n July, the Alaska Department of Natural Resources (DNR) Division of Oil and Gas released the final, adjudicated results of its November 2022 Beaufort Sea, Cook Inlet, and North Slope areawide lease sales. The lease sales were successful in that each generated bids that resulted in acreage awards, an essential part of the process of oil and gas development on state lands and waters.

In the final tally for the Beaufort Sea areawide sale, five of the six companies that submitted bids received at least one tract:

• Savant Alaska bid on three tracts and was awarded two totaling 2,987 acres
• Hilcorp North Slope bid on three tracts and was awarded all three totaling 6,400 acres
• Hilcorp Alaska bid on one tract and successfully won that award for 2,501 acres
• Lagniappe Alaska bid on one tract successfully for a total of 2,560 acres
• Samuel Cade bid on one tract successfully for 2,324 acres
• ConocoPhillips Alaska bid on two tracts but was not awarded either

The Beaufort Sea sale area comprises primarily offshore acreage on the north shores from the border with Canada to east of Point Barrow, up to 3 miles offshore (the boundary between the State of Alaska and federal waters); in total it contains 1.7 million acres of state-owned land and 570 lease tracts.

The November 2022 North Slope Areawide sale attracted seven bidders, all of which secured at least one tract:

• Great Bear Petroleum bid on twenty-seven tracts and won them all, with a total acreage of 39,540
• Captivate Energy Alaska bid on ten tracts and was awarded all ten, for a total of 25,431 acres
• Hilcorp North Slope bid on eight tracts and successfully secured all eight, totaling 19,013 acres
• Lagniappe Alaska bid on seven and was awarded seven tracts, for 17,695 acres
• Arctic Circle Exploration was awarded all five of its bids, securing 12,679 acres
• Santos bid on four tracts and was awarded three, a total of 3,817 acres
• Finnex bid on two tracts and was awarded one of them, a total of 1,840 acres

The North Slope sale area comprises 5 million acres of state-owned land and 3,121 tracts ranging from 160 acres to 5,760 each. It’s primarily onshore acreage with an eastern boundary of the Canning River and Arctic National Wildlife Refuge (ANWR), and the Colville River and National Petroleum Reserve-Alaska (NPR-A) form the westward border. It extends from the Umiat Meridian baseline on the south to the southern boundaries of the Beaufort Sea sale area.

Wrapping up results from November 2022 is the Cook Inlet Areawide Winter sale, for which Hilcorp Alaska was the only bidder. The company bid on and was awarded six tracts in Cook Inlet for a total acreage of 22,744. Unlike the North Slope and Beaufort Sea areas, the Cook Inlet area offers onshore and offshore leases; in this area, 3.3 million acres of state-owned land are divided into 833 tracts.

All three of these areas will have tracts available in the upcoming November 20 oil and gas lease sale, and in addition to those, the upcoming sale will also have tracts available in the North Slope Foothills and Alaska Peninsula sale areas.

The North Slope Foothills borders the North Slope lease area at its northern border and extends south to the Gates of the Arctic National Park and Preserve. The sale area contains onshore acreage between NPR-A and ANWR and approximately 4.3 million acres of state-owned land and 818 lease sale tracts.

Similar to Cook Inlet, the Alaska Peninsula lease sale area has onshore and offshore acreage, extending from the Nushagak Peninsula in the north and down the west side of the Alaska Peninsula to just north of Cold Bay, within the 3-mile boundary between state and federal waters. The state owns 5 million acres in this area, and there are 1,004 tracts ranging from 1,280 to 5,760 acres. It is one of the newer areas of oil and gas development, as the first areawide state lease sale was held there in 2005.

When the state conducts a lease sale, it offers up to interested parties all available acres in the area. According to the Division of Oil and Gas, “Areawide leasing allows regularly scheduled competitive sales within specific oil and gas basins without a nomination process. Offering oil and gas leases in each sale area annually allows Alaska to have a stable, predictable leasing program.” Through regularly scheduled areawide lease sales, the Division of Oil and Gas meets its obligations as recorded in Alaska Statute 38.05.177, which states in part: “The legislature finds that the people of Alaska have an interest in the development of the state’s oil and gas resources to maximize the economic and physical recovery of the resources; maximize competition among parties seeking to explore and develop the resources; [and] maximize the use of Alaska’s human resources in the development of the resources. [It also finds that] it is in the best interest of the state to encourage an assessment of its oil and gas resources… and to offer acreage for oil and gas leases.”

