HomeMy WebLinkAboutAPA3292FVE-YEAR
OLAND GAS
LEAS NG PROGRAM
JANUARY l983
STATE OF
ALASKA
DEPARTMENT OF
NATURAL RESOURCES
DIVISION OF MINERALS
AND ENERGY MANAGEMENT
STATE OF ALASKA
FIVE-YEAR OIL AND
GAS LEASING PROGRAM
Bill Sheffield
Governor
Esther Wunnicke
Commissioner
Department of Natural Resources
January 1983
Prepared for the First Session,
Thirteenth Alaska Legislature
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TABLE OF CONTENTS
Introduction
State of Alaska Leasing Strategy
Revenue Projections and Leasing Policy
Resource Evaluation Process
State of Alaska Leasing Process
Overview
Procedures
State of Alaska Five-Year Oil and Gas Leasing Program
Proposed Sale Areas: 1983-1987
Statewide Sale Area Map with Federal Sales Overlay
Comparison of Federal and State Leasing Programs in Alaska
Geological Descriptions of 1983-1987 Proposed Sale Areas
Description of Proposed Lease Sale Areas
Beaufort Sea (Sale 39)
Upper Cook Inlet (Sale 40)
Minchumina Basin (Sale 42)
Beaufort Sea (Sale 43)
Bristol Bay Uplands (Sale 41)
Holitna Basin (Sale 46)
Kuparuk Uplands (Sale 47)
Hope Basin (Sale 45)
Kuparuk Uplands (Sale 48)
Cook Inlet (Sale 49)
Camden Bay (Sale 50)
Prudhoe Bay Uplands (Sale 51)
!::3eaufort Sea (Sale 52)
Icy Cape (Sale 53)
Exploration Incentive Credit Proposal: Invitation to Comment
1982 Oil and Gas Lease Sales Results
Appendices
A. The Origin of Hydrocarbons
B. Final Notices for 1982 Lease Sales
C. Standard Mitigating Measures for Seismic Exploration
D. Comments Received on Proposed 1987 Lease Sales
E. Activity/Issues Matrix for North Slope Projects
F. Implementation Procedures for Beaufort Sea Seasonal
Drilling Restrictions
G. Lease Form
H. Arctic Slope Oil and Gas Development map
Acknowledgements
Page
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3
4
10
21
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21
24
25
26
27
28
31
33
35
38
41
43
47
50
52
55
58
61
64
67
69
70
71
INTRODUCTION
Title 38 of the Alaska Statutes, Public Lands, charges the Department of
Natural Resources with primary responsibility for management of the State of
Alaska's subsurface hydrocarbon and mineral resources.
In 1978, the Tenth Alaska Legislature made major amendments to Title 38. The
amendments included a requirement that the Commissioner of Natural Resources
submit to the Legislature each year a five-year schedule for the leasing of
state land for oil and gas exploration.
This is the sixth document to be produced pursuant to AS 38.05.180, as
ammended. The 1983 edition includes discussions of state leasing strategy,
revenue projections and state leasing policy, resource evaluation, the leastn;
process, a comparison of state and federal lease schedules, geological
descriptions of the major geologic oasins where lease sales are proposed,
descriptions of the proposed lease areas, exploration incentive credits, and
the results from the sales held in 1982. The appendices include a description
of the origin of hydrocarbons, final notices from sales held in 1982, the
department's list of standard mitigating measures for seismic exploration,
copies of the comments received on the proposed 1987 additions to the leasing
program, a map illustrating Arctic Slope oil and gas development, the
Activity/Issues Matrix for North Slope Projects, and procedures for
implementation of the Beaufort Sea seasonal drilling restrictions and a
current lease form.
The Department is considering extending the eligibility of exploration
incentive credits to include geophysical data. Details of the proposal are
presented on page 70. Public comments are being solicited. Comments must be
received by March 1, 1982.
Five lease sales were held in 1982, bringing to ten the number conducted by
the Department of Natural Resources since the institution of the five-year
leasing program in 1979. Sales held since 1979 include: Copper River
(Sale 298); Beaufort Sea (Sale 30); Prudhoe Bay exempt acreage (Sale 31);
Upper Cook Inlet and Susitna Valley (Sale 33); Kenai Peninsula exempt acreage
(Sale 32); Lower Cook Inlet (Sale 35); Beaufort Sea (Sale 36); Middle Tanana
and Copper River (Sale 37); Chakok River exempt acreage (Sale 37A); and
Prudhoe Bay Uplands (Sale 34). A summary of all state competitive lease sales
held since 1950 is presented on Ta~le 11, page 109.
