FAIRBANKS (AP) -- The state has issued a seven-year exploration license to Colorado-based Andex Resources to look for natural gas in the Nenana basin. While not a permit, the license gives the company sole rights to any natural gas within the nearly 500,000-acre basin about 50 miles south of Fairbanks.
The area could hold up billions of cubic feet of gas and could ultimately supply Fairbanks, Nenana and other nearby communities with natural gas.
''We don't want to raise people's expectations,'' said Andex vice president Jim Dodson. ''But at the end of the day, what tells the story is the end of a drill bit.''
The license gives Andex access to state land. The company is also working with Doyon Ltd. and Toghotthele Corp., both Alaska Native corporations formed by the Alaska Native Claims Settlement Act.
Doyon Ltd. owns the subsurface rights and Toghotthele surface rights to 38,000 acres that Andex plans to explore for gas, said Jim Mery, Doyon's vice president of land and natural resources. The Doyon and Toghotthele land in the basin is ''strategically placed,'' Mery said. ''We've worked hard to get people interested in the basin.''
Andex plans to conduct some seismic work this winter, said Jim Hansen, with the state Division of Oil and Gas.
Dodson said the company will take an in-depth look at existing seismic data compiled by companies looking for oil in the area. The company will reconfigure the data to glean what information they can that will be relevant to natural gas, he said.
''Then we'll have a much better idea what to do,'' Dodson said.
The license calls for a one-time fee of $1 for each of the 482,942 acres licensed, Dodson said. Andex must commit to $2.52 million in work on the land. On completion of that work, the licensed acreage can be converted to oil and gas leases, he said.
All lands converted to lease status will have a fixed royalty of 12.5 percent. Andex will have to pay at least $500,000 in bonds on the land, Dodson said.
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