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State lease sales again include SALSA blocks with wells required
Kristen Nelsonb Petroleum News
The state has published the sale notice for its fall oil and gas lease sales, the Beaufort Sea areawide, the North Slope areawide and the North Slope Foothills areawide. As the Alaska Department of Natural Resources’ Division of Oil and Gas announced in May, this year’s sale will include, as did last year’s, Special Alaska Lease Sale Areas, SALSA, in the North Slope and Beaufort Sea areawide sales.
The division posted an updated version of the SALSA data guide at http://dog.dnr.alaska.gov/Library/SALSA.
DNR Commissioner Corri Feige said May 15 that feedback for the 2018 SALSA program and the data compilation associated with the program had been enthusiastic, but that informal polling after the 2018 sale - which drew no bids on any of the blocks - found that there just wasn’t enough time from the August release of the SALSA information for potential bidders to do a thorough evaluation.
“By signaling our intentions earlier this year, potential bidders will have much more time to evaluate and consider opportunities,” Feige said when the updated SALSA guide was posted in May.
The SALSA presentation describes these areas as an opportunity to bid on large, contiguous acreage blocks, groups of North Slope and Beaufort Sea areawide lease sale tracts that will be offered together.
The division has gathered publicly available data bearing on the SALSA areas, and “each lease sale block has 3D seismic data acquired through the State of Alaska Tax Credit Program which remain available through the Department of Natural Resources for a modest fee. This compilation is meant to provide a jump start in understanding what data is available for the SALSA blocks,” Feige said.
Sale notice In-person bid submission for the fall sales will be Dec. 9 from 9 a.m. to 4 p.m. in Suite 1100 of the Atwood Building, 550 West 7th Avenue, Anchorage, Alaska, or by mail to DNR Division of Oil & Gas, Attn: Lease Sale, 550 W. 7th Ave., Suite 1100, Anchorage AK 99501-3563.
Bid opening will be Dec. 11 beginning at 9 a.m. in the Kahtnu 1 Meeting Room in the Dena’ina Center in Anchorage.
The Beaufort Sea areawide has a minimum bid of $25 per acre, a royalty rate of 16.67%, a primary lease term of eight years and annual rent of $10 per acre.
The North Slope areawide is divided into the north subregion and the south subregion. The only difference is the royalty rate, which is 16.67% in the north subregion and 12.5% in the south subregion. The minimum bid is $25 per acre, the primary lease term is eight years and the annual rent is $10 per acre.
In the Foothills areawide, the minimum bid is $10 per acre, the royalty rate is 12.5%, the primary lease term is 10 years and the annual rental rate is $1 per acre in year one, $1.50 per acre in year two, $2 per acre in year three, $2.50 per acre in year four, and $3 per acre in years five through 10.
Gwydyr Bay The block offerings require bidding for the entire block and there is a requirement that a well be drilled on each block to a specified target.
The Gwydyr Bay Block is 23,012 acres of state-owned uplands and state-owned tide and submerged lands in nine leases in the North Slope and Beaufort Sea areawide sales, north of the Prudhoe Bay unit and east of the Milne Point unit. The minimum bid is $25 per acre, the royalty rate is 16.67%, the primary lease term is eight years and the rental rate is $10 per acre per year.
The lease includes a work commitment that a well be drilled in the block by the seventh anniversary. The requirement for Gwydyr Bay is a well that “has penetrated to the base of the Kuparuk A interval as observed as the Miluveach top correlative stratigraphic surface seen in the Sak Riv 1A well (API No. 50-02923336-02-00) at 12,348 feet measured depth. The penetration may not be within a 1,500 feet radius of the bottom hole location of any existing well.”
Specified well data must be provided to the state.
Harrison Bay The Harrison Bay Block is 66,275.28 acres of state-owned tide and submerged lands in 21 leases in the Beaufort Sea areawide. The block is northwest of the Colville River unit and southeast of Smith Bay along the National Petroleum Reserve-Alaska. The minimum bid is $25 per acre, the royalty rate is 16.67%, the primary lease term is eight years and the rental rate is $10 per acre per year.
The lease includes a work commitment that a well be drilled in the block before the seventh anniversary of the lease. The well must penetrate “to the base of the Kuparuk C interval as observed as the LCU correlative stratigraphic surface seen in the S. Harrison Bay #1 well (API No. 50-10320007-00-00) at 7,289 feet measured depth.”
Specified well data must be provided to the state.
Storms The Storms block is 30,592 acres of state-owned uplands in 12 leases in the North Slope areawide. The block is south of the Prudhoe Bay and Guitar units and west of the trans-Alaska oil pipeline. The minimum bid is $25 per acre, the royalty rate is 16.67%, the primary lease term is eight years and the rental rate is $10 per acre per year.
The lease includes a work commitment that a well be drilled in the block before the seventh anniversary of the lease. The well must penetrate “to the base of the Kuparuk C interval as observed as the LCU correlative stratigraphic surface seen in the Hemi Springs State 1 well (API No. 50-02921056-00-00) at 7,256 feet measured depth.”
Specified well date must be provided to the state.
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