A current inventory of leases is found in Table 12, page 112. The table ~ists
the total acreage under lease and the numbers of producing leases. In
addition, the number of net profit share leases, segregated leases, and
unitized leases are tabulated. Finally, a summary of the numbers of
competitive, non-competitive and conditional leases is provided.
A publication containing applicable statutes and new and revised regulations
for oil, gas and geothermal resources will be released by the department in
March.
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A new addition to the Annual Leasing Report this year is the Arctic Slope Oil
and Gas Development Map which is being distributed with this document. The
map illustrates, in detail, current oil and gas projects occurring on the
north slope.
One of the major purposes of establishing a five-year petroleum leasing
schedule is to provide a plan to facilitate the orderly assessment and
development of Alaska petroleum resources. All Alaskans, including local
citizens and governments, environmental groups, the oil and gas industry, and
the business sector, benefit from a fixed and predictable leasing program. An
established leasing schedule permits the public to comment on the areas where
leasing is planned, allows business and labor to plan employment or business
opportunities, permits the petroleum industry to allocate a portion of its
resources to Alaska petroleum exploration and development, and provides local,
state and federal governments with adequate time for presale evaluation,
assessment and mitigation of impacts.
This document fulfills the following statutory requirements:
AS 38.05. 180(b) The Commissioner shall annually prepare and submit to the
Legislature, between the first and the 15th day of each regular
legislative session, a five-year proposed oil and gas leasing program
consisting of a schedule of proposed lease sales and specifying as
precisely as practicable the location of tracts proposed to be offered for
oil and gas leasing during the calendar year in which the proposed program
is submitted to the Legislature and the following four calendar years.
AS 38.04.180(e) Simultaneously with submission of the leasing program
required under (b) of this section, the Commissioner shall submit to the
Legislature a report containing the following:
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(l) the schedule of all lease sales held during the preceding calendar f-
year, the bidding method or methods utilized, and an analysis of -
the results of the bidding; (2) if determined, a description of
the bidding methods to be used for all lease sales to be held ~-
during the current and next two succeeding calendar years; (3) the _
reasons a particular bidding method has been selected.
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STATE OF ALASKA LEASING STRATEGY
The State of Alaska seeks to achieve certain objectives in its leasing
activities. Some of these objectives can be pursued independently of the
rest. Some are complementary in that by achieving one the state enhances its
ability to achieve or maximize others. However, some objectives are in
conflict, thus their maximization represents a balance or compromise. The
objectives of the State oil and gas leasing program are:
1. To adhere to an oil and gas leasing program, as required by state statute,
that is predictable and dependable, so that the petroleum industry, the
public, and the federal and state governments may efficiently plan oil and
gas related activities and fiscal expenditures.
2. To coordinate leasing with nearby owners of subsurface rights,
particularly the federal government, so that: (1) state-wide oil, gas and
coal leasing activities are cohesive regardless of land ownership; (2)
geologic and environmental data may be shared if possible; (3) drainage of
commonly owned petroleum reservoirs may be equitable; and (4) oil, gas,
coal and other mineral exploration and development may continue while
ownership disputes are being resolved.
3. To collect resource information adequate to estimate a fair return to the
state when developing leasing procedures and terms of sales and for
long-term fiscal planning.
4. To obtain the maximum economic return to the State and its citizens from
the sale of state-owned oil and gas resources oy using an optimal mix of
bidding methods and by encouraging competition.
5. To lease first in the most prospective areas and near areas in which
development has been or is taking place so that potential additional
development may take advantage of existing facilities wherever possible.
6. To maintain access to promising oil, gas and CQal areas by reserving
access corridors and by avoiding commitments to incompatible surface uses
in key transporation corridors.
7. To avoid hindering development or placing an undue burden on industry, by
simplifying necessary regulations so they are fair and effective.
8. To work with local citizens, local governments, special interest groups,
and other government agencies when selecting areas for leasing, designing
lease sales, and when approving permits.
9. To encourage the petroleum industry to provide local training programs and
to hire local people for available jobs.
10. To protect the integrity of affected cultures, the environment, and fish
and wildlife resources through plans of operations, lease and permit
stipulations, and comprehensive monitoring operations.
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REVENUE PROJECTIONS AND LEASING POLICY
The Five-Year Leasing Schedule is developed within a framework of private
public fiscal considerations. Although it is impossible to accurately
forecast future state revenue requirements and future hydrocarbon
developments, it is worthwhile to look at projected revenue streams from
existing reservoirs and determine the magnitude and timing of future
discoveries that would be needed to maintain an adequate level of state
revenues.
Figure 1 and Table 1 contain the most recent revenue forecast from the
Department of Revenue as of September 1982.
and
North Slope oil production is predicted to be 1.673 million barrels per day in
fiscal year 1984 (FY 84). Production from the Kuparuk, Milne Point and fields
in the vicinity of the Canning River is expected to increase this volume to a
daiiy production average of 1.830 million barrels per day by FY 89 .•
Subsequently production is projected to decline to .755 million barrels per
day by FY 98.
