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Spring sales draw just three bids as Hilcorp fills in around units
Kristen Nelson Petroleum News
The state's spring areawide oil and gas lease sales drew just three bids, all in the Cook Inlet areawide sale, on 4,441 acres, all from Hilcorp Alaska, for leases close or adjacent to existing Hilcorp units on the Kenai Peninsula and on the west side of Cook Inlet. The cash bonus portion of the sale was $177,636.
The Alaska Peninsula areawide sale drew no bidders, as has been the case with recent sales in that area, where there are no active leases.
"While the State of Alaska is disappointed by the low level of interest in this sale, it is encouraging to see Hilcorp continuing to invest in oil and gas leases in Southcentral Alaska," said Department of Natural Resources Commissioner John Boyle.
In the Cook Inlet sale, there was a fixed cash bonus of $40 per acre with a minimum 5% net profit share the variable. Hilcorp bid the 5% net profit share minimum on all three leases.
DNR said the sale was the second in Cook Inlet to offer net profit share revenue terms, and said this sale, combined with the December 2023 sale, also in fiscal year 2024, resulted in sales of more than 19,000 acres, higher than the five-year average of 13,418 acres for Cook Inlet, although less than the combined 27,865 acres of the two top Cook Inlet sales, both held in 2022.
Tract locations Two of the three tracts on which Hilcorp bid are on the Kenai Peninsula, east of the company's Kenai-area Cannery Loop field and north of Soldotna. Tract 121 includes 501.91 acres and tract 122 includes 1,379 acres.
DNR said those leases were at the closed Sterling unit, which had a history of gas production. Alaska Oil and Gas Conservation Commission data show Sterling produced from 1962 to 2015.
Hilcorp's most recent plan of development for Cannery Loop, filed with DNR's Division of Oil and Gas May 1, lists a grassroots well planned at Cannery Loop in May, CLU-16, targeting the Lower Beluga interval. The company said that pending results of that well it would evaluate additional wells "for continued development of Lower Beluga sands."
Tract 603, 2,560 acres, is on the west side, on the northern edge of the Pretty Creek unit at the southwest corner of the Lewis River unit where Hilcorp drilled a new well, LRU C-02, in 2023; its most recent POD did not include plans for further grassroots wells.
Cannery Loop averaged 4.9 million cubic feet per day in April, the most recent month for which AOGCC data are posted, some 2.4% of inlet production. Lewis River averaged 1.7 million cubic feet per day in April, 0.8% of inlet volume, and Pretty Creek, which only produces intermittently, had no production.
--KRISTEN NELSON
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