State receives 2 bids in online Cook Inlet oil and gas lease sale

Kristen Nelson

Petroleum News

The Alaska Division of Oil and Gas received two bids in this year’s Cook Inlet online oil and gas lease sale and no bids in the Alaska Peninsula sale.

While the state regularly receives bids for Cook Inlet tracts, Alaska Peninsula sales have drawn bids in just three sales since the area was first offered in 2005, with the last bids received in 2014 and no remaining oil and gas leases in the Alaska Peninsula area.

The Cook Inlet bids were from Furie Operating Alaska LLC and are for tracts adjoining that company’s Kitchen Lights unit in northern Cook Inlet. Furie produces natural gas from the Julius R platform.

Furie bid $19.75 per acre for tract 352, a total of $50,560, and $19.57 per acre for tract 361, a total of $50,099.20. There are 2,560 acres in each tract.

In last year’s Cook Inlet lease sale, the state received eight bids from three bidders, including Furie Alaska Operating and HEX LLC, which owns Furie.

In a statement May 25 after results were posted the Department of Natural Resources said the tracts covered 5,120 acres with some $100,649 in bonus bids, according to preliminary results from the sale.

“It’s encouraging to see a local producer continue to invest in Alaska, especially our Cook Inlet region,” said DNR Deputy Commissioner John Crowther. “At a time when utilities are looking to secure new sources of natural gas to meet local energy demand, reinvestment by an existing operator is a good sign. We of course wish to see more companies and bidding in future sales and are assessing how the state can support this through providing additional data, helping operators navigate complex federal permitting, and potentially making fiscal and policy changes to boost the competitiveness of Cook Inlet development.”

DNR noted that Kitchen Lights is one of the newest Cook Inlet gas fields. It came online in 2015 and has produced more than 30 billion cubic feet of natural gas.

The division said HEX purchased Furie and the Kitchen Lights development in July 2020 and has actively worked to improve production.

Production data from the Alaska Oil and Gas Conservation Commission for March shows production from Kitchen Lights averaged 12,056 thousand cubic feet per day, representing 5.9% of Cook Inlet gas production in that month. Kitchen Lights is one of the seven largest current gas producers in the inlet.

- KRISTEN NELSON