An Alaska natural gas pipeline to the Lower 48 is far from a sure thing, but Petro-Canada appears to be hedging its bets that one day gas eventually will move south. The Calgary-based producer, with a high bid of $8.5 million, won the right to lease 179 tracts of gas-rich property that cascades through the southern foothills of the North Slope in Alaska’s largest lease sale to date, acreage-wise. More important to Petro-Canada, the acreage boosts its North Slope potential to 1.3 million acres the company won 56 tracts in the same region just last year.

“It speaks well for the potential of North Slope gas beyond the known, existing reserves,” said Mark Myers, director of the Alaska Division of Oil and Gas. He said if Petro-Canada officials believe they can find and produce gas in northern regions like the Alaska foothills, “it’s a vote of confidence that we will see an economic gas line.”

The Division of Oil and Gas said Wednesday’s lease sale on 197 tracts in the southern North Slope and Brooks Range foothills was not the largest money-wise (compared with the heady oil-rush days of the ’70s and ’80s), but was the largest in terms of land. Unocal Corp., Anadarko Petroleum Corp., and joint bids from Anadarko and Canada-based EnCana also won with bids totaling $1.8 million for 85,000 acres. The leases are located on more than 7.6 million acres, south of the Prudhoe Bay and Kuparuk oil fields, and between the Arctic National Wildlife Refuge and the National Petroleum Reserve-Alaska. Few wells have been drilled in the area so far, but geologists say studies indicate the land is gas-rich.

Daniel Zobrist, an economist with the Division of Oil and Gas, said the bids are a “sign from the marketplace that speaks to the viability of a gas line.”

Alaska Gov. Tony Knowles, who has made a North Slope gas line through the state a top priority, said the latest sale indicates that the energy industry believes there will be a gas line. “I am especially pleased to see such aggressive interest from a relatively new player in Alaska,” he said in a statement. “It shows that interest in Alaska’s oil and gas resources is not limited to the major owners of the facilities on the North Slope.”

Myers said recent Congressional action was a vote of confidence that there will be a gas pipeline from Alaska that will run south from Prudhoe Bay, not along Alaska’s Arctic coastline into the Beaufort Sea, which has been strongly opposed by Alaska residents and environmentalists. “A northern gas line isn’t going to happen,” he said. “It will be a southern gas line, independent of the Mackenzie line.”

However, the proposed 3,500-mile gas pipeline from Prudhoe Bay to Chicago has never gotten past the extensive studies that indicate it can be done. When gas prices jumped in late 2000, the decades-old idea was revived once again by several producer groups, including Phillips Petroleum Co., BP and Exxon Mobil, which now hold most of the North Slope’s proven gas reserves, estimated at 35 Tcf.

The three companies completed a $125 million study recently on the viability of a gas line either along the Alaska Highway or under the Beaufort Sea and across the Northwest Territories south. However, as natural gas prices declined, so did the impetus to build a line — at least from Alaska. The producers told Alaska officials in late March that neither route from the North Slope currently makes economic sense. Meanwhile, a push to build a single gas line from the Mackenzie Delta has gotten stronger.

However, Petro-Canada apparently wants to position itself for a gas pipeline in any case, whether it goes through Alaska and across the Beaufort Sea and into the Northwest Territories or just begins in Canada. It jointly holds another 1.2 million acres of gas leases in the Mackenzie Delta, where a coalition is spending hundreds of millions now to gain permits for a separate south-bound gas line.

“Our view is both Mackenzie Delta and Alaska gas will eventually be shipped to North America,” said Petro-Canada spokesman Chris Dawson. “We’re positioning ourselves on both of these major gas frontiers.”

Petro-Canada’s acquisitions in the latest lease sale were so large that the company may exceed Alaska’s legal leasing limit of 500,000 state-owned acres (202,400 hectares) once the final results are tabulated, said Myers. If the limit is exceeded, Myers said Petro-Canada may have to give up some of the leases or take on partners.

According to preliminary results, Wednesday’s Brooks Range foothills lease sale grossed $10.26 million for Alaska. The sale offered 7.65 million acres (3 million hectares), with 1,347 tracts.

The Division of Oil and Gas also held an oil and gas lease sale in the Cook Inlet area Wednesday. Six groups bid $581,290 for more than 82,500 acres scattered throughout the Inlet, the agency said. Alaska unsealed bids for 20 tracts in the oil-rich region around Anchorage. High bids totaled $581,290, with Forest Oil Corp., Marathon Oil Corp., Northstar Energy Corp. and several individual investors obtaining leases, according to preliminary results. Pending an Alaska court decision about tracts withheld from the sale because of concerns for a beluga whale habitat, more Cook Inlet bids may be considered in the future, Myers said.

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