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State receives 3 bids in first online sale, all for inlet tracts
Kristen Nelson Petroleum News
The Alaska Department of Natural Resources Division of Oil and Gas posted results June 17 from its first online oil and gas lease sale, which offered tracts in two areas: Cook Inlet and the Alaska Peninsula.
It received three bids on Cook Inlet tracts, none on Alaska Peninsula tracts.
Hilcorp Alaska LLC was the sole bidder, bidding $26.76 an acre for a 5,590-acre tract south of Cosmopolitan and $18.76 an acre for two tracts, one 640 acres and one 916 acres, onshore on the west side of Cook Inlet on the Iniskin Peninsula, for a total of $178,779 for 7,146 acres.
In a press release after the sale results were posted, Division Director Tom Stokes said while the current low global prices and oversupply of oil were likely factors in reducing market interest in the sale, he was pleased that the sale demonstrated the value of the division’s new online auction capabilities.
“We have been working hard to update the way the division does business, including providing scientific data, making lease offerings available globally, and conducting auctions online,” Stokes said. “Today’s experience, including sale results, validates our investment in this new way of doing business. It bodes well for our ability to conduct larger, more complex sales in the future that operate more efficiently at lower state cost.”
Regulations changed Since state lease sales began in the 1960s paper bid submissions have been required along with public bid openings. Last year the state changed oil and gas bidding regulations, allowing for online bidding.
The division contracted with EnergyNet Services LLC to use the company’s Internet platform for the spring sales.
In announcing the changes last December, DNR Commissioner Corri Feige said the new regulations “will empower the Division of Oil and Gas to apply modern digital and technical solutions to provide efficient leasing services to the oil and gas industry.” Feige said the relationship with EnergyNet promises to be a relationship which will enhance the state’s ability to make its hydrocarbon resources available to broader markets.
This year’s results are similar to recent sales in these areas: There have been no recent bids on Alaska Peninsula tracts and Cook Inlet has typically garnered a handful of bids.
Hilcorp holds the largest acreage position in the Cook Inlet basin, where it produces both oil and natural gas, and has been the only bidder in recent Cook Inlet sales, taking three tracts in the 2019 sale, eight tracts in the 2018 sale and six tracts in the 2017 sale.
- KRISTEN NELSON
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