Arctic reserve lease sale draws limited interest, but one new company

Interest in National Petroleum Reserve-Alaska oil and gas acreage was tempered again this year, with federal officials citing a lack of access to the most promising areas as a reason for the modest bidding.

Overall, the Bureau of Land Management received 16 bids over 16 oil and gas leases covering 174,044 acres, Acting BLM Alaska Director Ted Murphy said during the Wednesday morning bid opening in Anchorage.

The bids, ranging from $57,000 to $216,000 per lease, netted a total of $1.13 million, half of which will go to the State of Alaska through revenue sharing. The state lease revenue from the federal reserve is then first available for allocation to a grant program aimed at reducing the impacts of development on North Slope communities.

Assistant Interior Secretary Joe Balash said in a call with reporters that the results are encouraging — BLM got 7 bids for NPR-A leases last year — but the lack of bidding compared to what has happened recently on nearby state lands “underscores the need for us to take a look at the NPR-A Integrated Activity Plan.”

The state North Slope sale on Nov. 15 netted $28.1 million in bids, the third-highest since 1998.

BLM made 254 tracts over 2.8 million acres available for leasing this year in the 22 million-acre reserve based on industry nominations, according to Balash.

He announced Nov. 20 that BLM would be starting the process to revise the NPR-A land use plan with the goal of opening additional areas of the reserve for oil and gas leasing.

The most promising areas based on recent Nanushuk formation discoveries, according to the U.S. Geological Survey, are in the northeast portion of the NPR-A around Teshekpuk Lake that was made off-limits to oil and gas leasing in the 2013 plan.

Last December the USGS dramatically increased its mean recoverable oil estimate for the reserve to nearly 8.7 billion barrels.

“We think that the Petroleum Reserve itself has much more potential,” Balash said, despite the relatively low number of lease bids.

Oil companies and some North Slope communities have also pushed for new roads in the reserve to make resident travel and commercial development cheaper and easier.

Emerald House LLC, a new player to Alaska, secured 10 of the leases; ConocoPhillips picked up five and Anchorage-based Nordaq Energy Inc. won one.

Emerald House is wholly-owned by Elixir Petroleum Inc., according to the state Division of Corporations, Business and Professional licensing. Elixir, an Australian company, holds a several leases covering about 35,000 acres in the southern portion of the NPR-A, according to the company’s website.

Most of the leases sold in Wednesday’s sale are near areas ConocoPhillips — the dominant player in the NPR-A — is exploring and developing in its Greater Mooses Tooth oil projects and its large Willow oil prospect.