State sets date for fall O&G lease sales

Once again, prime Beaufort, North Slope acreage comes with $25-per acre minimum bid, rental of $250 an acre starting with year 8

Kristen Nelson

Petroleum News

The Alaska Department of Natural Resources Division of Oil and Gas has set a Nov. 7 date for its fall areawide oil and gas lease sales and as in last year’s sales, bid minimums and rental rates for two of the three sales are designed to encourage development.

The bids — for the Beaufort Sea, North Slope and North Slope Foothills sales — will be opened at 9 a.m. at the Dena’ina Civic and Convention Center in Anchorage, the division said in an Aug. 17 public notice.

Regional tract maps for the sales will be available Sept. 7.

For the North Slope Foothills sale the terms are the same for all tracts with minimum bids of $10 an acre; fixed royalty rates of 12.5 percent; 10-year terms for all leases; and rental rates of $1 an acre for year 1, $1.50 an acre for year 2, $2 an acre for year 3, $2.50 an acre for year 4 and $3 an acre beginning in year 5.

Variation by location

These are terms the division introduced last year, describing the terms as “designed to encourage financially sound, responsible operators to join in the accelerated development of the state’s natural resources” and as “part of the state’s focus on boosting oil production on the North Slope.”

For Beaufort Sea tracts adjacent to federal land — the outer continental shelf, National Petroleum Reserve-Alaska and Arctic National Wildlife Refuge — terms are the same as for Foothills acreage, with a minimum bid of $10 an acre, a fixed royalty rate of 12.5 percent, a term of 10 years and rental rates ranging from $1 to $3 an acre from year 1 to year 5 and after.

The same terms apply to North Slope areawide tracts adjacent to federal land.

For other Beaufort Sea and North Slope tracts the minimum bid is $25 an acre; there is a fixed royalty rate of 16.67 percent; a term of 10 years; and rental rates of $10 an acre for years 1-7 and $250 an acre beginning in year 8.

As with the terms for last year’s sales, the division can set a lower rent, and the sales notice says: “beginning in the year after the year in which sustained production commences on this lease or the state otherwise determines in its sole discretion, upon request, that the lessee has exercised reasonable diligence in exploring this lease” the rent will be $10 an acre. “In evaluating a request to decrease rental based on the exercise of reasonable diligence, the state will consider the funds expended by the lessee to explore and develop this lease and the types of work completed by or on behalf of the lessee on this lease,” the notice says.