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Mental Health to hold west side lease sale; negotiates lease near Sterling Five-tract sale west of Tyonek is for leases expiring Jan. 31; Marathon requested negotiated lease for scattered parcels in area where it already controls most oil and gas interests By Kristen Nelson PNA Editor-in-Chief
The Alaska Mental Health Trust Land Office will hold a competitive oil and gas lease sale Feb. 15 for five tracts, approximately 17,375 acres, on the west side of Cook Inlet, northwest of Tyonek. The agency has also negotiated an oil and gas lease of approximately 2,200 acres near Sterling to Marathon Oil Co.
Best interest decisions on both actions were signed Nov. 29 by Stephen Planchon, executive director of the Trust Land Office. Written comments on the decisions are due Dec. 31.
The west side sale acreage is in five existing oil and gas leases which expire Jan. 31 in T12N-R12W and T13N-R11W, Seward Meridian.
The lease term will be five years; bonus bid is $5 per acre; royalty is 10.5 percent for the first five years and 12.5 percent thereafter; rents are $1 per acre in the first year graduating up to $3 per acre in year five and beyond if the leases are held by production.
The Trust Land Office said that it “may require that the successful bidder on Tract 174… demonstrate its intent to drill a shallow gas exploration well in the southeast corner of the lease … due to the close proximity of the Lone Creek No. 1 well on the adjacent Cook Inlet Region Inc. lease.”
If coalbed methane is the only resource being produced by year five, the lease will be terminated as to all other non-producing horizons at that time.
Scattered Sterling parcels in negotiated lease The Trust Land Office said that Marathon Oil requested the negotiated lease in the Sterling area. The scattered parcels are in a relatively undeveloped area north of the Sterling Highway and west of the Moose River in sections 5, 6, 7 and 8 of T5N-R8W; sections 1, 2, 4, 5, 6, 7, 8, 11 and 12 of T5N-R9W; and section 1 of T5N-R10W, Seward Meridian.
“Marathon is in the process of assembling acreage necessary to commence exploration for and possibly development of oil and gas resources in the Sterling area,” the Trust Land Office said. “Based upon efforts to date, Marathon effectively controls the area of interest with state and private leases.”
The Trust Land Office said that because of Marathon’s land interest in the area “it is unlikely that another credible oil and gas company would bid on the Trust land if offered competitively.”
With the Trust Land Office lease in place, Marathon is expected to proceed with a 3-D seismic study to target the best locations for wells.
Terms of the lease include: a five-year term; bonus bid exceeds the average of $9.64 an acre received in the September Trust Land Office lease sale; royalty exceeds the standard 12.5 percent; rents are $1 per acre in the first year graduating up to $3 per acre in year five and beyond if the leases are held by production; if coalbed methane is the only resource being produced by year five, the lease will be terminated to all other non-producing horizons.
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