The Bureau of Land Management, responding to instructions from President Barack Obama in May, will hold a National Petroleum Reserve-Alaska lease sale late this year and thereafter will hold annual NPR-A lease sales.
BLM asked for nominations and comments in June and released a draft map and determination Sept. 20. Comments on the draft determination are due Oct. 21. A notice of sale will be published in the Federal Register at least 30 days prior to the sale.
The draft determination says BLM proposes to offer 283 tracts, some 3 million acres and approximately 23 percent of the 13.4 million subsurface acres the agency manages in the northeast and northwest NPR-A planning areas.
The draft determination of National Environmental Policy Act adequacy documenting NEPA compliance and a map of available tracts for the upcoming sale are available on the BLM-Alaska website at www.blm.gov/ak.
According to the map, BLM proposes to offer unleased tracts largely around existing tracts on the eastern and southeastern side of NPR-A in the northeast and northwest planning areas.
CLOSE TO STATE SALE
Bud Cribley, director of the BLM Alaska state office, told the Alaska Oil and Gas Congress on Sept. 21 that the target for the sale is December. He said the date would probably coincide closely with the date of the state's oil and gas lease sale. The state's Beaufort Sea, North Slope and North Slope Foothills sales are scheduled for Dec. 7.
The NPR-A sale does not include acreage around Teshekpuk Lake, which Cribley described as the focal point of "world-class wildlife habitat" within NPR-A.
He noted that "as is natural in the world that BLM works in, the highest oil and gas potential is right on top of that wildlife habitat."
In BLM's draft determination of NEPA adequacy the agency said that 425,000 acres north and east of Teshekpuk Lake were previously deferred from leasing until 2018, and 219,000 acres of Teshekpuk Lake and its islands were previously classified as unavailable for leasing.
Tracts being offered include the area along the eastern and southeastern borders of NPR-A, adjacent to state acreage that will be offered in the North Slope and North Slope Foothills sales, and acreage filling in around and to the west of existing acreage positions, including tracts around the most westerly block of presently leased acreage, four tracts in the midst of acreage formerly held by FEX, which that company let expire or relinquished. FEX, a subsidiary of Calgary-based Talisman Energy, put more than 1 million net acres of NPR-A and Brooks Range foothills up for sale in early 2010 but began dropping acreage when it failed to find a buyer.
Some 1.4 million acres in NPR-A are currently at lease in 169 tracts, with major leaseholders including Conoco Phillips Alaska and Anadarko Petroleum -- primarily in partnership, and a partnership of Anadarko, Petro-Canada and BG Alaska.
There have been major relinquishments of NPR-A acreage, 1.3 million acres by FEX and Petro-Canada. Partnerships of Conoco Phillips, Anadarko and Pioneer Natural Resources, and Conoco Phillips, and individually, have relinquished 1.4 million acres.
There is currently no production from NPR-A.
Conoco Phillips has a discovery ready for production at CD-5 in NPR-A but that development has been held up by the U.S. Army Corps of Engineers over permitting issues.
PREVIOUS SALES
Recent sales began in NPR-A in 1999, when BLM held its first sale since 1984, a sale in the Northwest planning area.
Lease tracts were offered in the Northeast planning area in 2002, 2008 and 2010 and in the Northwest planning area in 2004, 2006 and 2008.
Previous sales have included all acreage within a planning area.
For this sale, BLM planned to offer only selected tracts and asked for tract nominations and comments.
The Alaska Department of Natural Resources wanted BLM to offer all available NPR-A tracts in the sale, and DNR Commissioner Dan Sullivan, in a July 21 letter to Cribley, said the state "supports making all tracts available in the lease sale to allow industry the ability to bid on and secure lease areas that will make exploration and development activities economically and logistically feasible."
BLM started signaling early this year -- at a time when it did not expect to hold another lease sale until about 2013 -- that it was planning to ask for nominations from industry of areas of interest, rather than making all tracts in an area available.
Ted Murphy, BLM's Alaska deputy state director for the Division of Resources, said in a February interview that having industry share with BLM what lands are of interest is "a critical aspect of developing" NPR-A. He said large blocks had been offered in the past because it was difficult for the agency to get a handle on what was of interest to industry.
ADJACENT AREAS IMPORTANT
Sullivan said that while the state supported making all acreage available, it was important to include tracts near and adjacent to state land. He said the state will be aggressively marketing areas adjacent to federal holdings in NPR-A and the Arctic National Wildlife Refuge this fall, including the area offshore the northern boundary of NPR-A and onshore areas to the east and southeast.
"We recommend offering tracts near and adjacent to these areas to make it more efficient for industry to explore and develop areas where known oil and gas plays straddle state and federal lands," Sullivan said.
By KRISTEN NELSON
Petroleum News