March 2, 2006

Alaska Oil-Search Rights Draw Heavy Bidding

By Yereth Rosen

ANCHORAGE, Alaska -- Enticed by oil prices over $60 a barrel, energy companies and individual investors bid more than $31.2 million on Wednesday for oil and gas rights in Alaskan territory, according to preliminary sale results.

"I'm thrilled, no doubt about it," said Bill Van Dyke, acting director of the Alaska Division of Oil and Gas. "It's just a real healthy environment on the North Slope right now for both companies that have been here for a long time as well as companies that are jumping in today," he said.

Some of the biggest oil fields in the United States are in the area. Alaska is second in the United States in proved oil reserves, according to the U.S. Department of Energy.

BP unit BP Exploration (Alaska) Inc. made the highest bid for a single tract, bidding $5 million for rights near its offshore Liberty prospect on federal property. BP Exploration also picked up two other Beaufort Sea tracts.

"Our participation in the state lease sale is aligned with our current interest in progressing Liberty along," said BP spokesman Daren Beaudo.

ConocoPhillips unit ConocoPhillips Alaska Inc., the North Slope's top oil producer, was also an active bidder, spending about $5.4 million on Beaufort Sea exploration rights and about $1 million on rights to explore land tracts on the North Slope.

The 62 offshore Beaufort Sea tracts -- of 573 offered -- that received bids represented more than twice the amount leased in any previous Beaufort Sea sale since Alaska began its area-wide leasing program in the late 1990s.

Monday's high bids for the Beaufort sale totaled about $15 million, according to preliminary results.

The 145 tracts -- of 1,225 on offer -- that received bids in the onshore North Slope sale matched the second-highest previous sale. High bids for the North Slope sale totaled more than $16.2 million, according to preliminary results.

Van Dyke said the active bidding reflects both high oil prices and the bright prospects on the North Slope for a variety of companies.

The Beaufort Sea tracts picked up by ConocoPhillips were concentrated around Cross Island, in an area where the company holds leases picked up in previous federal sales, said Rick Mott, vice president for exploration.

Union Oil of California (Unocal) offered nearly $7 million for exploration rights on land south of producing oil fields and west of the trans-Alaska pipeline, according to preliminary results. Unocal in 2005 became a subsidiary of Chevron Corp..

Eni Petroleum Exploration Co., an affiliate of Italian-based Eni, spent more than $5.6 million for rights to explore North Slope tracts near territory previously acquired in other deals, according to preliminary results.

FEX LP, a subsidiary of Canada-based Talisman Energy Inc., bid nearly $1.5 million for exploration rights to an area off the coast of the National Petroleum Reserve-Alaska. The tracts are near the Teshekpuk Lake area, an environmentally sensitive zone that the U.S. Bureau of Land Management in January opened up to oil and gas leasing.

Other companies picking up leases in the sales were Anadarko Petroleum, AVCG LLC, Pioneer Natural Resources, Texas-based Sunwest Oil and Gas Inc., Arctic Falcon and Barrow-based, Inupiat Eskimo-owned Arctic Slope Regional Corp.

On-the-ground exploration work could begin as early as next winter if title transfers are completed smoothly over the next several months, Division of Oil and Gas officials have said.