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No One Bids in Alaska's Cook Inlet Lease Sale

The Alaska Department of Natural Resources (DNR) said there were no bids placed in an oil and gas lease sale for the Cook Inlet and the Alaska Peninsula on Thursday, marking the first time in state history that there were no bidders for the inlet.

According to DNR records, there have been 158 competitive oil and gas lease sales in the state since 1959. Of those, 52 have been for leases exclusively in the Cook Inlet. Seven leases in the inlet were sold at its last lease sale, which was held in May 2015. A total of 20,840 acres were leased at an average price of $32.20/acre, and the state received a bonus of $671,033.

In a statement, Corri Feige, director of the DNR's Division of Oil and Gas Director, said the state attributed "the lack of participation in this lease sale to a protracted period of low prices, as well as a limited amount of available acreage around producing areas and infrastructure in Cook Inlet.

"The number of state oil and gas leases currently leased in Cook Inlet is above the historical average. Currently, there are 335 tracts leased in Cook Inlet, totaling more than 911,000 acres of state land."

Alaska Oil and Gas Association CEO Kara Moriarty blasted the Alaska State Legislature for considering changes to oil and gas tax credit system, which was proposed by Gov. Bill Walker. A bill under consideration in the state House of Representatives would eliminate tax credits for the Cook Inlet, a move Walker supports.

"It is no surprise the Cook Inlet lease sale received no bids," Moriarty said. "What company would even consider new projects in Cook Inlet at a time when the Alaska Legislature is considering changes that will make it more expensive to operate in the basin?

"The message being heard by the oil and gas industry is loud and clear: Alaska is an unpredictable, unstable, and uncertain place in which to do business. If the governor and sympathetic members of the legislature make it even harder for companies to invest in Alaska, this canceled lease sale is likely just the beginning in a series of similar announcements. Either way, Alaska loses."

There were no bidders at the last lease sale for the Alaska Peninsula, which was also held in May 2015.

The federal government is still planning to have a lease sale in the Cook Inlet. It will be one part of the Department of Interior's Outer Continental Shelf Oil and Gas Leasing Program for 2017-2022 (see Daily GPIMarch 15).

Last March, Apache Corp. abandoned its operations in the Cook Inlet, citing the downturn in commodity prices (see Daily GPIMarch 4).

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