During the decline period (after FY 89), production from the Canning River
area, Flaxman Island, Point Thomson and Beaufort Sea are melded into the
forecast production values. Although these values are relatively small
(approximately .150 million barrels per day) they should be treated a:s highly
speculative and subject to substantial revision as futher exploration and
development ensues.
North Slope gas production is given a 40% chance of beginning by FY 93 and
delivering 2.0 billion cubic feet per day to the pipeline through the forecast
period. Recent announcements by the pipelin~ consortium create doubt about
the completion date of the pipeline.
Cook Inlet hydrocarbon production is assumed to make very modest additions to
the above figures. Oil production is estimated to decline from a high of
approximately .080 million barrels per day in FY 82 to about .014 million
barrels per day by FY 97. This corresponds to a 12.2 percent annual decline
rate over the forecast period. On the other hand, gas production is expected
to increase from .507 billion cubic feet per day in FY 82 to .722 billion
cubic feet per day in 1998. These figures include a PAC Alaska demand for
.200 billion cubic feet per day beginning in 1984.
The Department of Natural Resources' analysis of North Slope reserves (Table
2) is generally consistent with the Department of Revenue•s production
assumptions. In addition to the primary reservoir at Prudhoe Bay (billion
barrels recoverable reserves remaining), the DNR estimates indicate a
lik~lihood of between 1.7 and 3.9 billion barrels of known reserves on leased
state land exclusive of tracts leased in the Beaufort Sea since 1978.
Production estimates are only half of a revenue forecast. The other component
is the estimated prices at which the oil may be sold. Oil price forecasting
has yet to achieve the status of a true art form~ and forecasts beyond a year
or so must be treated with a great deal of skepticism, if not disbelief. The
rea~ons for this skepticism are manifold but a short list would include:
instability within OPEC among the Hawks and the Moderates, economic
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PETROLEUM REVENUE FORECAST
(EXPECTED VALUES IN BILLIONS OF 1982 DOLLARS)
82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98
--------------------
r· FISCAL YEARS
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LEGEND
6 = SEVERANCE
0 = ROYAL TIES
D = TOTAL
l. SOURCE: ALASKA DEPT. OF REVENUE, PETROLEUM REVENUE DIVISION,
--QUARTERLY REPORT SEPT. 1982
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FIGURE I
TABLE 1 ------------------------------------------------~----~~~
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995"
1996
1997
1998
PETROLEUM PRODUCTION REVENUE FORECAST
(Expected Values in Millions of 1982 Dollars)
Total Severance and
Conservation Taxes
1597.57
1372.19
1216.23
1111.71
1212.77
1265.29
1093.31
1115.33
841.65
674.82
593.75
485.08
416.22
349.50
275.97
267.94
252.27
Total Royalties
1531.39
1341.71
1192.85
1122.37
1237.09
1304.73
1323.88
1354.93
1094.86
914.45
832.55
717.76
638.66
545.34
480.51
462.58
447.52
Total Petro 1 eum
Revenues
3128.96
2713.90
2409.08
2234.08
2449.86
2570.02
2417.19
2470.26
1936.51
1589.27
1426.30
1202.84
1054.88
894.84
756.48
730.52
699.79
Source: Alaska Department of Revenue, Petroleum Revenue Division, Quarterly
Report, September 1982
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instability among major consuming nations, market-oriented conservation
serving to reduce long-run dependence upon oil imports, growth in non-OPEC oil
production and finally the potential for war and political instability in the
Middle East. This latter threat leads to erratic inventory accumulation on
the part of consuming countries, and increases the amplitude of oil price
fluctuations.
The price and revenue projections presented here are only indicative of
behavior that would occur if current relationships built into the forecasting
model remain stable and exogenous factors followed projected trends. The
probability of this congruence must be regarded as low, hence the numbers
should be treated as indicative of long run magnitudes rather than numbers to
tie to a planning process.
Inflation is assumed to average roughly 7.7 percent from FY '83 through 1998.
At this rate of inflation, prices double approximately every 9 years. Todayis
$20.00 barrel of oil could be priced at $60.85 by 1998 and be worth no more in
terms of purchasing power than it is today.
The Department of Revenue's forecast assumes that oil prices rise on average
by 7.2 percent per year through 1998. Thus, real prices are assumed to
decline moderately throughout the forcast period. The Department of Revenue's
price forecast can be viewed as conservative, but prudent.
