US accepting bids on controversial Alaska leases

US accepting bids on controversial Alaska leases

Washington (Platts)--23Aug2006

The US Bureau of Land Management will accept bids until September 22 on
oil and gas leases in National Petroleum Reserve-Alaska, including a
controversial area deferred from previous lease sales north of Teshekpuk Lake,
a sensitive wildlife habitat area that was at the heart of a recent court
case.

The Teshekpuk Lake area, located in NPR-A's Northwest Planning Area, is
thought to contain 2 billion barrels of technically recoverable reserves, BLM
said.

It also was at the heart of a lawsuit in which environmental groups sought
to prevent drilling in the area. A federal appeals court late last month
upheld BLM's final environmental impact statement on development in NPR-A's
northwest section, paving the way for the sale.

Environmentalists panned the decision. The lease notice raises concerns
that Interior Secretary Dirk Kempthorne "is not really listening to Alaskans
and other Americans who have repeatedly voiced strong reservations about
providing sensitive land to the oil industry, while [BP's recent] pipeline
mishaps on the North Slope call into question the wisdom of allowing pipelines
to be built in sensitive goose molting and caribou calving areas," the Alaska
Wilderness League, Sierra Club, Northern Alaska Environmental Center and the
Alaska Coalition said in a joint statement.

"The Teshekpuk Lake area is biologically rich nursery grounds for birds
from many continents and mammals which sustain our Inupiat families and
communities and must be protected from leasing activities," added Rosemary
Ahtuangaruak, former mayor of Nuiqsut.

BLM Alaska office Director Julia Dougan said in a statement that
the agency crafted 11 additional stipulations that will apply to biologically
sensitive areas. "Some areas will also need to have another three years of
monitoring and study before we will authorize activities beyond winter
exploration," she said.

In addition to the Teshekpuk Lake area, the sale also will include leases
offered in previous sales in NPR-A's Northwest and Northeast section,
including some relinquished leases, BLM said in a Federal Register notice. The
sale will not include leases beneath Teshekpuk Lake or in areas along the
Colville River, BLM noted.

All told, 696 tracts will be offered on 8 million acres in the federal
reserve west of the producing North Slope oil and gas fields. NPR-A is thought
to contain between 5.9 billion and 13.2 billion barrels of recoverable oil
resources and 39 to 83 Tcf of natural gas. "This is a significant amount of
oil that will help decrease our dependence on imported oil," said BLM's
Dougan.

Leases will have primary terms of 10 years. High potential tracts, which
are outlined in a bid sheet, will have a fixed royalty rate of 16.6% and a
rental rate of $5/acre, while low potential tracts will have a fixed royalty
rate of 12.5% and a rental rate of $3/acre, BLM said.

Bids will be opened September 27 in Anchorage, BLM added.

--Cathy Landry, cathy_landry@platts.com
--Gerald Karey, gerry_karey@platts.com

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