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Explorers 2025: Exploration licensing continues to draw interest
State expands program this year with new geothermal regulations.
Eric Lidji for Petroleum News
The state of Alaska developed its exploration license program to create a pathway for companies to explore resource-rich corners of Alaska not offered through leasing.
To date, the program has generated more interest than energy. While licensing has not led to any significant production, it has allowed several smaller players to enter the oil patch.
Under the program, the state Division of Oil and Gas can make a preliminary determination that certain areas are suitable for exploration licensing. From there, it begins accepting proposals for exploration within these "determined" areas.
The state accepts proposals each April. Companies can request a license for an area between 10,000 and 500,000 acres, along with a proposed financial work commitment and a term limit. The state then provides opportunities for other companies to make competing bids for the same acreage, in an effort to get the best deal for the state.
In recent years, the state has been accepting proposals within two regions.
The "Southcentral Region" is an L-shaped area including the coastline along Prince William Sound and extending north to include the southern edge of the Interior, including the cities of Cordova, Valdez, McCarthy, Glennallen, Talkeetna, Paxson and Tok.
The "Nenana Region" covers a smaller area immediately west of the Fairbanks North Star Borough and immediately west and north of the Interior city of Nenana.
The Division of Oil and Gas received a gas-exploration proposal for the Susitna Valley during the 2024 cycle and issued a public notice in early August 2024 seeking competing proposals. The area under consideration follows a line running south from Talkeetna past Willow nearly to Susitna and then extending west beyond the village of Skwentna.
Under the terms of the public notice, companies have 30 days to provide a notice of intent to submit a proposal and 60 days to submit a proposal -- meaning early October.
The identity of the original applicants is held at this point in the process.
Alaska Natural Gas Corp. previously had two pending applications for an exploration program in the Susitna Valley covering 913,249 contiguous acres in the Susitna River basin within the Matanuska-Susitna valleys, immediately west of the Parks Highway.
The privately held company submitted its proposal in late April 2017, asking for 10-year licenses, each with a $500,000 work commitment. Based on economic and geologic considerations, the state imposed $3 million and $3.3 million work commitments. The proposals were subsequently removed from the state Division of Oil and Gas website.
Houston-Willow The "exploration licensing program" page on the state Division of Oil and Gas website currently lists two active projects: the Houston-Willow Basin and the Gulf of Alaska.
The state issued the Houston-Willow Basin license to independent explorers Samuel Cade and Daniel Donkel. The license covers 18,698 acres in the Houston-Willow basin with a $500,000 work commitment. The state awarded the six-year license on Dec. 1, 2018, which means that the license appears to have expired in December 2024.
The Alaska Railroad discovered coal in the area by 1917. Drilling since the early 1950s has included some 22 penetrations throughout the Houston-Willow basin, mostly to evaluate shallow gas and coalbed methane, according to the Division of Oil and Gas.
There was activity in the 1950s and early 1960s and a return in the late 1990s and early 2000s. Cade and Donkel submitted an application in April 2007 with local independent LAPP Resources Inc. and resubmitted after the death of principle Dave Lappi in 2011.
The state approved the exploration license with the hope that modern exploration techniques "would likely help to resolve details of the anticline's geometry and to clarify its conventional gas and CBM resource potential," according to the decision results.
Gulf of Alaska A second proposed exploration license in the Katalla region of the Gulf of Alaska has been under appeal for several years by applicant Nikiski-based Cassandra Energy Corp.
Exploration in the Gulf of Alaska dates to oil seeps discovered in the mid-1890s. A small refinery built in the early 20th century burned down in 1933 after the region had produced some 154,000 barrels of oil. Exploration resumed in the 1950s and early 1960s.
Chugach Alaska Corp. secured an exclusive exploration contract from the early 1980s through the early 2000s. Cassandra Energy joined that venture in the early 2000s, but his project was thwarted by a combination of environmental and regulatory delays until the late 2010s, when the company submitted an exploration license application to the state.
The Division of Oil and Gas initially leaned toward granting the company a 10-year license over 65,773 acres with a $1 million work commitment but ultimately denied the application in late 2020, saying it failed to serve the best interests of the state. In a decision at that time, then-Division of Oil and Gas Director Tom Stokes wrote, "the potential positive effects of the exploration license do not clearly outweigh or balance the potential negative effects to the other resources and habitat of the license area."
Geothermal Additionally, recently passed House Bill 50 included provisions authorizing the Alaska Department of Natural Resources to issue exploration licenses and leases for geothermal prospecting. In early 2025, the DNR issued a public notice for proposed regulations around the program.
The new regulations would create a way for the state to convert existing two-year geothermal prospecting permits to five-year geothermal exploration licenses.
The new regulations would be most immediately relevant to GeoAlaska, an Anchorage-based independent company with a geothermal prospecting permit on ADL 394080 in the southern part of Augustine Island. Augustine Island is located in Kamishak Bay on the west side of Lower Cook Inlet, approximately 170 miles south-southwest of Anchorage.
GeoAlaska claimed more than $437,551 in expenditures for fieldwork completed in 2023 with expenses of $188,000 planned for the 2024 field season. These figures exceed the $50 per acre state requirement expected for a geothermal prospecting permit area.
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