It is not reasonable to assume, in light of current knowledge, that the
current leasing schedule (or any other schedule based on state land holdings)
can fully offset the anticipated decline in Prudhoe Bay production. Proven
North Slope reserves (state land only) are approximately 9.5 billion barrels
of recoverable oil of which about 7 billion remain in the main reservoir at
Prudhoe Bay. Production from this reservoir probably will begin to decline
during the 1985-87 time period. Initial decline rates of 8 to 12 percent per
year are projected. An oil field in the range of 500 million to one billion
barrels recoverable reserves would have to be discovered each year to offset
the projected decline in production, at least for the first few years of
decline.
The likelihood of this decline being fully offset by further discoveries on
State land must be considered remote at this time. The State•s best remaining
prospects are probably in the nearshore (to the three-mile limit) Beaufort Sea
and adjacent onshore areas. The Department of Natural Resources has scheduled
six sales in the area between now and 1987. Other sales on the schedule must
be regarded as moderate to low potential in the light of current knowledge.
The current leasing policy, with increased reliance on contingency payments
rather than bonuses, can help mitigate the fiscal problems that will result
from the inevitable production decline in Prudhoe Bay. Although greater
reliance on contingency payments reduces immediate bonus payments to the
state, the financial trade off is the potential for greater revenues in v.e
future.
This conservative view of State reserves should not be interpreted as a
denigration of Alaska's potential as an energy supplier (although Alaska is
hardly another Saudi Arabia, which has approximately 165 billion barrels of
proved reserves). Many of the most promising oil and gas prospects are
thought to lie offshore in federal waters or in federal preserves such as the
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Arctic National Wildlife Refuge and the National Petroleum Reserve. Even
though the State will share in the revenues from onshore Federal reserves~
this share will be less than would be the case if the State were the lessor.
It is possible that rising real prices for oil will augment the supply of oil
from known reservoirs such that the high range estimates in Table 2 become
more likely. Increasing real prices will encourage closer well spacing,
improve the economics of secondary and enhanced recovery techniques, and
lengthen field life, all of which serve to increase ultimate recovery.
Additionally, rising real oil prices increase the purchasing power of a given
supply. One would have to assume, absent additional discoveries, that real
oil prices would have to rise at a compound rate of 15 percent per year after
the late 1980's to offset the decline in Prudhoe Bay production. The
development of alternative fuel sources (coal, nuclear, oil shale, natural
gas, solar) and price-induced conservation place long-term limits on oil price
increases (although as 1973 and 1979 indicated, substantial real increases are
possible in the short run). These factors suggest that oil price increases
may be more moderate than the 15 percent (real) per year needed to offset the
decline in Prudhoe Bay production, and indicate that the 1990's will begin a
period requiring fiscal restraint for the State unless ~lternative revenue
sources are developed. State finances since 1977 have been characterized by
wide fluctuations in revenues and expenditures coincident with the vagaries of
the world oil market. This suggests the need for state fiscal policies that
moderate the impact of these fluctuations and enhance the stability of the
state's economy.
This discussion has presented a conservative estimate of future oil revenues.
This·conservatism is born of prudence as well as an incomplete understanding
of the State's hydrocarbon potential. Due to the relatively unexplored status
of state land, state agencies presently possess only modest knowledge of
Alaska's subsurface geology.
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TABLE 2
Proven and Probable Oil Reserves on Currently Leased State Lands
North Slope, Alaska
AREA
Prudhoe Bay Unit
Sadlerochit Reservoir
(as of 7/31/82)
Sag River Reservoir
North Prudhoe Bay -
West Dock Area
Kuparuk River Formation
Milne Point Area
Gwydyr Bay Area
Prudhoe Bay Lisburne Reservoir and
Sag Delta Area and
Duck Island Area
Point Thomson Area and
Flaxman Island Area
Totals
Totals (minus Prudhoe Bay)
Note: All estimates as of July, 1982.
low
6170
100
50
600
30
50
460
400
7860
1690
Source: Department of Natural Resources
Range of Reserves
(millions of barrels)
most likely
6950
130
75
1000
45
80
650
600
9530
2580
Division of Minerals and Energy Management
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high
7340
220
100
1500
80
120
975
900
11215
3875
RESOURCE EVALUATION PROCESS
The following prov1s1ons of AS 38.05.180 circumscribe the process leading to
selection of a leasing method and sale tenns:
11 (a) The legislature finds that
(1) the people of Alaska have an interest in the development of the
state's oil and gas resources to ·
(A) maximize the economic and physical recovery of the resources;
(B) maximize competition among parties seeking to explore and
develop the resources;
(C) maximize use of Alaska's human resources in the development
of the resources;
(2) it is in the best interests of the state to encourage an
assessment of its oil and gas resources and to allow the maximum
flexibility in the methods of issuing leases to
(A) recognize the many varied geographical regions of the state
and the different costs of exploring for oil and gas in these
regions;
(B) minimize the adverse impact of exploration, development,
production, and transportation activity.
