State reduces rental rate on work done

Kristen Nelson

Petroleum News

The Alaska Department of Natural Resources' Division of Oil and Gas has approved rental reduction on oil and gas lease ADL 393571, 4,502.7 contiguous acres some 4 miles west of the Ninilchik Airport.

Hilcorp Alaska, which acquired the lease effective Jan. 1, 2018, requested the reduction based on work done.

The rental rate under the lease terms is $10 per acre for the first through seventh years of the 10-year lease term, and $250 an acre for the eighth through the tenth years of the lease.

Upon production from the lease, or evidence of "reasonable diligence in exploring and developing" the lease, the division has the discretion to reduce the rental to $10 per acre.

A Dec. 20 decision signed by division Director Derek Nottingham said Hilcorp provided information on expenditures for work on the lease including:

*Happy Creek 8 stratigraphic test well, spud and completed in July 2022;

*Marine vibroseis seismic survey initiated and completed in October 2023, in which the company acquired 2D seismic data extending from the Pearl participating area in the Ninilchik unit southwesterly to and within lease ADL 393571; and

*Sterling Highway 2D vibe line, acquired in March and April of 2024, with data acquired onshore from Clam Gulch in the Ninilchik unit to Anchor Point near the Seaview unit and on the lease along the Sterling Highway.

The division said the 2D seismic data acquired on the lease and in the vicinity "contributes to understanding potential for oil and gas accumulations between two producing units along Cook Inlet."

"Based on the expenditures made and the exploration work completed, Hilcorp has exercised reasonable diligence to explore and develop the Lease," the division said, approving the $10 per acre rental rate for the remainder of the effective lease term, effective Jan. 1, 2025.

--KRISTEN NELSON