|
First Beaufort Sea areawide sale set for October Royalty rates range from 12.5 percent to 20 percent, lease terms are either 7 or 10 years Kristen Nelson PNA News Editor
The state’s first areawide Beaufort Sea oil and gas lease sale, covering approximately 2 million acres, will be held Oct. 13 in Anchorage.
The Department of Natural Resources Division of Oil and Gas published notice July 15 that it will offer 516 state-owned tracts of tide and submerged lands in the Beaufort Sea between the Canadian border and Point Barrow. The minimum bid per tract for the sale is $10 an acre.
Three tracts were deleted from the sale because of conflict with the bowhead whale spring migration — those tracts are not covered by the best interest finding and will not be offered for lease.
All the most westerly tracts — from Point Barrow to Tangent Point (tracts 555 and 557-575) — have been deferred from this sale, as have all the most easterly tracts — from Barter Island to the Canadian border (tracts 1 through 39). The state said these tracts were included in the best interest finding and while they will not be offered for lease in this sale, they may be included in future lease sales.
Two tracts in dispute Tracts 79 and 80, adjacent to the Point Thomson unit, are the most expensive in the sale — and also the most uncertain. They will have a term of 7 years and a fixed royalty rate of 20 percent.
The division noted that it is offering these tracts for sale even though the former lessee (Exxon) is appealing the termination of the leases. The two tracts were formerly a single lease, ADL 372256, which was broken into two tracts when the division re-platted the North Slope to implement areawide leasing. The primary term of lease ADL 372256 expired Nov. 30, 1998, although application had been made before that date to have the lease included in the Point Thomson unit.
That request was denied by the division and has been appealed to the commissioner of DNR; thereafter the matter could be appealed to the Alaska Superior Court.
The division said in its July 15 sale announcement that if this appeal is not concluded before the lease sale, bids on these tracts will be opened, read and processed as normal. The winning bidder will be issued a lease, subject to termination if the former lessee prevails. The primary term of that lease will not begin until after the appeal is resolved. If the former lessee is successful, the state will refund the winning bidder’s bid and all rental payments.
Three rates for leases In addition to the 20 percent royalty, 7-year term on tracts 79 and 80, there are two other sets of sale terms: Tracts 40 through 77, 468 through 554 and tract 556 will have a term of 10 years and a fixed royalty rate of 12.5 percent.
Tracts 40 through 77 are on the eastern North Slope between Barter Island and Point Brownlow, offshore the coastal plain of the Arctic National Wildlife Refuge. Tracts 468 through 554 and tract 556 are on the western North Slope from Harrison Bay in the east to Tangent Point in the west. This group of tracts — with the longest lease term and the lowest fixed royalty — are distant from North Slope infrastructure.
Other tracts in the sale — basically those north of existing North Slope developments from Harrison Bay in the west to Point Brownlow in the east — will have a term of 7 years and a fixed royalty rate of 16.6666 percent. State lease tract maps indicate that the majority of this group of Beaufort Sea tracts across the top of developed North Slope areas are already leased. The state central Beaufort Sea oil and gas lease sale held in November 1997 offered tracts from Harrison Bay to Flaxman Island and brought in almost $28 million dollars for 162 tracts, some 323,835 acres.
All tracts have the same rental: $1 per acre for the first year; $1.50 per acre for the second year; $2 an acre for the third year; $2.50 per acre for the fourth year; $3 per acre for the fifth and following years. Tract sizes vary The gross areas of the tracts being offered ranges from 640 acres to 5,760 acres. The exact amount of net leaseable acreage in each tract will not be determined until after the bids are received. The Division of Oil and Gas will then complete a comprehensive evaluation of the lands within the tracts receiving bids to determine which lands are available for lease.
Bids will be received by the division at its Anchorage offices from 9 a.m. to 4 p.m. on Oct. 11.
Bids will be opened and read in public at the Wilda Marston Theater in the Loussac Public Library at 8:30 a.m. Oct. 13.
The bids will then be adjudicated at the division offices.
Preliminary sale results will be available in the division’s offices at 3:30 p.m. Oct. 13.
| 