Sale could spur inlet development

Wednesday’s lease sale could be a sign of increased oil and gas activity in the Cook Inlet.


Jonne Slemons, from the Division of Oil and Gas, said the division was pleased with the results of the sale.

“It’s a very, very good result for us,” Slemons said.

The sale, with bids totaling more than $11 million, was the fourth-largest in state history in terms of the dollar value, said Elizabeth Bluemink, from the state Department of Natural Resources. The largest was in 1993.

Dan Seamount from the Alaska Oil and Gas Conservation Commission said the size of the sale could be the start of an upswing in development in the inlet.

“That’s really encouraging to get that kind of leasing going on,” Seamount said.

Any development on the tracts acquired during the lease sale will have to wait about four to seven months until the titles are handed over, Slemons said.

The numbers released today are preliminary, she said. The state has to go through and calculate the acreage for each lease and finalize the bid amount.

“We need to just look and make sure no errors were made anywhere,” she said.

After that, survey work has to be done to finalize the titles, she said. That could result in minor tweaks to the results of the lease sale, including costs and acres.

Even after the titles are handed over to the successful bidders, each will be responsible for permitting any development.

Seamount said that his department goes over permits after all others are acquired, and has a fairly short permitting time. He said he’d expect most participants in the lease sale to have some geology and geophysics work to do before they start drilling.

“Then hopefully they’ll get discoveries,” he said.

Apache Alaska Corporation was the largest bidder in the sale.

Director of Public Affairs Bill Mintz said the company is planning seismic studies for its Cook Inlet acreage.

The company already has about 300,000 acres in the inlet, Mintz said. This would add to those leases.

Mintz said that the company has hired locally for past work in Alaska, so it’s likely that the Kenai Peninsula would benefit from that development.

If the new leases all come though, Apache will likely be the largest leaseholder in the Cook Inlet.

“We’re pleased with the results of the lease sale,” Mintz said.

Right now the company is working on the permitting process its studies, but eventually those studies would inform a development plan, Mintz said.

This is Apache’s first effort to permit in the inlet, but Mintz said the company has experience working in sensitive areas, including areas with marine mammal issues.

“It requires a lot of care and environmental sensitivity,” Mintz said.

Although Apache was the main bidder, the lease sale had 10 other participants who purchased leases Wednesday.

David Hall, chief executive officer of Cook Inlet Energy, said his company participated in the sale based on preliminary seismic data for nearby acreage.

“It just further enhances our prospects,” Hall said.

The new acreage will likely get added to the company’s existing exploration plans, as it is adjacent to leases it holds on the west side of the Cook Inlet.