Going Once, Going Twice… Who Wants a Piece of Alaska?
Did you hear about the state that held an oil and gas lease sale and nobody came? That’s what happened to Alaska when the state division of oil and gas tried to gin up development in the state’s southwestern peninsula by holding an auction that no one asked for. Not a surprise, really, as this was the state’s third attempt and last year’s sale only garnered one bid. It won.
That bidder was Hewitt Mineral Corp. from way down south in Ardmore, Okla., which paid $38,000 or $6.77 per acre. Kinda bites to make your “highest and best offer” and find nobody else came to the show. So where was Hewitt this year, knowing the tracts were ripe for the picking? Not to be found. Probably busy drilling away on their one tract. Like the Alaskan gold rush, looking for that lucky strike.
To give the Alaskans credit, the first year in 2005 drew a crowd. Of two. In addition to Hewitt, Shell Oil joined the fray that first year, paying about $1 million on 33 blocks. Since then there’s been no drilling or seismic work. So why drop the cash?
The Alaskan Peninsula lease sale offered some 6 million acres of mostly onshore state territory. However, the area is frontier—no commercial oil and gas production, no existing petroleum development, and no roads. Development costs, to say the least, are an issue.
Not that the acreage is totally without interest. In 2011 the U.S. Minerals Management Service will open up Bristol Bay and the North Aleutian Basin offshore for exploration. With 2.4 billion barrels of oil and 8.6 trillion cubic feet of gas, players will rush in to explore. And offshore exploration will make it more economically feasible to develop the remote onshore tracts.
So, in the meantime, schedule to be present at a lease sale in Anchorage next February with your checkbook in hand. And feel free to low-ball—the pickin’s are cheap.
Alaska Peninsula Lease Sale Tract Map
Onshore Alaska Peninsula Petroleum System Assessment
Petroleum News: Alaska Peninsula worth another look
Steve Toon, Editor, A&D Watch, Contributing Editor, Oil and Gas Investor, stoon@hartenergy.com
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March 5th, 2008 at 9:40 am
Of course no one wants to go Alaska. It’s cold! And according to “30 Days of Night,” there’s vampires up there too!
Seriously though, I wonder if the recent lawsuit against ExxonMobil by the natives is scaring away investors. Or, if E&Ps are calling the bluff on the optimism over Alaska. Or if despite all the talk about energy shortages, most companies think that we just haven’t reached that level of desperation yet and are happy developing their properties lying in less harsh climates.