ANCHORAGE, Alaska (Reuters) – A pair of oil and gas lease sales that offered nearly 10 million acres of state territory in southern Alaska drew only three bids, officials announced on Wednesday.
Hilcorp Energy Company’s Alaska unit submitted bids for three tracts comprising 10,286 acres in the Cook Inlet region, said Kyle Smith, leasing manager for the Alaska Division of Oil and Gas. About 4 million acres of offshore and onshore territory was offered in the Cook Inlet sale.
It was the poorest showing for the state’s annual Cook Inlet lease sale since 2016, when no bids were submitted. Cook Inlet sales in 2012, 2013 and 2014 attracted spirited bidding.
The inlet, located in the waters off the south-central coast of state capital Anchorage and stretching to the Gulf of Alaska, produces about 14,000 barrels of oil a day, according to state figures, down from the 1970 peak of 230,000 bpd. The basin supplies natural gas to Anchorage, Alaska’s largest city, and the surrounding region.
The state produces roughly 500,000 bpd, most of it in Alaska’s North Slope.
Smith said the small turnout at Wednesday’s lease sale likely reflected regional gas market conditions. Industry interest in the mature Cook Inlet basin has fluctuated over the years, he said.
“We’d love to have a big, robust lease sale, but years ago we were hoping we could keep the lights on,” he said.
No bids were submitted for the approximately 4 million onshore acres and 1.75 million offshore acres offered in the Alaska Peninsula region in southwestern Alaska.
The Alaska Peninsula is hundreds of miles away from state highways or urban centers, and has never produced oil or natural gas. The state has been holding annual peninsula lease sales since 2005, but the last time a company submitted a bid in any of those sales was 2007.
The next Alaska state oil and gas lease sales, to offer onshore North Slope and offshore Beaufort Sea territory, are tentatively scheduled for Dec. 11.
Reporting by David Gaffen; Editing by Susan Thomas