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North Slope Area Lease Sale Draws $5.6M, Down 61% From 2012

A total of 92 bids were entered in a pair of North Slope oil and gas lease sales in Anchorage Wednesday and the state netted $5.6 million, the Alaska Department of Natural Resources (DNR) said.

The agency received 90 bids from eight bidding groups on 89 tracts in the North Slope Areawide sale and two bids from one bidding group on two tracts in the Beaufort Sea Areawide sale. No bids were received for the North Slope Foothills Areawide sale, DNR said. A total of 162,163 acres in the North Slope and 5,120 acres in the Beaufort was leased.

The most active bidder was Nordaq Energy Inc., which submitted bids on 52 tracts on the North Slope. Nordaq was also active in a Cook Inlet lease sale DNR held earlier this year (see Daily GPI,May 9).

But while the Cook Inlet sale was the third largest of its kind in nominal dollars since the state's areawide lease sale program began in 1999, the Northern Alaska lease sale showed a steep decline in revenues compared with recent sales. Last year's oil and gas lease sales for the North Slope, North Slope Foothills and the Beaufort Sea totaled $14.2 million for 310,000 acres, $11.5 million of which came from the North Slope sale (see Daily GPI,Nov. 9, 2012). The 2012 North Slope area lease sale was the fourth largest by dollar amount; the 2012 Beaufort Sea sale netted the state close to $1.8 million, making it the fifth largest by dollar amount in that area. In 2011, the lease sale garnered the state $21 million for 550,000 acres.

But the 2013 North Slope sale results "are very encouraging, and we look forward to seeing new exploration on these hydrocarbon-rich lands," said DNR Acting Commissioner Joe Balash. "The robust participation we've seen in our lease sales over the last four years is a critical step in reaching our long-term goal of boosting oil production in Alaska.

"It is a clear sign that investors have great confidence in the future of development on the North Slope when they invest in additional oil and gas leases. They continue to see opportunities on our North Slope lands for new oil production to increase oil flowing through the Trans-Alaska Pipeline [TAPS] to market."

Preliminary, post-adjudication sale results are expected to be available on the DNRwebsite on Friday.

Alaska this year passed legislation (SB 21) that cut taxes on oil production with the goal of helping to refill TAPS (see Daily GPI,April 16).

Pioneer Natural Resources Co., the first independent producer to ply Alaska's North Slope, last month said it had sold its Alaska business unit to focus on West Texas (see Shale Daily,Oct. 25). Judging by U.S. Energy Information Administration data, Pioneer isn't the only company that has de-emphasized Alaska in recent years. Crude production in Alaska has fallen every year since 2003, and has declined from 17.2% of total U.S. production in 2003 to just 8.1% in 2012. Statewide, oil production in Alaska has fallen between 5.8% and 7.0% in each of the last four years. Meanwhile, crude production in the rest of the United States has increased every year since 2008, and it grew at a whopping 17.4% year-over-year in 2012.

Separately, the U.S. Bureau of Land Management (BLM) said Wednesday that it had received $2.89 million in winning bids for 245,293 acres in Alaska's National Petroleum Reserve. Three companies submitted 22 bids for the right to develop oil and gas lease tracts in the federal petroleum reserve managed by BLM on Alaska's North Slope. BLM had offered 408 tracts comprising about 4.5 million acres in the sale. The highest bid of $200,103 ($52.11 per acre) was offered by ConocoPhillips Alaska, BLM said.

A map and table with complete sale results by tract are posted at the BLM-Alaskawebsite.

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