The state of Alaska received bids nearly $21 million for petroleum leases on the North Slope and offshore in the Beaufort Sea on Wednesday, as the state looks to increase the volume of crude oil shipped through the Trans-Alaska Pipeline System (TAPS).
Meanwhile, the federal government said it generated bids totaling more than $3.6 million from its separate sale of oil and gas leases in the National Petroleum Reserve-Alaska (NPR-A) on Wednesday.
Both lease sales were conducted after two federal agencies on Monday agreed in principle to a proposal by ConocoPhillips to build a pipeline and an all-weather road across the Colville River and into the NPR-A, a move that is expected to spur additional oil and gas development in the reserve.
Alaska’s Division of Oil and Gas, part of the Department of Natural Resources (DNR), said it has tentatively sold 178 tracts on the North Slope totaling 334,969 acres for $14.1 million. Another 78 offshore tracts in the Beaufort Sea totaling 281,095 acres were sold for $6.8 million.
“Today’s lease sale was an important, positive step that attracted additional investment to the North Slope,” Alaska Gov. Sean Parnell said Wednesday. “Reversing the declining flow of oil through TAPS and getting to 1 million b/d is critical to our economy and the nation’s energy security.”
The Trans-Alaska Pipeline is currently operating at less than one-third of its 2.1 million b/d capacity.
“One of our immediate goals for this lease sale was to increase the number and type of investors and companies investing in Alaska,” DNR Commissioner Dan Sullivan said. While “the sale was successful in this respect, but there is certainly an opportunity to do more in the future to attract additional investment.”
In an interview with the Associated Press, Sullivan hinted that state officials were disappointed that, despite an aggressive marketing campaign toward energy companies (see Daily GPI, July 1), only 19 bidders participated in the lease sale.
“To be honest, there were a number of companies that we spoke to that certainly had an interest [that] did not show up today,” Sullivan said. “We’re going to try to get a sense of why.” The DNR said additional details surrounding the state lease sale were not yet available.
The U.S. Department of the Interior (DOI) said the Bureau of Land Management (BLM) sold 17 tracts in the NPR-A totaling 141,739 acres for an estimated $3.64 million. The state of Alaska will receive 50% of the bid receipts generated by the federal lease sale ($1.82 million), plus 50% of the annual revenue generated from the individual leases. The leases will be issued by mid-April after an economic evaluation of the bids has been performed.
The BLM said the single highest bid was from 70 & 148 LLC, which offered $490,299 ($101.03/acre) for a tract near the Colville River and adjacent to tracts the state offered at its sale. Other winning bids were received from Woodstone Resources LLC and ConocoPhillips Alaska Inc.
On Monday, the DOI said two federal agencies — the Fish and Wildlife Service (FWS) and the Department of Environmental Protection (EPA) — have agreed to a request by the U.S. Army Corps of Engineers to evaluate the environmental impacts of a proposal by ConocoPhillips. The proposal, known as the Alpine Satellite Development Plan, calls for the construction of a pipeline and an all-weather road over the Nigliq Channel of the Colville River.
According to the DOI, ConocoPhillips has agreed to let other companies developing leases in the NPR-A use the same crossing over the Colville, rather than forcing them to seek approval for their own bridge projects.
The Army Corps, which will carry out the final steps in the proposal’s permitting process in the coming weeks, denied ConocoPhillips a permit for the Alpine project in February 2010 (see Daily GPI, Feb. 9, 2010).
“To harness Alaska’s tremendous energy potential for our nation, we must continue to find ways to responsibly expand opportunities for exploration, development, and delivery of resources from the NPR-A,” said DOI Deputy Secretary David Hayes. “I applaud the hard work and collaboration by all parties, including the company and federal agencies, to develop a proposal that meets both the energy objectives of the [Alpine] project and that mitigates potential environmental impacts.”
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