Cook Inlet Energy LLC was the successful bidder for an exploration license covering 168,581 acres of Alaska state land in the Iniskin Peninsula area of southwest Cook Inlet, the Alaska Division of Oil and Gas said Wednesday.
The company committed to spending $1.5 million on exploration over the four-year term of the license.
"We are excited to open a new area of the state for increased oil and gas exploration and look forward to the possibility of new oil and gas opportunities," said Division of Oil and Gas Director Bill Barron.
State geologists continue to gather and assess information on the resource potential of the region in cooperation with the U.S. Geological Survey. Exploration drilling on the Iniskin Peninsula dates back to 1902, with several shallow holes drilled near oil and gas seeps at the head of Oil Bay and Dry Bay.
Geologic mapping of the peninsula by Division of Oil and Gas and Division of Geological and Geophysical Surveys geologists in 2013 has led to an improved understanding of the license area's structure and stratigraphy, Alaska officials said.
The exploration license program is intended to encourage exploration in areas outside of state oil and gas lease sale areas, far from existing infrastructure, with relatively low or unknown hydrocarbon potential, and where there is a higher investment risk. If the work commitment is met, Cook Inlet Energy may convert any portion of the license area non-competitively to oil and gas leases that will have a term of five years, royalty rate of 12.5% and rent of $3.00 per acre.
Cook Inlet Energy is a unit of Tennessee-based Miller Energy Resources, which according to its website is a "...high-growth oil and natural gas exploration, production and drilling company operating multiple projects in North America. Miller's focus is in the Cook Inlet area of Alaska and in the heart of Tennessee's Appalachian Basin."