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Alaska to push back oil and gas lease sale

Posted: September 9, 2011 - 12:05am

JUNEAU — Alaska is pushing back what it says will be one of the biggest oil and gas lease sales in the U.S. this year, citing the potential for more acres to be added and a desire to give companies more time to prepare bids.

Earlier this summer, the state announced plans for a 14.7 million-acre lease sale involving state lands and waters. It said the acreage involved, covering roughly the size of Massachusetts, Vermont and Connecticut combined, would include 2 million acres in the Beaufort Sea as well as leases adjacent to the federally controlled Arctic National Wildlife Refuge and the National Petroleum Reserve-Alaska.

While Congress would have to allow drilling in areas like the refuge, Alaska’s Department of Natural Resources has said drilling on nearby state leases could allow developers to draw untapped oil from beneath the federal lands.

The state planned to hold the sale Oct. 26 but is now pushing it to early December. The department, in a statement Thursday, said expiring leases and settled lawsuits could lead to more acreage being offered in the sale. Also, it said it wants to give companies more time to prepare bids.

A new date for the sale hasn’t been announced.

State Natural Resources Commissioner Dan Sullivan said marketing Alaska leases is key to the overall effort to boost oil production. Alaska relies heavily on oil revenues to run state government, but production has been declining and the state has been looking for ways to reverse the trend. Gov. Sean Parnell’s administration is seeking to open or improve access to more state lands for development while urging the federal government to follow suit. Parnell has also proposed reducing oil production taxes, an idea that stalled during the last legislative session.

Parnell has set a goal of having 1 million barrels of oil a day course through the trans-Alaska pipeline within a decade. So far this year, the line has moved an average of about 568,470 barrels per day.

Natural Resources staff has been pitching investment in Alaska to companies, in some cases traveling to corporate offices in the rest of the country to do so. They’re also trying to get word about the sale out through national and international press — as was done with the initial announcement at a U.S. Chamber of Commerce event earlier this year.

Sullivan said he can’t predict the level of participation in the fall sale; it’s also not clear that any additional acreage will even be added. A department spokeswoman said a public notice on lease terms would have been required by next week if the sale hadn’t been delayed.

But, Sullivan said, officials want to make sure that every effort is made to bring this “huge” lease sale to the attention of oil and gas companies worldwide.

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