* * * * *
(f) Following a presale analysis, the Commissioner may choose at least one
of the following leasing methods
(1) a cash bonus bid with a fixed royalty share reserved to the state
of not less than 12 l/2 percent in amount or value of the production
removed or sold from the lease;
(2) a cash bonus bid with a fixed royalty share reserved to the state
of not less than 12 1/2 percent in amount or value of the production
removed or sold from the lease and a fixed share of the net profit
derived from the lease of not less than 30 percent reserved to the
state;
(3) a fixed cash bonus with a royalty share reserved to the state as
the bid variable but no less than 12 l/2 percent in amount or value
of the production removed or sold from the lease;
(4) a fixed cash bonus with the share of the net profit derived from
the lease reserved to the state as the bid variable;
(5) a fixed cash bonus with a fixed royalty share reserved to the
state of not less than 12 l/2 percent in amount or value of the
production removed or sold from the lease with the share of the net
profit derived from the lease reserved to the state as the bid
variable;
(6) a cash bonus bid with a fixed royalty share reserved to the state
based on a sliding scale according to the volume of productton or
other factor but in no event less than 12 l/2 percent in amount or
value of the production removed or sold from the lease;
(7) a fixed cash bonus with a royalty share reserved to the state
based on a sliding scale according to the volume of production or
other factor as the bid variable but not less than 12 l/2 percent in
amount or value of the production removed or sold from the lease.
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(g) The share of the net profit derived from a lease reserved to the state
under (f) of this section is royalty sale proceeds for the purposes of the
Alaska permanent fund under AS 37.13.010 and the Alaska renewable
resources development fund under AS 37.11.020 •.
(h) The commissioner may include terms in any oil and gas lease imposing a
minimum work commitment on the lessee. These terms shall be made public
before the sale, and may include appropriate penalty provisions to take
effect in the event the lessee does not fulfill the minimum work
commitment. Should it be demonstrated that a lease has been proven
unproductive by actions of adjacent lease holders, the commissioner may
set aside a work commitment.
(i) The commissioner may provide for the establishment of an exploration
incentive credit system under which a lessee of state land drilling an
exploratory well on that land may earn credits based upon the footage
drilled and the region in which the well is situated. The commissioner
may also provide for credits to be earned by persons performing
geophysical work on state land, if that work is performed during the two
seasons immediately preceding an announced lease sale and on land included
with the sale area and the geophysical information is made public
following the sale. Credits may not exceed 50 percent of the cost of the
drilling or geophysical work. Credits may be used during a limited period
established by the commissioner and may be assigned during that period.
Credits may be applied against (1) oil and gas royalty and rental payments
payable to the state; or (2) taxes payable under AS 43.55. No credit may
exceed 50 percent of the payment toward which it is being applied.
Amounts due the Alaska permanent fund (AS 37.10.065) and the Alaska
renewable resources development fund (AS 37.11.020) shall be calculated
before the application of credits under this subsection.
* * * * *
(k) The commissioner shall define all terms and adopt all regulations
necessary for a reasonable understanding and evaluation of a particular
bidding method before the public announcement of the terms of the proposed
sale employing that method."
The law requires that the Department of Natural Resources thoroughly assess
the influence of bidding methods and lease terms prior to a given sale. The
end result of this effort is a set of terms and bidding methods tailored to
the department•s assessment of the geological potential and operating
environment of a particular area.
An assessment of potential hydrocarbon resources requires knowledge of the
area•s subsurface geology as well as economic data concerning prices and
costs. The Division of Geologic and Geophysical Surveys (DGGS) provides the
Division of Minerals and Energy Management with a probabilistic assessment of
the quantity, quality and location of hydrocarbons present in a given sale
area. These estimates are based upon seismic information; hence, they must be
regarded as speculative in nature. Once a probability distribution of the
magnitude of potential reserves, if any, is derived, it is possible to proceed
with a meaningful economic evaluation of the sale area including specific
tracts which are determined to overlie potential reserves.
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The reservoir parameters provided by DGGS are used as inputs into a Monte
Carlo program that samples from a triangular distribution. This program
contains a random sampling technique that samples from various probability
distributions with given parameters. The parameters in the case of the
triangular distribution are the high, low and most likely values. For other
statistical probability distributions the mean and standard deviations or
given probability levels, such as the 95 percent and 5 percent levels would be
sufficient to define a range of probable outcomes from which the program could
sample. Table 3 represents program output for a hypothetical field.
The program generates two sets of values. The first set of values are the
results to be expected per exploratory attempt. This expected value is
derived by sampling the triangular probability distribution some 2000 times.
