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US, Alaska lease sales nab $24M in high bids

By Dan Joling

Associated Press

Published: Wednesday, Dec. 7 2011 8:41 p.m. MST

Alaska Division of Oil and Gas director Bill Barron announces bids at a state petroleum lease sale on Wednesday, Dec. 7, 2011, at Dena'ina Civic and Convention Center in Anchorage, Alaska. Combined high bids for the sales was just under $21 million. All except $6.8 million was from North Slope leases.

Dan Joling, Associated Press

Enlarge photo»

ANCHORAGE, Alaska — A state of Alaska petroleum lease sale took in just under $21 million in high bids on the North Slope and in nearshore waters of the Beaufort Sea, a step Gov. Sean Parnell hopes will help increase the volume of crude oil in the trans-Alaska pipeline.

The state received no bids for the North Slope Foothills region but tentatively sold 178 tracts covering 334,969 acres for $14.1 million on the North Slope. It also sold another 78 tracts covering 281,095 acres for $6.8 million along the Beaufort coast.

A few hours later, a federal lease sale within the National Petroleum Reserve-Alaska attracted three companies or groups that submitted high bids of $3 million for 141,739 acres. Most was in the northeast corner of the reserve where ConocoPhillips this week took a step closer to receiving a permit to build a bridge and pipe that could link leases in the reserve to North Slope infrastructure and eventually the trans-Alaska pipeline.

The state will receive 50 percent of the earnings from the federal lease sale.

Alaska officials said they were pleased with the results. Parnell in a statement called it a step toward his goal of getting a million barrels per day moving through the trans-Alaska pipeline. The line has been operating at less than a third of its 2.1-million barrel per day capacity.

Natural Resources Commissioner Dan Sullivan said after the sale that the goal of increasing competition had been met with 19 bidders. State officials have been aggressively pushing the message that Alaska remains one of the great hydrocarbon basins in the world, he said.

"To be honest, there were a number of companies that we spoke to that certainly had an interest who did not show up today," he said. "We're going to try to get a sense of why."

Division of Oil and Gas Director Bill Barron noted the high volume of bidding in areas projected to yield shale oil.

"Some of those are in areas that have seen some activity in the past," he said, referring to acreage that was released and is now leased again.

One new player was Royale Energy of San Diego, with more than 50 high bids. The company said in a release it targeted liquids-rich shale known to have sourced the Prudhoe Bay and Kuparuk oil fields.

Company co-CEO Stephen Hosmer said Royale continues to focus on natural gas production in its core area but the Alaska acreage "is an exciting opportunity to add oil to Royale's future mix."

Royale frequently bid against Great Bear Petroleum, which submitted more than 30 high bids in the North Slope sale. On two tracts, Great Bear bid a penny per acre higher than Royale, $40.11 vs. $40.10, to be the apparent high bidder.

Shell Offshore submitted 18 high bids in Harrison Bay in the Beaufort sale.

"Shell's participation in today's lease sale underscores our ambition to be a long-term partner with the state of Alaska and to build a generational business in the Alaska offshore," Shell spokesman Curtis Smith said.

Repsol E&P USA was high bidder on 26 leases on the North Slope and five in the Beaufort Sea.

Pioneer Natural Resource submitted the highest state bids — $876 per acre on a pair of Beaufort leases.

ConocoPhillips was high bidder on at least 34 North Slope tracts.

In the federal lease sale, ConocoPhillips Alaska was high bidder on three leases and was edged out on two other by the 70&148 LLC, which was high bidder on 11 tracts.

Woodstone Resources was the third bidder in the federal sale.

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