Spring areawide lease sales open May 20

Bidding in the Alaska Department of Natural Resources' Division of Oil and Gas spring areawide lease sales -- the Cook Inlet and Alaska Peninsula areawide sales -- opened May 20 on EnergyNet. Bidding in the sales closes June 6, with bid results to be available June 12.

For the Cook Inlet sale, the division is offering leases based on net profit share.

There is a fixed per-acre cash bonus of $40, with the bid variable net profit share, with a minimum 5% net profit share bid and no royalty. The primary term of the Cook Inlet leases is 5 years, with one-time extensions available under certain conditions. Annual rental rates are $1 per acre for year one, $1.50 for year two, $2 for year three, $2.50 for year four and $3 for year five.

In a May 20 statement DNR said: "State revenue generated by net profit share instead of royalty share enables a producer to recover costs more quickly, which could make marginal projects more economically viable."

Bidding in the Alaska Peninsula areawide sale is by the more traditional variable of cash bonus per-acre bid, with a minimum of $5 per acre and a 12.5% fixed royalty rate. The leases are for 10 years, with annual rental rates of $1 per acre for the first year, $1.50 for the second year, $2 for the third year, $2.50 for the fourth year and $3 for years five through 10.

--Petroleum News