Apache Oil dominated Alaska’s Cook Inlet June 22 area-wide lease sale, netting 95 of 106 leases offered. Apache bid mostly the state’s required minimum bid of $10 per acre but bid higher more than $20 per acre on some tracts.
The bids represent Apache’s first significant acquisition of acreage since the company purchased existing leases two years ago and began a program of seismic surveys.
The state received a total of $11.04 million in apparent high bids at the sale. The highest bid was $605,779 by an individual, John Martineck, for a tract on the Kenai Peninsula near a recent gas discovery made by Buccaneer Energy, an Australian firm. According to the state Department of Natural Resources, the June 22 lease sale was the fourth-largest in history. The top lease sale in Cook Inlet was in 1993 when the state received $65 million in bids.
“These are exciting results. They far exceeded our expectations,” state Division of Oil and Gas Director Bill Barron said.
Apache’s bids were in several parts of Cook Inlet where there was unleased state acreage. Apache’s bids put together a large group of leases in upper Cook Inlet west of Anchorage and in an area south of the city of Kenai, offshore from Marathon Oil Co.’s Ninilchik onshore gas field.
The company also bid and won a group of leases east of Kenai near where Marathon drilled its Sunrise exploration well two years ago, the results of which have not been released. Apache also acquired leases near the small North Fork gas field east of Homer, on the southern Kenai Peninsula.
Apache was also the sole bidder on a special package of three leases offered as a bundle near a confirmed oil discovery, the Cosmopolitan prospect, being developed by Pioneer Alaska Inc. Pioneer had relinquished three of four leases it held, retaining one core lease. The state offered the three leases in a bundled package June 22, with Apache making the lone bid of $613,690, or $70 per acre.
The state set standard royalty of 12.5 percent on the bundled leases but set a lease term of five years instead of the usual 10 years. It also imposed special work requirements for the lease owner to submit an exploration plan within six months of the leases being awarded. Most of the tracts sold in the sale were 5,760 acres.
The June 22 sale could make Apache the major leaseholder in Cook Inlet but final figures will not be available until later. Barron said sale results and statistics would be posted on the Division of Oil and Gas website later June 22.
A few bids from other companies and individuals were received, including one successful bid for a tract from Marathon Oil Co., one bid from small independents Cook Inlet Energy, Aurora Exploration and NorDaq Exploration, and a handful of bids from individuals.
Apache’s entry into Cook Inlet is significant because the company is well-established and has a long history of investing and rejuventating declining oil provinces. Cook Inlet oil production has declined substantially since oil fields in the region were first developed in the 1960s and 1970s, but many geologists feel the region has not been adequately explored and that substantial oil and gas resources remain to be discovered.