In the hypothetical case presented in Table 3, 2000 exploratory wells
generated 191 discoveries. Slightly less than one exploratory well in ten is
successful in this case. The average size discovery, summing over successful
and unsuccessful attempts, is approximately 157.7 million barrels. This
number (value) should be interpreted as the prior expectation for drilling
statistically independent prospects with the given parameters.
The second set of values generated by the program define the likely size of
the prospect, provided a discovery is made. In this example the average
discovery is about 1.65 billion barrels. S~bsequent economic modelling and
analysis of the prospect would be based on a prospect of this size.
The final result of this evaluation process is a range of estimates of the
expected present value or market value of the tracts. These tract specific
market values are examined to determine their respective sensitivities under
all bidding systems and a wide array of subsidiary lease terms, such as length
of lease, work commitments, tract sizes and exploration incentive credits.
This evaluation process leads to the selection of bidding methods and lease
terms that best protect and enhance the state•s fiscal and environmental
interests.
The economic evaluation model used by DMEM is a discounted cash flow model
similar to those used by industry for prospect evaluation. In simple terms
the model takes a series of estimated future cash flows (both negative and
postive) and discounts them at a specified interest rate to arrive at a
present value. This present value serves as an estimate of the market value
of the acreage being leased.
· The data requirements of the model are both geologic and economic. Among
other things, the geologic parameter estimates deal with the possible size of
the prospects, the quality of the reservoir(s) at the prospect location and
the actual probabilities of hydrocarbons being present in the quantities and
of the quality anticipated. From these data, potential reserves are
calculated. The reserve estimates are then used to construct the basic
economic model. Production rates and facilities requirements are derived
directly from the estimates of potential reservoir size, quality and depth.
The basic economic parameters include: estimated facilities costs (including
number of wells), estimated operating costs (usually expressed on a per barrel
or per mcf basis), estimated state and federal taxes (as a percentage of
income or revenue), and estimated product prices. The cost and revenue
estimates are calculated for the average size prospect, assuming hydrocarbons
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TABLE 3
HYPOTHETICAL RESERVES DISTRIBUTION
FIRST WELL DEV. WELLS ALL WELLS
MONTE CARLO RESULTS:
ATTtMPTS 2000. 22283. 24283.
HITS 191. 22050. 22241.
MISSES 1809. 233. 2042.
SUCCESS RATIO % 9.5 99.0 91.6
AVERAGE RESULTS TO BE EXPECTED PER ATTEMPT:
NO. OF PRODUCERS
NET PAY, FT.
RESERVES, BBL
0.10
26.1
1319492.
11.02
26.5
156369124.
11.12
26.5
157688616.
AVERAGE RESULTS TO EXPECTED PER HIT:
NO. OF PRODUCERS
NET PAY, FT.
PRODUCTIVE ACRES
RESERVES, BBL
1.00
273.0
160.0
13816672.
115.45
277.9
18423.2
1637373024.
116.45
277.8
18583.2
1651189696.
DISTRIBUTION OF RESERVES AND RATE VALUES:
NO. OF RESERVES INITIAL ALLOWABLE CHANCE* WELLS GROSS-BBL RATE-BBL/D BBLID 90.4 0. 0.
0.7 32.07 311660404. 32071.43 32071.43 1.7 74.30 418115016. 74303.03 74303.03 1.9 103.44 1139460752. 103435.90 103435.90 1.6 122.22 1576099120. 122218.75 122218.75 1.3 138.58 1964874240. 138576.9'2 138576. 9'2 1.0 144.89 2508863008. 144894.74 144894.74 0.7 167.00 2922002720. ·~ 167000.00 167000.00 0.2 205.00 3336399584. 205000.00 205000.00 0.5 190.44 4056809312. 190444.45 190444.45
MINIMUM PAY REQUIRED TO SET PIPE, FT. 100.0
*CHANCE OF OCCURRENCE OF RESERVE CATEGORY
-13-
are present. Revenues and costs are projected over the life of the prospect,
then discounted (at a rate selected by the program user back to time zero,the
point of initial expenditure.) This "riskless11 discounted cash flow provides
the basis for all subsequent analysis.
The model initially derives the internal rate of return (ROR) for the cash
flow. The ROR is defined as the discount rate which reduces the sum of all
cash flows to zero. Mathmatically it can oe solved from the following
equation:
ROR = -Io + B.l + J32_ + .......• t&L_
l+r (l+r)2 (l+r)N
= 0
where Io = Initial investment in year zero.
Rl, ...... , RN =Net Revenue (gross revenues-operating cost)
in years one through N.
r = discount rate
2= greater than or equal to
i -
I
r I
I -
I
I
r -
\
l
The ROR is the value of r (r~ 0) that reduces the above equation to zero. Or [ .•
it can be alternately expressed as the value of r (r~O) that reduces the .
value of the positive cash flows (R1., •..•• , RN) to equal negative cash
flow(s) Io. f -
For example, assume the following:
Io = initial well cost of $500 spent on January lst.
