[September 28, 2008]

Modest bids by six companies in BLM lease sale in NPR-A

(Alaska Journal of Commerce (Anchorage) Via Acquire Media NewsEdge) Sep. 28--Six companies on Sept. 24 bid $30.9 million for 1.65 million acres of oil and gas leases in the National Petroleum Reserve Alaska. The U.S. Bureau of Land Management had offered 4.83 million acres for lease in the northeast and northwest planning areas of the NPR-A.

Overall, bids were modest. The high bid was $642,926, submitted on Lease D008, in the northeast part of the reserve, by Petro-Hunt LLC, a company new to Alaska. Most companies in the bidding hold existing leases in NPR-A and bid mostly near their existing landholdings.

Companies submitting bids included ConocoPhillips Alaska Inc., Anadarko Petroleum Corp., PetroCanada, FEX LP (a subsidiary of Talisman Energy) and small independent Renaissance Umiat LLC.

Petro-Hunt dominated the sale, however, acquiring 57 leases of 150 tracts drawing bids.

BLM offered a total of 187 tracts.

Ken Boyd, a former state oil and gas director now doing private consulting, said he wasn't surprised by relatively modest bids on the acreage. Exploration costs in NPR-A are extremely high because of the remoteness of the acreage from any infrastructure, so companies will typically bid low to acquire acreage to compensate for the high costs and risks, Boyd said.

Two areas that drew a large number of bids were in the southern part of the reserve, near where Anadarko Petroleum, PetroCanada and BG Group are exploring for gas on private and state lands. Anadarko and PetroCanada made those bids.

Boyd said he was surprised BG Group did not bid.

Another area that drew substantial bidding was in the northeast area near existing leases, and this was by ConocoPhillips and others already active in the area, Boyd said. However, FEX and Petro-Hunt submitted bids across a wide area of the central NPR-A that has seen little exploration.

Most of the sale area involves acreage put up in previous BLM lease sales, but the Sept. 24 sale also included lands considered to be highly prospective that have not been offered before, BLM spokeswoman Sharon Wilson said.

However, even these drew modest bids, mostly in an area adjacent to the Moose's Tooth Unit where ConocoPhillips and Anadarko Petroleum have made small discoveries in previous drilling.

The sale also included an area south of Teshekpuk Lake in the northeast section, one that geologists believe is highly prospective, as well as lands near the Colville River that were previously withheld from leasing.

Overall, BLM estimates technically recoverable resources in the two sales areas at 9.3 billion barrels of oil and 59 trillion cubic feet of gas in the areas, Wilson said.

Conservation groups have mounted vigorous protests against leasing around Teshepuk Lake, an ecologically sensitive area that is intensely used by waterfowl. In response to this, BLM has put a 430,000-acre area near Teshekpuk Lake under a 10-year leasing moratorium, Wilson said.

In addition, a permanent restriction has been ordered on 219,000 acres below the lake itself, she said.

Tim Bradner can be reached at tim.bradner@alaskajournal.com">tim.bradner@alaskajournal.com.

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