Bidding is light in state’s Nov. 3 North Slope lease sale

Few bidders showed up for Alaska’s annual North Slope onshore lease sale.

No company bid for state-owned offshore tracts in the Alaska Beaufort Sea, nor for leases on state lands in the foothills areas of the southern North Slope, according to results released Nov. 3 by Alaska’s Division of Oil and Gas.

“We were expecting a low turnout but not this low,” said Sean Clifton, a state Division of Oil and Gas official. “Oil prices have been very strong for a period of time, so this was a surprise,” he said.

There were six bids covering 14,080 acres and totaling $467,609 in bonus bids from two bidders, according to preliminary results released by the division. The bids were from small independent companies, all making offers at or near the state’s minimum per-acre bid.

Lagniappe Alaska LLC bid on five tracts in an east-central North Slope area southeast of the large Prudhoe Bay field. This is an area, also southwest of the large Point Thomson gas field, that has attracted interest from explorer in recent years.

The Louisiana-based Lagniappe already has a block of about 167,000 acres of state leases in the area. The company is important because it is connected with Bill Armstrong, a veteran oil explorer with a track record of major discoveries on the North Slope.

The second bidder was Savant Alaska, LLC, for one tract of 1,280 acres adjacent to and south of the small Badami oil field near the Beaufort Sea coast. Badami is between Point Thomson Prudhoe Bay. Savant has operated the Badami field for more than 10 years.

The state has also offered 818 tracts totaling 4.3 million acres in the North Slope Foothills sale, and 857,889 acres in 291 tracts in the Beaufort Sea sale, but received no bids, said Tom Stokes, director of the Division of Oil and Gas.

He said 45 percent of the state’s Beaufort Sea acreage is already under lease, as is 40 percent of the North Slope area.

“When you combine that fact with the limited available acreage around known exploration targets throughout the North Slope, and some banks’ current hesitance to lend money for Arctic exploration, it’s understandable that the modest interest in today’s lease sale focused on opportunities close to development infrastructure,” Stokes said.

Lagniappe Alaska’s leases are a few miles east of the Trans Alaska Pipeline System, while the new lease acquired by Savant is near the existing Badami oil pipeline that connects with TAPS.

What may be chilling industry interest is the effort by U.S. conservation groups to lobby major banks and other investment groups urging a stop financing of Arctic oil and gas exploration.

The campaign is having an effect. “It has become very difficult for small explorers to raise money for drilling,” Alaska Natural Resources Commissioner Corri Feige said in a recent interview.

Also, President Joe Biden’s opposition to exploring the prospective coastal plain of the Arctic National Wildlife Refuge, which is east of the state’s North Slope lands, may have chilled industry interest in the region.