R = $200 per year
Five year life for project
All revenues received on 31st of December of each year (simplifies
discounting)
-$500 + $200 + $200 + $200 + $200 + $200 = 0
1.285 (1.285)2 (1.285)3 (1.285)4 (1.285)5
Thus r = .285 or 28.5%. This is the ROR for the project.
Simultaneously with the computation of the ROR, the program computes the net
present value of the discounted cash flow at a specified interest rate. This
calculation can be made on a before federal income tax (BFIT) or after tax
(~FIT) basis. This latter value represents the estimated market value of the
asset.
The net present value of any prospect is the residual value (positive or
negative) of a series of positive and negative cash flows discounted at some
specified discount rate (r). This discount rate usually represents the
average borrowing or reinvestment rate of the firm. Thus, the NPV represents
the firm's valuation of a prospect at the market or opportunity rate of
interest. Given this rate of interest, the firm can compare alternative
prospects/projects with the goals of: 1) selecting projects with the highest
NPV and 2) maximizing the present value of a given investment strategy.
-14-
L
I
l
[
! -
[ ~
L
L
l
r,
I
1.'
r ..
!
l'
r -
l-
r-
I
The net present value is specified as:
NPV = -Io + BL + R2 + ..•..••• + __&!__
~ (l+r)2 (l+r)N
All definitions are the same as before except that r is fixed at a
predetermined rate.
Assuming r is 10% then:
NPV = -$500 + $200 + $200 + $200 + $200 + $200
1.10 (1.10)2 (1.10)3 (1.10)4 (1.10)5
= -$500 + $758
= $258
At higher discount rates the NPV declines. For example, at 15% the NPV is
$170 falling to $98 when the discount rate is increased to 20%. The NPV is
zero at a discount rate of 28.5% and becomes negative at higher rates.
The characteristics of the NPV and ROR should be elaborated on before
proceeding with a further delineation of the model. Both measures, if used
carefully, provide important information regarding the estimated value of a
prospect! This estimated value can then be used to evaluate potential bids
and subsequently to project estimated state revenues.
The NPV is independent of the absolute size of cashflows and can take on
negative values. A negative value indicates that a project's ROR is less than
the discount rate used to evaluate the prospect, whereas a positive value
indicates a ROR greater than the discount rate used for evaluation.
As mentioned previously, the rate of return (ROR) is defined as the discount
rate (r~O) that equates the sum of the positive cash flows with the sum of
the negative cash flows. The ROR is independent of the absolute magnitudes of
the cash flows, it is only affected by their relative magnitudes and their
timing. A proportional change in all cash flows leaves the basic prospect
profitability unchanged.
Timing is important because the discounting process attaches more weight to
near term events than to actions distant in time. This occurs because the
discount factor is in the denominator of each term and the denominator
compounds at a rate l+r over time. This weighting characteristic means that
ROR calculations are very sensitive to errors in estimating initial
investments and early positive cash flows.
There are circumstances where a prospect can have more than one ROR. This
occurs when cash flow patterns occillate from negative to positive. If there
is more than one sign reversal in a cash flow pattern, it is possible to have
more than one discount rate that satisfies the definition of ROR. In this
situation the prospect's ROR is indeterminant.
In addition, there are circumstances where the ROR cannot be computed. If
cash flows are all negative or all positive, there is no discount rate
satisfying the definition of ROR. Secondly, if the sum of undiscounted
positive cash flows is less than the sum of undiscounted investment, no ROR
calculation is possible.
-15-
The use of ROR calculations to evaluate project profitability requires one
extremely strong assumption, that is, that funds generated by the prospect can
be reinvested at the computed ROR. This situation is unlikely.
Finally, risk is not easily incorporated into the concept. One cannot say
that a 50 percent chance of a ROR of 30 percent is a risk weighted ROR of 15
percent. Risk affects costs and revenues asymmetrically, hence influencing
the ROR in a non-proportional manner.
Risk can be incorporated into the ROR calculation by defining well investments
as follows:
I= Co + Cl:£) cd
p
Where
I = total investment in wells
cd = Dryhole cost
Co = pro due i ng well cost
p = probability of success
1-p = dryhole risk
For example, suppose a dry hole costs $2 million and a successful completion
costs $2.5 million. Given a probability of success of 10% the new investment
equals:
I = $2.5 million + $2.0 million (~)
• 1
= $2.5 million+ $2.0 million x 9
= $20.5 million
This risk-weighted pseudo investment implies that drilling prospects with a
10% chance of success will, over time, require nine dry holes for each
successful well, or an average investment of $20.5 million per success.
