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Companies bid $53.9 million on petrol reserve leases

Posted: Thursday, June 03, 2004

ANCHORAGE - Five oil companies on Wednesday bid for the right to develop 1.4 million acres in the National Petroleum Reserve-Alaska, in what was the state's largest onshore federal lease sale.

The high bids totaled $53.9 million and covered 123 individual tracts of land. The highest bid for a single tract was $13.74 million, made by Fortuna Energy Inc., a subsidiary of Calgary, Alberta-based Talisman Energy Inc.

The land, more than 5 million acres in the northwest region of the NPR-A, is remote and without infrastructure. It could take more than a decade to explore and develop, said officials with the federal Bureau of Land Management.

"The energy resources of the National Petroleum Reserve-Alaska are essential to meeting our nation's energy demands," said Henri Bisson, BLM's Alaska director. "These resources will enhance domestic energy production in the future and decrease dependence on foreign oil sources."

The NPR-A covers about 23.5 million acres of public land west of Prudhoe Bay and the Arctic National Wildlife Refuge on Alaska's North Slope. Estimates of oil reserves in the NPR-A range from about 6 billion to 13 billion barrels of oil.

BLM will review the bids over the next 90 days before formally awarding the leases, bureau spokesman Edward Bovy said.

ConocoPhillips Alaska Inc., Petro-Canada Alaska Inc., Fortuna, Anadarko Petroleum Corp. and Pioneer Natural Resources Alaska Inc. turned in their sealed bids by Friday's deadline, BLM spokeswoman Jody Weil said. The bids were unsealed and read Wednesday morning in Anchorage.

Many of the higher bids were located near the Barrow Arch, a potentially oil-rich geologic vein that cuts across Prudhoe Bay and west through the reserve.

"There are always surprises in these lease sales," Bisson said after reading the bids. "You don't know what information people have about the resources, or what their take is on those particular resources. They obviously feel the lease tract is worth it or they wouldn't have bid that much."

Some of the companies bid together on some tracts and separately on others. Fortuna and Petro-Canada had not participated in previous NPR-A lease sales, Weil said.

Richard Garrard, ConocoPhillips exploration manager, said the Canadians companies' entry this time surprised nobody.

"We expected some Canadian companies would come here," Garrard said. "They're accustomed to working in northern latitudes and more remote locations in the Arctic."

Petro-Canda spokeswoman Michelle Harris said her company was pleased with Wednesday's sale, but did not have immediate plans for the land the company bid on.

"We see it as a future growth area," Harris said.

The proceeds from the lease sales and the annual rental payments are split between the federal government and the state. The state's share from Wednesday's bids could come to $26.9 million, Bisson said.

A federal judge ruled last week that leaseholders would not be able to occupy any of the land until a legal challenge by seven environmental groups has been resolved.

The environmental groups say the lease plan violates several environmental protection laws and ignores sensitive habitat for North Slope birds, wildlife and whales.



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