Oil and gas lease sale indicates interest in gas development

ANCHORAGE (AP) -- The state's lease sale of oil and gas properties on the North Slope and the Beaufort Sea on Wednesday marked a turning point for the state's energy industry, with companies bidding on areas likely to hold natural gas.

''This is a fundamental change in Alaska's oil and gas industry. Nobody has looked for gas on purpose on the North Slope before,'' said Ken Boyd, director of the state's Oil and Gas Division. ''It's the companies showing confidence that a gas pipeline will be built.''

The sale of 713,600 acres on the North Slope and offshore in the Beaufort Sea brought in more than $11 million for the state.

Anadarko Petroleum and its partner, Alberta Energy Co. of Canada, were the most active bidders on tracts in southern areas of the North Slope -- an area more likely to yield natural gas than oil.

''We definitely bid on a gas play,'' said Mark Hanley, Alaska spokesman for Houston, Texas-based Anadarko. ''We have a good exploration position. We're pretty excited about the gas opportunities here.''

Other bidders at the sale Wednesday included BP and Phillips Alaska Petroleum. The larger companies were bidding mainly on leases within established oil development areas, filling in with acreage near tracts already under development, Boyd said.

Anadarko bid successfully on 57 tracts totaling 297,000 acres.

Most of those bids were made in partnership with Alberta Energy. Anadarko holds a 66 percent interest in those tracts and Alberta holds a 34 percent interest.

Like Anadarko, Alberta Energy is an independent oil and gas producer. Neither company owns refineries, tankers or gas stations. The two companies entered into a partnership in August.

The bidding Wednesday doubled Anadarko's acreage in Alaska, Hanley said. Some of the acreage leased is adjacent to property owned by the Arctic Slope Regional Corp. Anadarko signed a partnership agreement two years ago for access to about 3 million acres of the Native corporation's property. Much of that property is in the foothills of the Brooks Range, an area thought to hold natural gas reserves.

Interest in developing Alaska's North Slope natural gas has been gaining momentum during the past year as North Slope oil production declines and demand for gas in the Lower 48 skyrockets.

A route for a North Slope natural gas pipeline has not yet been decided, but Anadarko hopes to have a role in development of such a line, Hanley said.

''We feel if we have reserves identified, we can be at the table with folks when they talk about the sizing of the pipeline. It's hard to do that if you don't have reserves identified,'' Hanley said.

Anadarko plans to begin its first independent seismic testing in the area after Jan. 1 and expects to begin drilling in 2002 to look for gas.

The next state oil and gas lease sale, to be held next May, will also focus on the Foothills area and is expected to be another good indicator of interest in the state's natural gas reserves, Boyd said.