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Alaska Lease Sale Garners $46.7M, Most of It from Shell

Royal Dutch Shell was the big bidder on leases in Alaska's Beaufort Sea in the Minerals Management Service's (MMS) Oil and Gas Lease Sale 195 in Anchorage, AK, on Wednesday. Shell's bids totaled more than $44 million out of the $46.7 million received by MMS for 127 blocks totaling about 618,751 offshore acres. ConocoPhillips Alaska Inc. and Armstrong Alaska Inc. placed the remaining bids.

MMS said it offered 1,794 whole and partial blocks in the lease sale encompassing about 9.4 million acres. The sale area extends from three to 60 nautical miles offshore in water depths generally ranging from about 25 to 3,000 feet. Water depth in the majority of the sale area is less than 200 feet. The area extends from the Canadian border on the east side to Barrow on the west.

John Goll, MMS Alaska regional director, said the agency was pleased with the bidding results despite the small number of bidders. The offshore acreage leased by Shell includes areas were there were previous discoveries by Unocal and Arco Alaska Inc. Nevertheless, the areas in the lease sale are extremely remote.

"The Beaufort Sea contains the best near-term potential for offshore petroleum reserves on the Alaska Outer Continental Shelf that can be vital to our nation's and Alaska's economy," Goll said. "Any resources discovered would help boost supplies into the Trans-Alaska Pipeline."

He said MMS has developed seven lease stipulations to help minimize the impact on the environment and the Inupiat people in the area from any development of the oil and gas resources. These include requirements for protection of biological resources and spectacled and Steller's eiders, bowhead whale monitoring, use of pipelines rather than tankers and booming for fuel transfers.

In the previous eight federal sales held in the Beaufort Sea planning area since 1979, MMS issued 690 leases of which 64 remain active. All current leases are within three to 12 miles of the coast or barrier islands. Lessees have drilled 30 exploratory wells in the federal portion of the Beaufort Sea, all but one well in the sale area.

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