Exploration partners Anadarko Petroleum and Phillips Alaska bought up the most tracts in the Bureau of Land Management’s second lease sale since the United States resumed leasing in the Alaska National Petroleum Reserve (NPR-A) three years ago. The two companies, which have been most active in the reserve, are expected to be awarded 34 tracts with winning bids of $9.6 million. The entire lease sale generated winning bids totaling $63.8 million for 60 tracts covering 579,269 acres.

“This additional acreage in the NPR-A will allow us to continue our exploration momentum westward across the petroleum reserve,” John Seitz, Anadarko CEO, said in a statement. The acreage further enhances Anadarko’s prospect inventory, Seitz added. With the sale, Anadarko’s leasehold totals 277,500 net acres in the NPR-A. The company has access to about 1.9 million net acres across the Alaska North Slope through either current or pending leases or options.

TotalFinaElf E&P USA is expected to be awarded 20 tracts with winning bids totaling $53.5 million. TotalFinaElf submitted the six highest bids of the sale, bidding more than $10 million on each of two tracts and more than $7 million on a third. TotalFinaElf’s bidding accounted for about 83% of the dollars raised by the sale.

EnCana Oil and Gas (USA) Inc. will likely be awarded bids on five tracts with winning bids of $920,000. Eight companies participated in the sale. No bids were received from BP, a company active in the reserve three years ago.

The federal government will share 50% of winning bids with the State of Alaska. The 24.2 million-acre petroleum reserve is located west of the Arctic National Wildlife Refuge (ANWR) and the Prudhoe Bay and Kuparuk oil field complexes. About four million acres in the reserve’s northeastern corner were offered for leasing in 1999. That lease sale drew $104.6 million in bids, largely from Arco Alaska Inc. and BP. Phillips Alaska acquired Arco’s Alaska assets and has been the most active in exploring the reserve in recent years. Last year, Phillips announced it had discovered commercial quantities of oil in the reserve.

The petroleum reserve was established in 1923, but there has been no production from the area and, until recently, limited exploration. The discovery of the 430-million barrel Alpine oil field, announced in 1995 by Arco, sparked new industry interest in NPR-A. The Alpine property is on state land east of the petroleum reserve’s.

The Bureau of Land Management is also planning for possible lease sales in future years in the reserve’s northwestern corner. A new U.S. Geological Survey (USGS) assessment of the reserve concludes that there are “significantly greater petroleum resources than previously estimated.” However, it also concludes that ANWR is a better target with more recoverable oil at prices under $35/bbl (see NGI, May 20).

The USGS assessment, which was released last month, said that undiscovered oil beneath the federal part of the reserve (93% of the area) likely ranges between 5.9 billion and 13.2 billion bbl with a mean value of 9.3 billion bbl (10.6 billion bbl for the entire reserve, including non-federal portions). An estimated 1.3 billion to 5.6 billion bbl of those resources are economically recoverable at market prices of $22-30/bbl. The undiscovered natural gas in the same area ranges between 39.1 Tcf and 83.2 Tcf with a mean value of 59.7 Tcf (61.4 Tcf for the entire reserve). The economical viability of the gas depends on the availability of a pipeline to market. The bulk of the natural gas resources are thought to occur in the central and southern NPR-A.

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