Three independent oil and gas companies won the right Wednesday in the state's annual Cook Inlet lease sale to explore for and develop oil and gas resources on new leases.
Forty-four tracts drew bids that should generate more than $6.8 million in bonuses for the state of Alaska based on preliminary numbers. Final numbers should be available Friday, state officials said.
The three bidders winning almost all of the leases were Hilcorp Alaska LLC, which earlier bought Chevron's Cook Inlet leases and is in the process of acquiring Marathon Oil Corp.'s; Apache Alaska Corp., a branch of the Houston-based multi-national just coming into Alaska; and Cook Inlet Energy, a small, new player run by some old hands that had the highest per-acre bid amount, $82.50 for tract 374.
That one tract of 2,560 acres should generate $211,200 for the state through the bonus bid. A bigger tract of 5,760 acres, with the winning bid by Hilcorp, is expected to bring in $345,600, based on preliminary numbers.
Most tracts were either 2,560 acres or 5,760 acres. Some tracts were onshore, some were offshore and some were split between.
Bill Barron, director of the state Oil and Gas Division, conducted the sale in a meeting room at the Dena'ini Civic and Convention Center. He stood before a giant map of Cook Inlet, with the tract up for bid showing up as a small block of red among vast yellow sections, which were already leased. He opened the sealed bids one by one, reading off the tract number, the bidder, per-acre amount of the bid and the total the state would likely receive from bonuses.
Buccaneer Alaska LLC and William Crawford also bid on leases. Crawford, an individual, won a lease for a small 35-acre tract with a $875 bid.
The three players with the bulk of the winning bids "are basically doing some fill in work around their existing leases," Barron said. "So that's all real positive. People are solidifying land holdings to continue to do their exploration and development activities."
Last year, Apache Alaska snatched up a number of leases, and with other new explorers also working in Cook Inlet off existing leases, the state was pleased this year's sale generated as much interest as it did, Barron said.
Wednesday's sale generated the second highest amount since the state switched to areawide lease sales in 1999, Barron said. Only last year's lease sale generated more, $11 million. The state used to hold targeted sales with sites nominated by potential bidders.
"That's a significant comment," Barron said. "People are still seeing a robust potential development and exploration activities for the Cook Inlet."
Income from bonus bids is split largely between the state's Permanent Fund and the general fund that pays for state government.
Cook Inlet Energy became an operator in December 2009, after it gobbled up another company's assets in a bankruptcy sale, said David Hall, the company's chief executive officer.
"We see an enormous amount of potential all up and down the Cook Inlet, both oil and gas," Hall said. Greg Kirkland, the company's senior geologist, said Cook Inlet Energy has a large database on individual wells as well as seismic data.
Apache is still conducting seismic tests to gather more information about where commercial amounts of oil and gas may remain trapped under the surface, said Lisa Parker, its government relations manager. That data is being used to determine the areas for exploratory drilling, which it hopes to do this fall, she said.
The state is trying to encourage more oil and gas exploration and development in Cook Inlet. It levies no tax on oil from Cook Inlet, and the production tax on gas is low, just 18 cents per thousand cubic feet of new production. A law passed in 2010 gives a special incentive for the first three exploration wells drilled from a jack-up rig.
Reach Lisa Demer at ldemer@adn.com or 257-4390.
