First sale draws $1.3M Alaska Peninsula bidders: Shell, Hewitt in Point Moller, Nelson Lagoon area Kristen Nelson Petroleum News Editor-in-Chief
The State of Alaska’s first Alaska Peninsula areawide oil and gas lease sale —the first state lease sale in the Bristol Bay area since the 1980s — drew two bidders Oct. 26, Shell Offshore Inc. and Hewitt Mineral Corp. out of Ardmore, Okla.
The state offered 1,047 tracts and received 37 bids on 37 tracts, some 213,120 acres, in the Point Moller and Nelson Lagoon area.
Mike Menge, special assistant to the governor, said prior to the sale that this was the opening of the third chapter in Alaska’s oil and gas history: first Cook Inlet, then the North Slope and now the Alaska Peninsula. He said the sale represented a real partnership of the state, the local area and commercial partners.
Mark Myers, director of the Alaska Division of Oil and Gas, noted after the sale that this was the first sale in the area in 22 years, “and we’re a long ways from any infrastructure, so I think it’s a good solid start in the evaluation.”
Myers said that while there weren’t a lot of takers, the area is relatively unknown. “When you look at the history of the North Slope, you might see a similar pattern — pre-Prudhoe vs. post-Prudhoe,” he said.
This will likely be the first of at least 10 annual areawide sales on the Alaska Peninsula, he said, and called the sale “a healthy indicator of industry interest in the oil and gas potential of the Alaska Peninsula.” Shell the big bidder Shell bid $954,063 at the sale, a consistent $5.02 an acre, after returning to Alaska earlier in the year with bids of more than $44 million on Beaufort Sea federal outer continental shelf acreage.
Marcus Patterson, Shell Exploration & Production team leader for Alaska exploration, said after the sale that Shell looked at things “from a regional perspective” and focused on “the standard views that we have of the basin model.”
Patterson said the 33 tracts on which Shell bid were both onshore and offshore, about 190,000 acres.
Once the tracts are awarded, “we’ll start an evaluation program” on the acreage, he said. Shell has had several meetings on its plans in the area, “and will continue to engage the local stakeholders.”
The Division of Oil and Gas said in its preliminary results that all 33 bids submitted by Shell contained a 4 cent error in the calculation of the bid deposit. The division said it was recommending that the commissioner of the Department of Natural Resources determine the error was “due to excusable inadvertence,” allow Shell to correct the error in accordance with the division’s regulations and the sale announcement, and that the corrected bids be accepted. Hewitt an independent Hewitt Mineral, an independent oil and gas company, bid a total of $313,922 for four tracts, with $21.14 an acre on two tracts (the high per acre and total high bid of the sale, $121,767) and $6.11 per acre on two other tracts.
Myers said after the sale that he understood Hewitt Mineral became interested in the Alaska Peninsula sale after seeing technical data the division had at a convention in the Lower 48. Governor: sale a success Alaska Gov. Frank Murkowski said he sees the sale “as a tremendous success” and attributed it to efforts of former lawmaker Nels Anderson and the late Harvey Samuelsen. The governor said the men “recognized that responsible development could coexist with other activities in the region.”
The governor called the sale “just the beginning of an opportunity to bring new economic development to this region of Alaska,” and said the partnership between the state, local governments and regional organizations “to encourage new investment in this area is exciting and it is now showing results.”
The governor’s press release included comments from Nels Anderson, who said residents of “Bristol Bay have been trying to talk to every administration up until Governor Murkowski and no one was willing to do anything. Because of what the governor did in response to a request by the late Harvey Samuelsen, Jim Haynes and myself, we have a lease sale today.”
Anderson said he was looking forward to another lease sale next year and said “I hope oil companies will show even more interest.”
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