State cancels Cook Inlet, Alaska Peninsula oi lease sale

With no stated interest from oil companies, the Alaska Division of Oil and Gas announced Tuesday that it would cancel its 2016 lease sale bid opening in Cook Inlet and the Alaska Peninsula.

The department did not receive a single bid for state-owned tracts offered in the Cook Inlet or Alaska Peninsula this year, according to a press release issued Tuesday from the Division of Oil and Gas. The division still has plans for a Northern Alaska Areawide oil and gas lease sale in fall 2016, according to the release.

It sometimes happens that the division receives no bids, said Diane Hunt, the special projects and external relations coordinator for the Division of Oil and Gas. It’s common that no offers come in for the Alaska Peninsula, and last fall, no bids came in for the North Slope Foothills or the Beaufort Sea, she said.

It is possible that one reason the Cook Inlet lacked bidders because of the land that was offered, she said.

“We think that with the oil prices low and the land that is available, there is no infrastructure near it,” Hunt said. “We would have to have high oil prices to see that (development).”

She said the Division of Oil and Gas tends to get less interest when oil prices are lower. In 2014, when oil prices were more than $100 per barrel, the state received 39 bids for leases in Cook Inlet and the Alaska Peninsula, the majority of which were in Cook Inlet. However, when oil prices were lower in 2009, the state only received four bids in Cook Inlet, she said.

“Right now, the oil industry is just waiting to see what oil prices are doing,” Hunt said. “And right now, the companies don’t have excess funds to expand their acreage positions, and they’re all in a holding pattern.”

Kara Moriarty, the president and CEO of the Alaska Oil and Gas Association, said in a statement that the lack of bids in Cook Inlet was likely connected to the oil and gas industry’s hesitance to invest in Alaska because of the ongoing debate about industry tax credits.

“The message being heard by the oil and gas industry is loud and clear: Alaska is an unpredictable, unstable, and uncertain place in which to do business,” Moriarty said in a statement. “If the governor and sympathetic members of the legislature make it even harder for companies to invest in Alaska, this canceled lease sale is likely just the beginning in a series of similar announcements. Either way, Alaska loses.”

The Legislature has heard multiple iterations of bills to alter the current oil and gas tax credit incentive program in the state, including one version that would zero out the tax credits in Cook Inlet by 2018. The Legislature has not made any formal decision yet.

There are currently three oil and gas producers operating in Cook Inlet — Hilcorp, BlueCrest Energy and Furie Alaska Operating. Hunt noted that even though no new bids came in for 2016, there is activity going on in the Inlet. BlueCrest recently began producing oil, Hilcorp is exploring for new assets on the southern Kenai Peninsula and Furie Operating Alaska recently inked a deal with Homer Electric Association to sell natural gas.

Cook Inlet gas still receives some of the best prices in the world for its natural gas, Hunt said.

“Though we didn’t receive any bids, there’s still lots of activity in Cook Inlet,” Hunt said. “We’re just going to wait and see (how the year goes).”

Reach Elizabeth Earl at elizabeth.earl@peninsulaclarion.com.

More in News

The sign in front of the Homer Electric Association building in Kenai, Alaska as seen on April 1, 2020. (Photo by Brian Mazurek/Peninsula Clarion)
HEA returning capital credits to members

Members will be issued credits based on the amount of electricity they purchased in 2019.

Alaska State Troopers logo.
Holiday enforcement citations up from last year

Around major holidays, Alaska State Troopers and Alaska Wildlife Troopers conduct extra traffic enforcement as part of a national safety campaign.

Central Peninsula Hospital as seen March 26, 2020, in Soldotna, Alaska. (Victoria Petersen/Peninsula Clarion)
CEO: Hospital at risk of being overrun

CPH has exceeded its bed capacity multiple times and a surge area has been opened in a former obstetric unit.

Ice chokes the Homer Harbor on Jan. 9, 2020 in Homer, Alaska. North Pacific Fishery Management Council is scheduled to take final action on a fishery management plan for commercial fishing in Upper Cook Inlet this week. (Photo by Michael Armstrong/Homer News)
Cook Inlet salmon fishery issue to be decided by North Pacific Fishery Management Council

Fishermen, processors take issue with option to close waters to commercial fishing

Alaska State Troopers logo.
Man allegedly leads troopers on high-speed chase

The man faces charges of assault and reckless driving.

A microscopic look of the COVID virus. Photo: CDC
Peninsula reports 80 new cases, 65 in central

All peninsula communities reported at least one new case except for Fritz Creek

A microscopic look of the COVID virus. Photo: CDC
DHSS: 519 new cases, 1 new death

Affected peninsula communities include Kenai, Soldotna, Homer, Nikiski, Sterling and Other North

Linda Farnsworth Hutchings, left, and Kenai Peninsula Borough Mayor Charlie Pierce, right, participate in a mayoral candidate forum hosted by the Kenai Chamber of Commerce at the Kenai Visitor and Cultural Center on Sept. 9, 2020. (Photo by Brian Mazurek/Peninsula Clarion)
Farnsworth-Hutchings vying for vacant Soldotna council seat

The interviews can be watched live on Wednesday

Most Read