subsequent offerings are significantly different.
The procedures for the sale will probably be similar to those used by DNR’s Division of Oil and Gas. Trust Senior Resource Manager Mike Franger told PNA July 17 that the trust will be reviewing the division’s procedures. He said that during the public comment period, which ends Aug. 13, the trust will be sorting out the details and developing forms and a bid packet.
Included in the sale are tracts north of Cook Inlet near the Beluga River, tracts north of the inlet and east of the Little Susitna River, tracts west of Big Lake, a tract north of Palmer and tracts in the Chickaloon area.
Franger said that basically these are lands that haven’t been offered before, but there is some potential for oil on the west side of the inlet. Almost all adjacent lands, public and private, are or have been the focus of oil and gas leasing, exploration or production efforts. Some of the lands are in the state-approved Pioneer unit in the Houston-Wasilla area, where coalbed methane drilling has taken place. Franger said there was also some oil potential for acreage on the west side of Cook Inlet. Present surface land use ranges from improved subdivision lands to unimproved rural areas. Terms similar to state Leases will be for five years with a minimum bonus bid of $5 per acre. The royalty will be 10.5 percent for the first five years of the lease term and 12.5 percent thereafter. Per acre rents increase over time: $1 for the first year; $1.50 for the second year; $2 for the third year; $2.50 for the fourth year; and $3 for the fifth year and beyond (if held beyond the fifth year by production).
If coalbed methane is the only resource being produced by year five, the lease will be terminated as to all other non-producing horizons at that time. Operating stipulations will be similar to those for other recent state oil and gas leases.
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