State North Slope lease bids quadruple results from 2013

The State of Alaska received significant interest in North Slope oil and gas leases during its 2014 lease sale.

A total of 356 bids were submitted for 298 tracts, including 297 for the North Slope onshore leases, 57 for the Beaufort Sea and 2 for the North Slope foothills. High bids totaled $59.7 million, said Division of Oil and Gas Director Bill Barron at the end of the bid opening.

The 2014 bids far outnumbered recent years, and are the most submitted since at least 2006. In 2013, 92 total bids were submitted. In 2012, the state received 132 bids on 122 tracts. In 2011, there were 257 high bids: 78 for the Beaufort Sea and 179 for onshore leases.

“I’m certain, having talked with some of the bidders, that the affirmation of tax reform in August contributed to the number of bids we saw,” said Department of Natural Resources Commissioner Joe Balash.

For the North Slope areawide leases, nine bidder groups sought leases and 526,947 acres were sold. For the Beaufort Sea leases, five bidding groups bid, and 107,189 acres were sold.

Independents submitted the majority of the high bids. Caelus Alaska Exploration won the largest number of bids, but was also outbid on some leases, mostly by ConocoPhillips and Denver-based 70 and 148 LLC, a subsidiary of Armstrong Oil and Gas.

Caelus operates on the North Slope leases formerly held by Pioneer Natural Resources, and the State of Alaska recently announced a preliminary finding in favor of Caelus’ request for royalty reduction while it brings the new Nuna field online; that decision must still be finalized.

In the Beaufort, 70 and 148 LLC outbid Caelus on eight adjacent tracts west of Deadhorse. That company was also the apparent high bidder for two other tracts.

Major North Slope producers also bid on leases in the Beaufort and areawide sales. ConocoPhillips won some Beaufort leases, but did not grab all of the North Slope areawide lease it bid on. The major bid was in conjunction with Chevron and ExxonMobil for one lease in the areawide sale, which the companies won as the sole bidder.

ConocoPhillips and Anadarko also jointly bid other leases, and were outbid by 70 and 148 LLC on some.

Other winning bidders included Burgundy Xploration, Great Bear Petroleum Ventures 2 and Woodstone Resources. Chevron and Exxon also jointly bid on a lease with ConocoPhillips, for which they were the only bidder.

R3 Exploration Corp. was the sole bidder for North Slope foothills leases. If the bids are validated, the company will have leases for 10,120 acres on two tracts in the North Slope Borough, both on the Colville River at the edge of the National Petroleum Reserve-Alaska. The State will receive $147,114 for those leases.

The sealed bids were opened Nov. 19; the division accepted them Nov. 17. Leases will be awarded after all of the bids are validated.

11/19/2014 - 12:53pm