For the first time MMS to offer incentives in a Cook Inlet lease sale

The Minerals Management Service is holding a Cook Inlet lease sale May 19, and for the first time in Cook Inlet, is offering economic incentives.

MMS said Nov. 19 that it is proposing to hold a Cook Inlet lease sale “that may provide needed natural gas for Southcentral Alaska.” The agency said it estimates that the offshore potential could exceed 1 trillion cubic feet of conventionally recoverable natural gas.

Cook Inlet OCS lease sale 191, tentatively scheduled for May 19, excludes a narrow band of blocks offshore the lower Kenai Peninsula and the Barren Islands. MMS said the areas are a critical habitat for the endangered Stellar sea lion and are also used by residents of Port Graham, Nanwalek and Seldovia, and others, for subsistence.

MMS said this is the first time it has offered economic incentives for leasing in federal waters in Cook Inlet: a longer primary term of eight years; lower minimum bid ($25 per hectare) and annual rental rates ($5 per hectare); and royalty suspension volumes, which would relieve royalty payments on a producing lease up to the first 30 million barrels of oil equivalent, applied to both oil and natural gas, with price floor and ceiling thresholds.

The sale area is in federal waters in Alaska’s Cook Inlet between three and 30 nautical miles offshore and covers some 2 million acres from just south of Kalgin Island to just northwest of Shuyak Island.

The agency issued a final environmental impact statement for the sale Nov. 14.