The Alaska Division of Oil and Gas received bids on two tracts covering 5,120 acres and totaling approximately $100,659 in bonus bids from one bidder, according to preliminary results from the 2022 Cook Inlet Areawide oil and gas lease sale. The sole bidder was Furie Operating Alaska, LLC, a subsidiary of HEX, LLC, which operates the Kitchen Lights Unit offshore in Cook Inlet. The tracts Furie won are adjacent to that unit, which currently produces natural gas for local utilities.
John Hendrix, President and CEO of the HEX Cook Inlet says that the information of winning the tracts was news to him, but he says:
“Well, I know we applied for it. We’re trying to be good, responsible resource development representatives in the state of Alaska and it’s good that we won it. We hope to basically be able to develop it in the future, but we must have a fiscal regime and a state that wants us to develop our Alaska resources, and a federal government to boot.”
The Kitchen Lights unit is one of the newest gas fields in Cook Inlet, going online in 2015. It has produced more than 30 billion cubic feet of gas. HEX purchased Furie and the Kitchen Lights development in July 2020, and has actively worked to improve production.
Despite the news of winning the tracts, Hendrix adds:
“The federal government has an environment no one would want to invest in right now. We bought into state leases, but we have our own challenges right now with the state of Alaska. We are basically overtaxed. We have to pay almost 30% of our gross receipts to the state of Alaska for royalties and for those they awarded royalties to and for property taxes. Right off the top, 30%. No fishermen gives up 30%. No miner gives up 30%, but we give up 30% as Alaska’s only oil and gas company that’s owned by Alaskans 100%. We’re here as a company on the Kenai. We want to do the Kenai proud and our state proud, but we’ve been blessed with a state that had big companies come in and we’ve got buracureacy formed around big companies and we need to adjust and change to survive the years ahead, not only our company but the state.”
The Division of Oil and Gas did not receive bids in the 2022 Alaska Peninsula Areawide lease sale, which was held concurrently with the Cook Inlet Areawide sale.
Preliminary results from the sale, which was conducted online, are posted at dog.dnr.alaska.gov. More details will be posted as they become available.