Inlet lease sale set for Wednesday

The state will hold its annual Cook Inlet area-wide lease sale Wednesday and has set the yearly Beaufort Sea, North Slope and North Slope foothills sale for Oct. 26, the Division of Oil and Gas said in a press release.

The oil and gas division will offer new conditions and options in both sales to stimulate industry interest, Bill Barron, new director of the division, said in the statement.

Both sales will be held in Anchorage. Alaska’s area-wide sales for different regions of the state are held yearly and offer all unleased acreage in the area.

“Consistent with the state’s effort to boost oil development, the lease sale terms are expected to include options not previously seen in lease sales in these areas,” Barron said. “The (state) Department of Natural Resources intends to aggressively market its offerings, and will include tracts bordering the 1002 area of the Arctic National Wildlife Refuge.”

The Cook Inlet sale is expected to attract interest because of a recent gas discovery on the Kenai Peninsula, an area where gas fields have produced for years but where new exploration, spurred by state financial incentives, is under way.

Buccaneer Energy, subsidiary of an Australian company, recently announced that its Kenai Loop No. 1 exploration well flowed at 30 million cubic feet per day in a test and will be capable of sustained rates of 6 million to 8 million cubic feet per day in long-term production. Buccaneer is planning a second well this fall.

The state is also offering acreage in the June 22 lease sale that is adjacent to a confirmed oil discovery at Cosmopolitan, an offshore prospect in Cook Inlet. Pioneer Natural Resources recently relinquished acreage at the location but is retaining some leases on the discovery.

Pioneer conducted flow tests at Cosmopolitan but encountered problems in producing through horizontal wells drilled from shore.

In October all unleased acreage in state-owned submerged Beaufort Sea lands, out to the three-mile state territorial limit, as well as onshore central North Slope and the foothills region in the southern North Slope will be offered.

Several companies, including Anadarko Petroleum and PetroCanada, have relinquished leases in the foothills recently because the area is gas-prone and construction of an Alaska gas pipeline appeared stymied by a surplus of gas in the Lower 48.

However, interest in the foothills region could be stimulated by a state plan to build a resources road to improve access to the area by explorers and an independent company’s plan to develop a small oilfield at Umiat, within the National Petroleum Reserve. Houston-based Renaissance Umiat LLC hopes to use the gravel road built by the state as a base for a buried pipeline to connect the field with the Trans-Alaska Pipeline System.

Tim Bradner can be reached at tim.bradner@alaskajournal.com

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