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State issues Interior shallow natural gas leases on a third of a million acres Eight individuals involved, Lappi is the notification person for all 65 leases Kristen Nelson PNA Editor-in-Chief
The state has issued 65 non-competitive shallow natural gas leases in Interior Alaska, a total of 333,383 acres. Jim Haynes of the Department of Natural Resources Division of Oil and Gas told PNA July 2 that title work for the applications was completed and award notices were mailed May 7. Applicants then had 30 days to pay the first year’s rent.
The eight applicants receiving leases are Caroline O. Bradshaw (eight leases, 42,707 acres); Kory Bradshaw (eight leases, 43,669 acres); Karen L. Fitzpatrick (eight leases, 41,728 acres); Cory Lappi (eight leases, 44,919 acres); Linda O. Lappi (nine leases, 43,174 acres); Troy Lappi (10 leases; 43,091 acres); Elizabeth A. Orell (eight leases, 42,738 acres); and Jennifer L. Orell (six leases, 31,356 acres). No plans have been announced for exploration on the leases, but the state shows David L. Lappi as the notification address for all 65 leases. Lappi pushed shallow gas legislation Lappi has been one of the driving forces behind shallow gas projects in the state. He earned a bachelor of science in geology from the University of Alaska Fairbanks and a postgraduate diploma in geoscience from Macquarie University in Sydney, Australia. He has worked in both Australia and Alaska, and in the early 1990s started looking for joint venture partners to explore the shallow gas potential in the Cook Inlet basin.
He acquired conventional state oil and gas leases in the Houston area, and worked with the Division of Oil and Gas and with the Legislature to get the shallow gas leasing program established. He also worked with the Alaska Oil and Gas Conservation Commission on drilling requirements for coalbed methane wells, which can be drilled with smaller rigs and with different techniques than conventional gas wells.
Lappi ended up with Australian backers for the first commercial coalbed methane effort in the state in the Houston area, on conventional state oil and gas leases. The Australians bought Lappi’s interests in the leases and Lappi to managed the project. A handful of coalbed methane wells were drilled, but the Australian group lost interest and put its interests up for sale.
Lappi also does consulting work and Mark Sexton, president and CEO of Evergreen Resources Inc. of Denver — recent purchaser of the Unocal Alaska and Ocean Energy Inc. coalbed and conventional gas prospect at Pioneer — said last fall that Lappi was doing some contract work for Evergreen. Lappi has also appeared before the AOGCC as an expert witness for Danco Inc.’s Dan Donkel and independent Monte Allen in their efforts to have Phillips Alaska Inc.’s North Cook Inlet gas unit expanded to include leases to the north in which Danco and Allen have overriding royalty interests.
Lappi has also been working on technology to identify shallow gas prospects by aerial mapping so that rural communities in Alaska could find gas sources for local use. The state’s shallow gas leasing program is targeted for such use, with royalties set at 6.25 percent if gas is used in the immediate area and at the standard 12.5 percent otherwise. State has drilled, run seismic Tom Smith, a geologist now retired from the state Division of Oil and Gas, drove the coalbed methane program for the state in the early 1990s, and the state drilled a coalbed methane core hole near Wasilla using a U.S. Geological Survey rig and tested the coal seams for gas content.
The state’s program is now headed by Jim Clough of the Division of Geological and Geophysical Surveys in Fairbanks. The state has identified and done some work at three potential coalbed methane sites near communities where gas could be used and Clough said in the division’s June newsletter that DGGS and the Kansas Geological Survey ran a high-resolution shallow reflection seismic survey at Fort Yukon in April to determine the extent and thickness of the coals, a study funded by the state and the U.S. Department of Energy.
Clough said the next step is to drill and test coalbed methane resources. The state has identified three “highly prospective” coalbed methane basins: on the western North Slope near Wainwright; on the Alaska Peninsula near Chignik Bay; and at Fort Yukon. Two wells are proposed for each site and Clough said the division is working with the Department of Energy’s Los Alamos National Laboratory to fund development of coiled-tubing micro-hole drilling technology to reduce coalbed drilling costs. Applications accepted in 2000 Private development is fostered by the state’s shallow gas lease program. The state accepted the first applications for the non-competitive, first-come-first-served leasing program in early 2000, when the Division of Oil and Gas received 263 lease applications for areas across the state. As of early May this year, the state had received additional applications, bringing the total to more than 300.
Four leases northwest of Red Dog — only four tracts received applications in that part of the state — were issued to Cominco Alaska Inc. last year.
In Interior Alaska — Nenana, Fairbanks, Big Delta — the state received 100 applications. The division’s Pirtle Bates said in early May that four of those applications were in areas where there was no state land.
Of the 96 award notices mailed in early May, Haynes said 27 of the leases were forfeited because the applicants did not respond within 30 days. Sixty-five leases were issued, he said, and four are pending as a result of a problem with forwarding of mail.
The 162 Cook Inlet applications are still being adjudicated. The majority are in the Matanuska-Susitna area, Bates said, with a few on the Kenai Peninsula. Those areas have the most complicated land status, but Haynes said the division hopes to have work on those applications done by September.
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