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Alaska Peninsula lease sale set for Oct. 26 State postpones North Slope and Beaufort Sea areawide sales until February; some 5.8 million acres offered in peninsula sale Kristen Nelson Petroleum News Editor-in-Chief
The first Alaska Peninsula areawide oil and gas lease sale will be held Oct. 26, and it will be the only areawide sale the state holds in October: it has rescheduled the North Slope and Beaufort Sea sales to February.
The Alaska Department of Natural Resources Division of Oil and Gas said July 25 that it wants to focus industry attention on the Alaska Peninsula sale and to spread the work of both participants and staff more evenly. “The Department of Natural Resources has worked hard to evaluate and organize AP 2005, and this sale deserves our full attention this October,” the department said in a sale notice.
In a July 26 press release Alaska Gov. Frank Murkowski noted that the lease sale will be the first in the area in two decades and comes in response to requests made by local leaders and organizations who urged the governor to support new oil and gas efforts in the area.
“The state is very optimistic about the oil and gas potential in the lease sale area,” the governor said. “This sale presents a significant opportunity for the Alaska Peninsula and Bristol Bay regions to diversify their economy and foster new economic development for their communities.”
Department of Natural Resources Commissioner Tom Irwin said DNR “worked closely with local governments and organizations to ensure that oil and gas exploration and development in the region will be conducted in a manner compatible with commercial and subsistence fishing, which will remain a cornerstone of the local economy.” Sale covers 5.8 million acres The department released the final best interest finding and the Alaska Coastal Management Program determination for the Alaska Peninsula areawide sale July 25. The 5.8 million acre sale area is divided into 1,047 tracts ranging in size from 1,280 acres to 5,760 acres, and includes onshore and offshore acreage from the Nushagak Peninsula in the north, down the north side of the Alaska Peninsula to just north of Cold Bay. Approximately 1.75 million acres are offshore.
While tracts in state waters are included in the sale, mitigation measures in the final best interest finding specify: “Drilling in offshore tracts will only be conducted directionally from onshore locations.”
Bids will be opened at 8:30 a.m. Oct. 26 at the Loussac Public Library in Anchorage. A minimum bid of $5 an acre is required; leases will have a fixed royalty rate of 12.5 percent; and the leases will have 10-year terms. Annual rental begins at $1 per acre, increasing to $1.50 per acre in the second year, $2 per acre in the third year, $2.50 per acre in the fourth year and $3 per acre for the fifth and following years.
Detailed information is posted on the division’s Web page at: http://www.dog.dnr.state.ak.us/oil/. Exploration activity There was an oil well drilled near Puale Bay in 1902, the division said in the final finding. That well was not successful, however, and by 1906 the effort was abandoned.
Twenty-six wells have been drilled since 1903, the latest the Amoco Becharof No. 1 in 1985. One offshore stratigraphic test, the ARCO North Aleutian COST well No. 1, was drilled in 1983.
The division said hydrocarbon potential for the northern coastal plain between Becharof Lake and a narrow strip of coastline opposite Cold Bay is expected to be “moderate to locally high for gas, and low to moderate for oil.” The division said this represents its “general assessment of the oil and gas potential of the area and is based on its resource evaluation,” including geology, seismic data, exploration history and proximity to known hydrocarbon accumulations.
“Conditions are expected to be very good for both structural and stratigraphic traps,” the division said, noting that there are several oil and gas seeps along the southeastern flank of the peninsula, “such of which occur along the crests of large anticlines.”
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