Alaska sets date for Bristol Bay lease sale

Sep 17, 2005 02:00 AM

The Alaska state Division of Oil and Gas set Oct. 26 as the date for a planned oil and gas lease sale in Bristol Bay, in Southwest Alaska. The agency has also issued the Final Best Interest Finding for the sale, a required analysis to show that the leasing will have public benefits.
The state will offer oil and gas leases on 5.8 mm acres of onshore and offshore lands within the state's three-mile limit in Bristol Bay, state Department of Natural Resources Commissioner Tom Irwin said. Most of the area being offered is onshore, including lands along the Alaska Peninsula and around Bristol Bay itself, but 1.75 mm acres in the sale area are offshore, in state-owned submerged lands within the three mile territorial limit.

The area being offered covers parts of Bristol Bay and the northern side of the Alaska Peninsula, stretching from the Nushagak Peninsula in the north to the Cold Bay area on the peninsula. It is an area about the size of New Hampshire.
Irwin said that 1,047 tracts, ranging in size from 1,280 acres to 5,760 acres, will be sold in an area wide sale. Leases will have a 10-year term and a fixed royalty of 12.5 % with a minimum bonus bid of $ 5 per acre.

The state will also reschedule the North Slope onshore and Beaufort Sea state area wide sales originally set for October, Irwin said. Those sales will instead be held in February.
"It is important to focus industry attention on the Alaska Peninsula sale as well as spread the workload of the oil and gas leasing staff more evenly over the annual schedule," the commissioner said.

State geologists say Bristol Bay has considerable potential for oil and gas. The region attracted considerable early exploration interest due to the presence of oil seeps, with the first well drilled in 1903. Some 26 onshore wells have been drilled, the latest being Amoco Becharof No. 1 in 1985. State oil and gas director Mark Myers said the entire region is gas-prone but southern sections of the area to be offered have oil potential as well.
State geologist Tim Ryherd said the geology of Bristol Bay is very similar to Cook Inlet, where oil and gas discoveries have been made since the late 1950s. The Bristol Bay region has been off-limits for leasing in recent years, however, because coastal communities feared oil spills would damage rich salmon fisheries. However, fishing has declined and there is now local support for oil and gas development, Gov. Frank Murkowski said.

The governor said community leaders in the region approached him about holding a lease sale as a way of encouraging local economic activity and employment, and in developing local sources of energy. The state subsequently signed formal agreements with Alaska Native corporations and boroughs in the region to provide a framework for cooperation and information sharing.
"The state is very optimistic about the oil and gas potential in the lease sale area," Murkowski said. "The sale represents a significant opportunity for the Alaska Peninsula and Bristol Bay regions to diversify their economy and foster new economic development for their communities."

The US Minerals Management Service offered adjacent Outer Continental Shelf acreage for lease in OCS Sale 92 in 1988 and sold 23 leases. The leases were later repurchased by the government after local communities and the state of Alaska protested.
The OCS part of the basin is still under a leasing moratorium. MMS has no current plans to offer the federal acreage, agency spokesperson Robin Cacy said.

Source: Alaska Journal of Commerce
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