|
BLM calls for NPR-A sale nominations Interior updates report on oil, gas lease utilization; new rule in works to encourage timely onshore development of unused leases Kristen Nelson Petroleum News
The Bureau of Land Management is calling for nominations and comments on tracts for 2012 oil and gas leasing in the National Petroleum Reserve-Alaska.
In a Federal Register notice published May 15, BLM said available tracts are in the Northeast and Northwest NPR-A planning areas. A map and detailed instructions are available at www.blm.gov/ak.
That notice coincided with release of a Department of the Interior updated report to the president on oil and gas lease utilization.
The report focuses on Lower 48 onshore leases and outer continental shelf leases.
Nominations due June 29 Nominations and comments for the NPR-A sale are due June 29 and should be mailed to: State Director, Bureau of Land Management, Alaska State Office, 222 W. 7th Ave. Mailstop 13, Anchorage AK 99513-7504.
Recent sales in NPR-A began in 1999 and through 2010 sales covered either the Northeast or Northwest planning area or both. The 1999 sale resulted in 133 tracts leased for $104.6 million. Sales were held every other year beginning in 2002 and through 2008 also brought in multimillions in high bids, ranging from $13.8 million in 2006 to $63.8 million in 2002. Sales slumped in 2010, with just five tracts leased for $799,995.
Beginning in 2011, BLM began asking for nominations of tracts, with 17 tracts sold for $3.6 million in that year.
In a May 15 release the Department of the Interior said the NPR-A sale is scheduled for November.
The sale is the second in NPR-A since President Obama directed Interior in May 2011 to conduct annual oil and gas lease sales in NPR-A.
Unused leases In a release on the report on unused oil and gas leases, Interior said more than two-thirds of federal offshore acreage and more than half of federal onshore acreage in the Lower 48 is idle — it is “neither producing nor under active exploration or development” by the companies holding the leases.
OCS acreage includes 31,864,710 acres in the Gulf of Mexico, 241,023 acres in the Pacific (where no lease sales have been held since 1984) and 3,723,465 acres in Alaska.
In the Gulf of Mexico 9.8 million acres of the leases have activity (1,984 leases out of 5,902); in the Pacific, 217,669 acres (43 leases out of 49) are active; and in Alaska 72,491 acres, 14 leases out of 670, are active.
Interior did note that approximately three-quarters of the leased Alaska OCS acreage is subject to litigation challenging the 2008 Chukchi Sea lease sale.
Sen. Lisa Murkowski, R-Alaska, objected to the conclusions in the report.
“The administration claims that just 3 percent of leases in Alaska are producing, without acknowledging that the federal bureaucracy is largely to blame for that dismal percentage,” she said May 15.
“Companies are doing everything in their power to convince federal regulators to allow project to move forward, and yet this report attempts to blame the companies for the lack of progress,” Murkowski said, noting that U.S. law already constitutes a “use-it-or-lose-it” policy for oil and gas leases.
Murkowski said there are a variety of reasons that not every lease issued is in active development, including requirements for companies to secure relevant permits and explore to ensure energy resources are present in producible volumes, activities which often take years to complete.
The report does not list Alaska onshore lease activity. In the Lower 48 there are 37 million acres under lease, with production or exploration on 16 million of those acres, or 44 percent. Interior said in the report that due to data system issues, those figures “likely understate the number of leases with approved geophysical exploration permits.” It said BLM is reviewing the data and the figures may be revised in a future publication.
BLM policy For OCS leases, the Bureau of Ocean Energy Management, BOEM, is implementing reforms to encourage diligent development, including: increasing rental rates to encourage faster exploration and development; using tiered terms of lease life to incentivize prompt exploration and development, based on water depths; and increasing minimum bids.
The Interior report said BLM is implementing reforms to ensure that onshore lease sales “will offer parcels in appropriate locations and avoid the contention and litigation that have characterized many development proposals over the past several years.”
Interior is also developing an Advanced Notice of Proposed Rulemaking or ANPR which will look at incentives to encourage timely onshore development. The ANPR will include royalty rate options to encourage production earlier in the life of a lease.
The State of Alaska began changing leasing terms in recent years to encourage more rapid exploration and development, increasing minimum bid amounts and steeply increasing annual rental rates after the first few years. For example, in the Cook Inlet areawide lease sale held May 16, the minimum bid was $25 an acre ($10 an acre was previously common), and rental rates were $10 an acre for the first through seventh years, increasing to $250 an acre for the eighth through tenth years, unless the lease is in sustained production or the state determines there has been reasonable diligence in exploring and developing the lease, in which case the rental would remain $10 an acre.
| 