State nets $7M from five companies in Slope lease sale

The State of Alaska’s North Slope oil and gas lease sale netted only about half of the bid revenue that the Bureau of Land Management’s sealed bid auction for the Arctic National Wildlife Refuge coastal plain did, but interest from industry was still far greater.

The Division of Oil and Gas collected approximately $7 million across 115 bids from five companies, officials announced Wednesday afternoon following the morning bid opening.

The state’s North Slope and Beaufort Sea lease sales are traditionally a minor annual event with a small audience of industry representatives, reporters and others present to watch the bid opening. COVID-19 precautions prevented that this year.

BLM generated about $14 million in its ANWR sale in which bids were opened a week ago; however, the individual coastal plain leases are many times larger than the state tracts that are usually about 2,500 acres or less and 11 tracts were leased to three bidders. Most of that bidding was from the state-owned Alaska Industrial Development and Export Authority.

Oil and gas officials said in the statement announcing the sale results that the bid activity is encouraging despite the rough conditions of oil markets over the past year.

“This is good news for Alaskans. We look forward to working with these companies to ensure Alaska’s future in energy development,” Oil and Gas Director Tom Stokes said.

The state oil and gas lease auctions have typically been held in late fall. The December 2019 sales netted generated nearly 70 bids totaling about $7.5 million, while more than $28 million was spent on state land by explorers in 2018.

The five bidders collected 191,248 acres of state land and near shore areas of the Beaufort Sea and are a mix of small explorers and larger, established producers.

Hilcorp Energy was the only bidder on Beaufort Sea acreage and won three tracts along the north edge of the Prudhoe Bay Unit.

Per usual, there were no bids for the North Slope Foothills area.

Oil Search, the Papua New Guinea-based producer that is developing the large Pikka oil project on the Slope, collected 46 tracts primarily to the south of its current work.

The vast majority of the sought-after acreage between the producing fields near the coast is currently leased.

Great Bear Petroleum Ventures II also picked up 46 tracts largely to the south of the producing fields as well, spending more than $100 per acre on some of the leases to do so. Great Bear was originally founded as an Anchorage-based independent explorer and held significant North Slope when it was purchased by British Pantheon Resources in 2019.

Lagniappe Alaska, an offshoot company of Bill Armstrong, who’s namesake Armstrong Oil and Gas led discovery of the Nanushuk oil formation that is the main source Pikka prospect in the mid-2010s, also won 13 leases mostly on the eastern portion of the Slope near ExxonMobil’s Point Thomson gas field. Explorers have shown more interest in eastern Slope areas in recent years; the area was partly explored in the 1980s and some oil was found but for several reasons was not developed.

New North Slope player Arctic Circle Exploration — a Kansas-based independent, according to state business records —also acquired seven leases south of Prudhoe.

Elwood Brehmer can be reached at [email protected].

01/19/2021 - 12:22pm