State sets opening for spring sale bids

Kristen Nelson

Petroleum News

May 9 is the day set for the state to open bids for the annual Alaska Peninsula and Cook Inlet areawide competitive oil and gas lease sales. The opening will be at 9 a.m. in Suite 102 of the Atwood Building in Anchorage, the Alaska Department of Natural Resources, Division of Oil and Gas said March 23. Bids are due to the division by 4 p.m. May 7.

There are some 4 million onshore and 1.75 million offshore acres in the Alaska Peninsula sale. That area was first offered for areawide leasing in 2005, and 37 tracts received bids, a total of $1,149,253. The next sale, in 2007, saw a bid on only one tract, for $5,728, and there were no bids in annual sales from 2008-13. The 2014 sale drew bids on three tracts, a total of $47,807. There were no bids in the 2015-17 sales. There are currently no active leases in the Alaska Peninsula lease sale area and no production in the area.

The Cook Inlet sale area includes some 4.2 million acres. There are some 490,335 acres under lease in the basin, which has been in production for decades. Bidding at recent sales has varied widely. In 2017, there were six bids on six tracts totaling $836,502; in 2016 there were no bids; and in 2015 there were eight bids on seven tracts, totaling $671,033.

There were significant Cook Inlet sales from 2010 to 2014, with a low of $1.7 million in 2010 (37 bids on 35 tracts) and a high of $7.9 million in 2011 (110 bids on 104 tracts). Other sales ranged from $3.1 million (33 bids on 28 tracts, with 24 awarded) in 2013, to $4 million in 2014 (39 bids on 34 tracts, 32 awarded) and $4.6 million in 2012 (51 bids on 44 tracts, 41 awarded).

All tracts in the Alaska Peninsula sale have a minimum bid of $5 per acre, a primary lease term of 10 years and annual rental rates of $1 per acre in the first year rising in increments of 50 cents per year to $3 per acre in years 5-10.

The minimum bid for the Cook Inlet sale is $15 per acre and the primary lease term is 8 years, with rental rates in years 1-8 of $10 per acre.

The royalty rate is 12.5 percent for both sale areas.