Oil companies look at Susitna basin

ANCHORAGE (AP) State regulators are soliciting proposals for an oil and gas exploration license for the Susitna basin and expect to issue a final finding on two other proposed licenses in the area this summer.

The Division of Oil and Gas says it received a proposal April 29 for an exploration license west of the Parks Highway in the Susitna basin north of Anchorage.

Already filed are two existing proposals for exploration licenses in this area, both submitted by Forcenergy (now Forest Oil) in 2000.

The new proposal covers 499,840 acres. Division officials told Petroleum News it does not include any of the land within Forest Oil's exploration license proposals.

The Susitna comment area is west of the Parks Highway, and mostly west of the Susitna River, from south of Houston to north of Willow. The area of Forest's proposed licenses goes west nearly to Skwentna.

The Susitna basin comment area extends beyond the area of Forest's proposed licenses to the southeast, south and north, but primarily to the west.

The name of the applicant for the new proposal, along with the exact acreage and work commitment proposed, is being withheld until it is known whether there are competing proposals.

Anyone interested in submitting a competing proposal must notify the division by June 12, and submit a complete proposal by July 14.

The division is also accepting comments on the exploration licensing proposal through June 12. It will issue a written finding after the public comment period closes.

Alaska's exploration license program was established to encourage oil and gas exploration outside of known oil and gas provinces on the North Slope and in Cook Inlet.

An exploration license gives an exclusive right to explore up to 500,000 acres for up to 10 years. The state receives no bid payment, but does receive $1 an acre as a licensing fee.

And the licensee makes a commitment to spend money on exploration. If there is competition for a license, the license goes to the party committing the most dollars.

Once a licensee has met its work commitment, it may convert all or part of the license area to oil and gas leases. Those leases have annual rental fees of $3 an acre and the state's royalty share of production would be at least 12.5 percent.

Under the program the state accepts proposals each April.

The division has issued two exploration licenses: to Forest Oil in the Copper River basin (398,445 acres with a work commitment of $1.42 million) and to Andex Resources in the Nenana Basin (482,942 acres with a work commitment of $2.525 million).

The Copper River basin license was issued in October 2000 and has a five-year term. The Nenana Basin license was issued in October 2002 and has a seven-year term.

Forest also has two proposed licenses awaiting an issuing decision by the state: Susitna basin north (399,360 acres with a work commitment of $2.52 million) and Susitna basin south (474,420 acres with a work commitment of $3 million). Those proposed licenses are west of the Parks Highway between Willow and Talkeetna.