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State oil and gas, geothermal lease sales net nearly $4.5 million in high bids

ANCHORAGE, Alaska – The state received nearly $4.5 million in high bids for oil and gas leases in Cook Inlet and received a bid for a geothermal lease on Augustine Island during a series of lease sales on Wednesday morning.

The Cook Inlet lease sale was the third largest of its kind in nominal dollars and the sixth largest in acreage leased since the state’s areawide lease sale program began in 1999.

“We’re very pleased to see the Cook Inlet energy renaissance continue to take hold,” said DNR Commissioner Dan Sullivan. “This provides increased energy security for Alaskans and growing employment opportunities in Southcentral,” he said.

“Three years ago, the conventional wisdom was that Cook Inlet was a dead hydrocarbon basin. We’ve been able to turn that around with: strong legislative action to make Cook Inlet one of the most competitive places in the country to invest; a comprehensive strategy at DNR to secure timely development and attract new investors; and a strong partnership between all the stakeholders in Cook Inlet to address the key issues of gas storage, deliverability and increased energy supplies for Alaskans,” Sullivan said.

In the past two years, Cook Inlet has seen a dramatic increase in oil and gas investment from a variety of large and small companies. The past three Cook Inlet lease sales have been some of the best in years. This investment activity is beginning to translate into increased drill rigs, oil exploration and gas production in the Inlet. For example, Southcentral utilities were recently informed that their gas supply needs could be met through the end of 2017.

The success seen so far in Cook Inlet with this combination of legislative action, DNR effort, and stakeholders working together is a clear indication of what can be achieved on the North Slope to turn around its production decline, Sullivan said.

The Division of Oil and Gas opened the lease sale bids at the Dena’ina Civic and Convention Center in downtown Anchorage. Until the bids are adjudicated, lease sale results provided below will remain preliminary.

Cook Inlet areawide oil and gas lease sale

  • 32 bids were received from seven bidding groups on 28 tracts, encompassing approximately 145,739 acres.
  • Bidders included Hilcorp Alaska, Cook Inlet Energy, and NordAq Energy. Hilcorp was the most active bidder, winning 19 of the 28 tracts in the lease sale.

Augustine Island geothermal lease sale

  • A single bid was received for one of the 26 tracts offered. The bidder was Nicholas van Wyck.
  • This was the state’s first geothermal lease sale on Augustine Island. The division’s last geothermal lease sale was in 2008 on Mount Spurr.

Alaska Peninsula areawide oil and gas lease sale

  • Similar to the past five years, tracts in this lease sale did not receive any bids.

Division Director Bill Barron provided the following observations about the lease sale results:

“In the past two years, we’ve seen record lease sales for the Inlet and new players moving in. But obtaining a lease is just the first step. We are very pleased that a number of leaseholders in the Inlet are busy this year exploring and securing their land positions, evaluating their exploration results, and working over properties they’ve obtained from other companies.”

Barron said that he was also pleased to see one of Cook Inlet’s new entrants – Hilcorp – stepping into exploration for the first time in Alaska.

Regarding the Augustine Island lease sale, Barron added, “Geothermal energy is still a fairly new and unexplored resource in Alaska. The resources are clearly there and we hope to see a successful project in Southcentral.”

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