What’s been called a renaissance in Southcentral Alaska’s once dwindling oil and gas basin showed no signs of letting up on Wednesday as eight bidding groups plunked down $5.3 million to lease more than 100,000 acres in the Cook Inlet region.
Meanwhile, a state official said a production platform is headed to Alaska -- meaning more gas production may be on the horizon -- and a leading independent producer is in negotiations to extend gas contracts with Anchorage utilities, potentially providing more breathing room to prevent widespread power outages some have feared in recent years.
And in a separate Alaska Peninsula lease sale also held Wednesday, two newcomers to Alaska submitted bids for three tracts in the state waters of Bristol Bay about 35 miles southwest of Port Moller.
Bids haven’t been submitted in the Alaska Peninsula sale since 2007, said Bill Barron, director of the state’s Division of Oil and Gas.
Novus Terra Ltd. was the lone bidder for two tracts, bidding about $47,000 for a little more than 9,000 acres. Auxillium Alaska was the lone bidder on the third tract, offering about $4,400 for approximately 900 acres.
“It’s kind of a new game,” said Barron of those bids. “Trying to understand who they are and what their focus will be is kind of a direction the division will take for the next several years.”
The lease sale for Cook Inlet -- where extremely generous incentives include no taxes for oil production and low taxes for gas production -- marked a continuation of the healthy sales seen in recent years, with the companies, all independents, submitting bids on 35 tracts totaling 114,000 acres.
Barron called it a “real stable sale” in line with annual offerings the previous two years, when bidders leased more than 100,000 acres.
Hilcorp, which is making moves to enter the oil-rich North Slope at the top of the state, strengthened its hold in the Cook Inlet basin, offering high bids on about a dozen tracts on land and in the water.
Lori Nelson, a spokeswoman with the Houston, Texas-based company, said the acquisitions “patch holes in the framework” and strengthen leases Hilcorp already owns.
Hilcorp, which in recent years acquired Cook Inlet properties belonging to Chevron and Marathon, has been credited with rejuvenating old wells and drilling new ones to improve oil and natural gas production in the inlet.
Hilcorp has played a critical role in finding enough new gas to meet the needs of Southcentral utilities through 2018. Now it’s in negotiations with utilities to extend contracts to 2019, said Nelson.
Apache picked up seven tracts across Cook Inlet. Also based in Houston, the independent has conducted an extensive seismic monitoring program in recent years. The new acquisitions complement the company’s existing holdings in the inlet, said Lisa Parker, spokeswoman.
Houston-based Woodstone Resources, which has previously offered bids on leases in the inlet and on the slope, was the highest bidder for any one Cook Inlet tract, offering $153 an acre for a pair of tracts, about $800,000 for some 5,000 acres.
One company not bidding was Furie Operating Alaska. That independent claims to have discovered about 750 billion cubic feet of natural gas in the Kitchen Lights Unit, about 20 miles northeast of Nikiski. That's about seven and a half years of Cook Inlet's current production of about 100 billion cubic feet a year.
Furie is currently shipping up a production platform from Texas, said Barron. Gas should be flowing late this year or early next year, he said.
“Those are new gas resources that have never been brought to bear,” he said.