State sets dates for online lease sales

2020 Alaska Peninsula, Cook Inlet areawide sales will be first under new system with bidding online through EnergyNet Services

Kristen Nelson

Petroleum News

Last year the Alaska Department of Natural Resources’ Division of Oil and Gas updated its regulations, and among the updates it added a provision to allow online bidding for oil and gas lease sales. Previously, “sealed bid or at public outcry auction” were the only methods allowed. The regulation updates added “including online bidding” to acceptable methods.

The regulation changes went into effect after last year’s Beaufort Sea, North Slope and North Slope Foothills sales, which were held in the traditional method - bids were submitted on paper and opened and read in public.

With social distancing requirements and prohibitions of meetings of more than 10 people in place due to COVID-19, the division was already positioned for online bidding.

When the regulations were finalized in December, DNR Commissioner Corri Feige said the regulatory changes “will empower the Division of Oil and Gas to apply modern digital and technical solutions to provide efficient leasing services to the oil and gas industry.”

The Alaska Peninsula and Cook Inlet areawide sales will be the first to use online bidding.

The division said in an April 10 notice that it has contracted with EnergyNet Services LLC to provide an online bidding system. Bidder registration and bid submission will be on the EnergyNet Government Listings site at www.energynet.com.

Bids open May 19

Bidding results will be available to the public on the division’s website at 9 a.m. June 17.

The Alaska Peninsula sale includes some 5 million acres of state-owned land in 1,004 tracts, encompassing onshore and offshore acreage from the Nushagak Peninsula down the north side of the Alaska Peninsula to just north of Cold Bay. The Alaska Peninsula sale received bids in three lease sales since it was first offered in 2004, with the last three bids received in 2014. There are no active oil and gas leases in the Alaska Peninsula areawide.

The Cook Inlet Areawide includes some 3.3 million acres of state-owned land in 833 tracts encompassing onshore and offshore acreage from Wasilla in the north to Anchor Point in the southeast, then along Alaska’s submerged lands act boundary in Cook Inlet to the Iniskin Peninsula. There were just three bids received in the Cook Inlet sale in 2019. In the division’s annual report to the Legislature on the lease sale program, dated Jan. 29, Division Director Tom Stokes said the “rapid and significant” drop in oil and gas prices beginning in 2014, “combined with a relatively stable gas demand in southcentral Alaska are thought to be major factors contributing to ongoing low bidder activity in the Cook Inlet Areawide lease sales.”

The minimum bid for Alaska Peninsula tracts is $5 per acre. The royalty rate is 12.5%, and leases have a primary term of 10 years.

Rental is $1 per acre in the first year, $1.50 in the second year, $2 in the third year, $2.50 in the fourth year and $3 per acre in the fifth through 10th years.

The minimum bid for Cook Inlet tracts is $15 per acre. The royalty rate is 12.5% and leases have an eight-year term, although a onetime lease extension is possible under certain conditions. The rental rate is $5 per acre for years one through four and $10 per acre for years five through eight.

What will it look like?

The heading shows: BLM New Mexico and Texas Federal Lease Sale, May 20 and 21, 2020; 95 parcels covering 45,445.76 acres available for lease; open for bidding May 20th-May 21st, 2020.

This links to a map showing locations of the listings and there is a further link to individual listings, which are on a BLM website.