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Interior Seeks Comments on Potential Cook Inlet Lease Sale

The Interior Department is seeking industry comments to gauge interest in a potential oil and natural gas lease sale in the Cook Inlet Planning Areas off the coast of South-Central Alaska.

The department's five-year leasing program for 2012-2017, which was announced in November, proposed a special interest lease sale in the Cook Inlet Planning Areas (Sale 244). The special interest sale asks operators to nominate specific tracts in the planning areas that they potentially would be interested in exploring and developing through a Request for Interest (RFI). The special interest sale in the Cook Inlet has been initially scheduled for 2013, but it may be moved to later in the program, depending on industry interest.

The U.S. Geological Survey (USGS) estimates that total undiscovered gas resources range between 4.97 and 39.74 Tcf, with a mean estimate of 19 Tcf (see NGI, July 4, 2011)). Total undiscovered oil resources in Cook Inlet range between 108 million and 1.36 billion bbl, with a mean estimate of 599 million bbl. As for natural gas liquids, the USGS said total undiscovered resources fell between 6 million and 121 million bbl.

Producers, including Houston-based Escopeta Oil Co. LLC, already have reported gas discoveries in Cook Inlet, which state lawmakers believe are sufficient to justify a new northward pipeline to Fairbanks, AK. A bill offered in the Alaska Senate (Senate Bill 215), one that has strong support, would give the state a green light to connect Fairbanks with natural gas lines in the Anchorage area (see related story).

Escopeta officials last November said they believed they had made the largest discovery of natural gas in Cook Inlet in 25 years. They estimated that they discovered more than 45 Bcf of gas at a single well, and up to 3.5 Tcf in the larger Kitchen Lights Unit region from two separate geologic formations (see NGI, Nov. 14, 2011). Escopeta's claims could not be verified. At the time of the discovery, Escopeta Vice President Bruce Webb said the company was in the preliminary design stages of an accelerated natural gas development scenario, which could bring new gas deliverability to the Cook Inlet as early as 2013.

Fears that old wells in Cook Inlet are running out of gas have prompted a strong push in the the Alaska legislature and the business community to construct a gas pipeline to bring the vast North Slope gas reserves to the populated areas of the state. Declining local gas reserves have also been cited in renewal of a hydroelectric proposal for the Susitna River -- a project scuttled in the 1980s partly because of cheap gas production in Cook Inlet. Whether new drilling in Cook Inlet will erase concerns about long-term gas supplies is still a major question.

The publication of the RFI in the potential Cook Inlet lease sale in the Federal Register (FR) does not indicate that a decision has been made about a lease sale in the Cook Inlet Planning Area, according to Interior's Bureau of Ocean Energy Management (BOEM). BOEM officials said they would not make a decision about a potential lease sale before finalizing the 2012-2017 OCS leasing program, and would determine whether there is adequate interest to hold the sale and conduct thorough environmental reviews.

For the 2012-2017 time period, Interior has proposed a total of 15 lease sales in six offshore areas where there are currently active leases and exploration and where there is "known or anticipated hydrocarbon potential." These include plans for five annual area-wide lease sales in the Western Gulf of Mexico (GOM) beginning this fall; five sales in the Central GOM beginning in the spring of 2013; two sales in the Eastern GOM in 2014 and 2016; one sale in the Beaufort Sea in 2015; one sale in the Chukchi Sea in 2016; as well as the Cook Inlet special interest sale.

Between 1978 and 1986, an estimated 13 exploration wells were drilled in the federal waters of the Cook Inlet Planning Area, BOEM said. Currently there are no active oil or gas exploration or development facilities in the federal waters there. The area's state waters contain 18 production platforms, 12 of which are currently active.

The RFI is available at http://www.archives.gov/federal-register/public-inspection/index.html. Comments may be submitted via the "Open Comment Documents" link at http://www.boem.gov/About-BOEM/Public-Engagement/Public-Engagement-Opportunities.aspx.

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