In a sign that at least one industry player believes an Alaskan natural gas line may not become reality for some time, Burlington Resources Inc. has abandoned 32 Alaskan North Slope Foothills leases it obtained in 2001. Burlington apparently no longer considers the North Slope to be a core area, and the company did not want to pay the annual rent to retain the leases, according to a spokesman for the Alaska Division of Oil and Gas.
Pat Galvin, petroleum land manager for the division, said Burlington’s annual rent payment of $367,002 for all 32 leases, which are located on the south side of the North Slope, was due on July 1. When the payment was not received, he said a “courtesy call” was made and the company indicated it no longer wanted the leases. In the 2001 lease sale conducted by the state, Burlington obtained the leases for $1.9 million, which was 20% of the $9.7 million bid in the entire sale.
Burlington spokesman James Bartlett told the trade publication Petroleum News that there were “several factors” in the company’s decision, including the cost of carrying the leases. He also said that development of an Alaska natural gas pipeline is at least seven years away, and “Alaska is unlikely to become a core area for Burlington anytime soon.”
Alaska began its North Slope lease sales in 2001, and then-Gov. Tony Knowles made a southern North Slope gas line through the state a top priority. Knowles said then that the strong lease sales were an indication that the energy industry believed there would be a gas line (see Daily GPI, May 3, 2002).
Alaska’s lease rents are progressive, according to the Division of Oil and Gas, with $1/acre for the first year, progressing to $3 for the fifth and subsequent years. Burlington’s third-year rent was due, which would have been $2/acre. Burlington obtained 183,000 acres for 10-year terms in leases in the southern half of the Foothills sale area, paying $5.50/acre for 13 of the leases and $14.44/acre for the other 19 leases. The leases are located between the Anaktuvuk and Itkillik rivers.
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