The Alaska Division of Oil and Gas issued on Friday a formal notice for oil and gas lease sales on all available State acreage, including in the North Slope and Cook Inlet regions.
Bidding will open Nov. 20th, and bid results will be announced on Dec. 13, 2023. This annual sale includes five areas: Beaufort Sea, North Slope, and North Slope Foothills on (all on Alaska’s Arctic Slope); Cook Inlet; and the Alaska Peninsula.
This year, the Division of Oil and Gas is offering a previously unused bid variable and lease terms: a net profit share bid variable. A fixed royalty with a per-acre cash bonus bid variable has been the normal practice, and the only option used for over 25 years.
According to the DOG Notice of Sale document, the Cook Inlet is the only sale area in which the net profit share bid variable will be used, beginning with a minimum bid of 5%. In the other four sale regions, the bid variable will remain a cash bonus.
In a press release, the Division stated that the new bid variable in the Cook Inlet is intended “to help incentivize production of natural gas for Alaskans in the region.” In the Cook Inlet sale area, the cash bonus per acre is fixed, and there is no royalty.
“These new lease terms and bid variable offering in Cook Inlet is an innovative approach that we hope will attract additional investment,” said DNR Commissioner John Boyle. “Most importantly, our goal is bringing new gas production online quickly to meet our domestic energy needs.”
The sale area encompasses onshore and offshore acreage that extends from Wasilla in the north to Anchor Point in the southeast, then along the 3-mile boundary along State of Alaska and federal waters to the Iniskin Peninsula, and along the west side of Cook Inlet.
According to the DOG press release, state revenue generated by net profit share instead of royalty share enables a producer to recover costs more quickly, which could make marginal projects more economically viable.
Public notice of the sale was posted on Friday to give prospective bidders time to review available tracts and the terms of the sale.
Details are available on the Division of Oil & Gas website.