Because a foundational element of all lease sales is the assumption that they are in the best interest of the state, it offers several resources to any interested bidders to aid them in making informed decisions.

For example, DNR’s Energy Resources Section (which operates within the Division of Geological & Geophysical Surveys) “generates new, unbiased information on the geologic framework of frontier areas in Alaska that may host undiscovered oil, gas, coal, and geothermal resources.” Six full-time geologists generate data through their expertise in depositional systems, sequence stratigraphy, structural geology, geochronology, petroleum geology, and coal geology. At present, the Energy Resources Section manages three petroleum-focused basin analysis programs—North Slope and Brooks Range Foothills, Cook Inlet, and Frontier Basins and Rural Energy—and data from these programs is disseminated to the public for free.

As another resource, the state has a collection of seismic and well data. While the 2D and 3D seismic information is available for free to qualifying research, education, or government institutions, private entities that would like to use the data as part of their decision-making can purchase it from the state. All of the seismic data is recent (in geological terms), with most of what’s available being conducted in the 2000s or 2010s, and it is available at a variety of prices.

There is also well data available for approximately 100 wells, all of which is free, at present.

he Alaska Department of Natural Resources (DNR) Division of Oil and Gas has designated 38,315 acres on the south side of Mount Spurr as a competitive geothermal area, and Derek Nottingham, director of the Division of Oil and Gas, has issued a final decision approving a lease sale for the area.

It’s not the first time the state has encouraged geothermal development in the area. DNR held lease sales in the Mount Spurr area in 1983, 1986, and in 2008, and in 2021 the Division of Oil and Gas awarded two noncompetitive geothermal prospecting permits (one to Raser Power Systems and the other to GeoAlaska).

The 11,070-foot volcano occasionally threatens the Anchorage area, 75 miles away, by spewing ash, most recently in 1992. That proximity also makes Mount Spurr a tantalizing source of energy.

Approval for the upcoming lease sale is based on the history of commercial exploration interest and available geologic information that indicates a substantial likelihood of commercial geothermal resources. In addition, the timing is right, as there are incentives in the 2022 Inflation Reduction Act for geothermal energy production.

The final decision states: “One of the effects of [the Inflation Reduction Act] includes the geothermal federal tax credit to a bonus rate of 30 percent until 2032. Geothermal power plants are eligible for either a production tax credit for clean electricity at $25 per megawatt-hour for the first ten years of operation of the facility, or an investment tax credit for clean electricity equal to 30 percent of the investment in a new geothermal facility. Manufacturers of geothermal technologies like geothermal drills are eligible to apply to the Department of Energy for an advanced energy manufacturing credit. This includes up to $40 billion in Department of Energy Title 17 Loan Guarantee Program for large-scale energy projects that use innovative technology to reduce, avoid, or sequester greenhouse gas emissions, including for geothermal projects. In sum, federal energy policy has shifted significantly since the noncompetitive permits were issued in 2021, which has generated renewed interest in geothermal exploration.”

The state does not find value in overly-restricting who can acquire oil and gas leases. Individuals do not need to be a resident of Alaska or even a citizen of the United States, as a non-citizen who intends to become a citizen qualifies, as does a non-citizen who lives in a country where laws grant privileges similar to those of citizens of the United States. The restrictions for a business are slightly more stringent, as corporations, LLCs, and other business entities must be organized under the laws of the United States or one of its territories, and it must be qualified to do business in Alaska.

The Beaufort Sea areawide lease sale results demonstrate the possible variety of qualifying entities, ranging from publicly traded ConocoPhillips Alaska to privately owned exploration company Lagniappe to individual Samuel Cade.

Conducting routine lease sales, making quality data readily available, and establishing a broad range of qualified entities all work to create an environment that promotes the development of our state’s resources. As the Division of Oil and Gas states, “The Division of Oil and Gas manages lands for oil, gas, and geothermal exploration and development in a fair and transparent manner to maximize prudent use of resources for the greatest benefit of all Alaskans.”