North slope leaseholders: winter in motion, or not.

• Author: Anderson, Tom
• Position: OIL & GAS

Every year the state of Alaska holds two annual competitive oil and gas lease sales, one in the spring and one in the fall. In November, three area lease sales occur in the North Slope, North Slope Foothills, and Beaufort Sea exploration regions. The Division of Oil and Gas oversees this process under the Alaska Department of Natural Resources, and in 2015 the November 18 bid lease sale encompassed 7,727,986 acres. At the same time, the US Department of the Interior held a bid opening for leases it offered in the National Petroleum Reserve-Alaska.

Preliminary Findings

On November 18, 2015, the Division of Oil and Gas released its "Record of Winning Bids" for the North Slope Areawide region and indicated the bidding method was a cash bonus bid and fixed royalty. Accumulate Energy Alaska, Inc. (77.5 percent ownership) and Burgundy Xploration LLC (22.5 percent ownership), both based in Houston, bid on 121 tracts; Denver-based 70 & 148 LLC bid on 10 tracts; and ConocoPhillips Alaska, Inc. bid on 3 tracts. The total number of valid bids was 134, with 131 tracts leased. The sum of the winning bids totaled $9,510,956.80 with 186,400 acres awarded. ConocoPhillips was outbid by 70 & 148, LLC. No bids were received for the Beaufort Sea or North Slope Foothills tracts, and all but three North Slope tracts were for shale areas.

The federal lease sale was for 143 tracts totaling about 1.4 million acres in the National Petroleum Reserve-Alaska. That sale was successful for ConocoPhillips. The company was the sole bidder and placed bids on six tracts for a total of 28,589 acres in the amount of $788,680, which the state of Alaska receives 50 percent--$388,340.

ConocoPhillips

Also in mid-November 2015, ConocoPhillips announced approval of funding for the Greater Mooses Tooth #1 (GMT1) development in the National Petroleum Reserve-Alaska, with production beginning near the end of 2018. Peak production is estimated at approximately thirty thousand barrels of oil per day. The company noted development includes gravel pad, facilities, pipeline, a 7.7 mile road, and nine starting wells, with a capacity ceiling of thirty-three wells. The construction will take place over the 2016 and 2017 winter seasons, employing as many as seven hundred workers.

"GMT1 is expected to cost approximately $900 million gross and follows our recent successful completion of the CD5 project," said Joe Marushack, president of ConocoPhillips Alaska, in the company's November 18, 2015...