Alaska Considers Offer for Susitna Basin Acreage

The Alaskan state government is considering a bid from an unnamed oil and gas company to carry out exploration activities on approximately 500,000 acres in the Susitna basin west of the Parks Highway. This is the fifth bid to be submitted under a program that was developed in 1994 by former Gov. Wally Hickel to provide oil companies with inexpensive access to large under-explored areas of the state. The state Division of Oil and Gas won't reveal the identity of the bidder until it determines if other companies are also interested in exploring the area. The deadline to submit bids for the Susitna basin is June 12th and so far there are no other bids. The Susitna basin land stretches west from the Susitna River between Talkeetna in the north and the Willow area in the south.

Alaska will issue two exploration licenses later this year to Forest Oil for 874,000 acres in the Susitna basin. This latest bid is for lands that border the acreage to be awarded to Forest Oil. Natural gas could be the main resource in the Susitna basin. If drillers found commercial quantities, most likely the gas would feed into an existing pipeline system that connects the Beluga gas field, on the west side of Cook Inlet, to Anchorage.

Since the program was developed in 1994, the state has only issued two exploration licenses. In October 2000, Anschutz Exploration received a license after committing to spend $1.4 million over five years to explore 398,445 acres in the Copper River basin. Now the state is considering three more licenses, including the two for Forest Oil and the one being sought by the still unnamed bidder. Under the program, the state does not receive large up-front bonuses like in regular oil and gas lease sales. With exploration licensing, it collects only a $1-per-acre fee. Companies that get exploration licenses must post a bond with the state to guarantee they do the work they committed to. The program is still new, and so far no drilling has been done on licensed ground. But companies have done some seismic surveys in search of drilling prospects.