Active state Slope sales net $21.2M, NPR-A quieter
Interest was again high among oil and gas lease bidders for state acreage on the North Slope in Dec. 6 lease sales but that was not the case for the federally controlled National Petroleum Reserve-Alaska.
Winning bidders spent $21.2 million for 216,000 acres of state land and water across 119 lease tracts. The vast majority of that, $19.9 million, was for 179,000 onshore acres and the remaining $1.2 million was for 37,000 acres of state-owned, near shore waters of the Beaufort Sea.
It was the third most spent to win state lease bids in the past 20 years, according to Division of Oil and Gas Director Chantal Walsh.
She said the results of the annual sales are exciting given last year’s strong response from explorers despite continued lower oil prices.
“It’s particularly fun to see competitive bidding going on,” Walsh commented shortly after the bid opening.
Last year’s Slope and Beaufort sales drew $17.8 million in winning bids but that was for 391 lease tracts covering more than 630,000 acres.
Again, no one bid on state leases in the North Slope Foothills area.
Spanish major Repsol, which holds a 49 percent stake in the large and in-permitting Nanushuk oil project, dominated the onshore Slope sale, spending up to $293 per acre in some bids to win 45 tracts. Much of that acreage is in the few tracts south of the Pikka Unit that holds the Nanushuk project that were not leased and open for bidding.
The value of some of the winning bids, which averaged $110 per acre, is the highest since the state started the areawide lease sales in 1998, according to the Department of Natural Resources.
In an interesting turn, Repsol also outbid its outgoing Nanushuk partner, small independent Armstrong Energy, on about a dozen tracts in that area south of Pikka. In late October Armstrong sold part of its stake in Nanushuk to Oil Search — an Australian company that operates primarily in Papua New Guinea — for $400 million. Oil Search will become the operator of the Nanushuk project next June and company leaders said they plan to exercise an option to fully buy Armstrong out of the project for another $450 million by July 2019.
"Today's results are yet another indication the State of Alaska is highly attractive to oil and gas investors around the world, and we are open for business," Gov. Bill Walker said in a DNR release. "I am particularly pleased to see Repsol E&P adding to its promising North Slope portfolio and showing strong interest in exploration south of its existing leases in the Pikka Unit."
Despite the competition, Armstrong still won about two-dozen tracts, most of which are just south of the ConocoPhillips’ Kuparuk River field.
ConocoPhillips also picked up a handful of leases south of Kuparuk.
Accumulate Energy, a subsidiary of Australian 88 Energy, won 12 leases further to the south. 88 Energy is exploring an unconventional oil play along the Dalton Highway about 60 miles south of Deadhorse.
Despite offering all 10.3 million acres available for leasing, the Bureau of Land Management received only seven bids for 80,000 acres in the NPR-A, all of which came from ConocoPhillips.
In a partnership with Anadarko Petroleum Corp., ConocoPhillips spent $1.1 million with BLM to expand its holdings in the eastern portion of the NPR-A. Conoco is in the midst of developing its two Greater Moose’s Tooth projects in the 23 million-acre federal reserve and has plans to drill four other wells in the NPR-A this winter; three to delineate its 300 million-barrel Willow oil discovery announced about a year ago and another separate exploration well.
Half of the federal lease revenue will go to the State of Alaska, as part of revenue sharing arrangements for the NPR-A.
Last year’s NPR-A sale netted more than $18 million in high bids for 613,000 acres, mostly from ConocoPhillips, which has led the foray into the vast undeveloped area.
Elwood Brehmer can be reached at email@example.com.