Alaska North Slope November oil and gas lease sales: bidding expected on state and federal lands.

• Author: Bradner, Mike
• Position: OIL & GAS

The state and federal US Bureau of Land Management will hold their annual area-wide lease sales on the North Slope in November. These sales are held every year now, and this year the BLM will again coordinate its federal sales in the National Petroleum Reserve-Alaska with the state so that both sales are held on the same date, this year Nov. 7.

Lease Sales

The November state sale will invite bids on unleased state lands on 14.7 million acres, an area the size of Massachusetts, Vermont and Connecticut combined. Last year's state North Slope sales netted more than 300 bids and $21 million in high bids for leases.

These are "area-wide" lease sales, in that all unleased lands in certain areas are made available. The practice has been to have state and federal lease sales at approximately the same time every year so that potentially, bidders can do planning. The state holds similar annual area-wide sales in Cook Inlet and on state-owned lands on the Alaska Peninsula-traditionally held in the spring.

The federal government holds offshore lease sales as well in the federally owned Outer Continental Shelf submerged lands beyond the state's three-mile territorial limit. In recent years the federal government has held lease sales in large areas of the Beaufort and Chukchi seas. Companies like Shell, ConocoPhillips, Statoil and Repsol that bid in those sales now have leases in the OCS and are making exploration plans.

Lease sales are important litmus tests of industry interest, and they are watched closely by companies and government officials. They are typically sealed-bid competitive offers, so a company shows its hand on what it thinks of an area when it makes its bid. Where there is more than one company bidding for a tract the differences in bids are often surprising, reflecting the differences of opinion companies can have. Sometimes they are very close, even a few dollars apart.

The huge bids by Shell in the 2008 Chukchi Sea lease sale--the company spent more than $2 billion--were unusual and caught worldwide attention because the bids signaled the company's seriousness in the Arctic. New companies interested in gaining a foothold in Alaska usually show up for the first time at lease sales. A few years ago Alaskans were introduced to Great Bear Petroleum, an independent company interested in shale oil development, when Great Bear bid for half a million acres of state North Slope lands in a lease sale.

In the November 2012 sale, the state will offer leases in the foothills region of the southern Slope, the central North Slope area where most of the current industry...