The model employed by the state uses a variation of this specification. The
dry hole/success ratio is defined as 1-p/p. This ratio multiplies all dry
hole costs {bonus, pre-exploration costs, exploratory well costs) to arrive at
a risk-weighted psuedo investment figure. This figure represents the average
unsuccessful investments per success over a large number of trials.
Therefore, the investment function is:
I = [1-p/p (dry hole costs) + (costs associated with success)].p
This approach also has limitations. First, it considers only two outcomes
(success, failure, at a given risk), when, in fact, there is a family of
possible outcomes. (The model can be modified to overcome this limitation.)
Secondly, if the psuedo investment exceeds the sum of future positive cash
flows, then the ROR cannot be computed.
-16-
f -
l
r -
l
r -
l
r
\
r-
l -
t
r
r
L
L
l
These shortcomings can be overcome by shifting the analysis to an expected net
present value (EWV) approach. This approach correctly risks the net present
value of a prospect as:
EWV = p [Is + Id 1-PJ(-1) + p [Bl_ + ~ +~ P ~ ll+r)~··· {l~)N
Where
EWV
Id
R 1, R2, ••.• , RN
p
= expected net present value
= all dry hole costs including bonus and
pre-exploration expenses.
= successful well costs (including development
wells and ancillary facilities)
= Net revenues (AFIT basis). i.e. after federal
income taxes
= Probability of success
This expected value should not be interpreted as an estimate of the most
likely value of the prospect or tract. It represents the average gain or loss
per decision to develop prospects or tracts of a given quality over a large
number of trials. Expected values should be interpreted as average results
generated over a large number of independent trials. A profit maximizing
strategy involves selecting prospects that maximize the expected present value
of decisions involving choices among alternative courses of action.
Tables 4 and 5 provide the basic economic estimates for a hypothetical 1.4
billion barrel prospect that has been assigned a 10 percent chance of success.
The prospect will require two $30 million exploratory wells. All cost and
revenue streams (1982$) other than the exploratory well costs have been
multiplied by .10 (i.e. you can't drill 10 percent of an exploratory well but
everything subsequent is probabilistic).
Table 4 illustrates the before tax (BFIT) economics given a $20 per barrel
price for oil, 12.5 percent royalty and a severance tax of 12.25 percent. The
rate of return, net of inflation of 21.30 percent, indicates the prospect has
promise and merits further economic analysis.
Table 5 presents the analysis, net of state and federal taxes (AFIT). This
additional refinement of the eponomic analysis indicates the prospect has
almost a 19 percent return after taxes.
The model is designed to replicate the private decision-making process in
estimating anticipated bids. The model can be used to estimate bonus, royalty
or het profit share bids. The basic estimation process works in the following
manner. First, the prospect geological parameters are used to scale the field
model. This model is then risked to represent the likelihood of hydrocarbons
being found in anticipated quantities. Secondly, industry target real rates
of return are specified. Therefore, if one wants to solve for the bonus as
the bid variable with a fixed royalty, it is necessary to vary the bonus
amount until the ROR achieves the target levels. This provides a range of
possible bids. These bids represent the after tax net present value (ATWV)
of the prospect.
-17-
If!royalty bidding is the option to be investigated, the bonus is fixed and
royalty rates are varied until the specified RORs are achieved. The same
process is used to determine net profit share bids, except that both bonuses
and royalties are fixed with the profit share being varied until target rates
of return are derived.
The bid values consistent with the specified RORs are then used as input
values into another program. This program estimates state income from taxes
and bid variables, then provides a table of present values of this income from
a zero to 100 percent discount rate. These present value tables can then be
used to compare the income to the state from various bidding systems.
Depending upon the selection of a discount rate to value state income as well
as assumptions about levels of competition, different bidding systems appear
preferable from the standpoint of maximizing the expected present value of
income to the State. Generally speaking, the lower the discount rate, the
better the relative performance of the contingency bidding systems. This is
so because the lower discount rates attach relatively higher weights to future
income as opposed to present income. Once the state•s discount rate exceeds a
certain real level, bonus bidding appears superior from a value maximization
standpoint, other things being equal.
There are limitations on the model that require some caution in interpreting
the results of any analysis. The effect of high royalties on field
investments and the production profile is not modeled. There is no explicit
feedback mechanism that rescales investments downward as royalties rise, even
though rescaling is a theoretical expectation. This means the model
overstates the relative gains from royalty bidding because the production
profile is not lengthened and total production reduced. For any given
quantity of recoverable oil, lengthening the period of production lowers its
present value, other things being equal. The bias in royalty bidding versus
other bidding systems probably becomes more pronounced as royalty rates exceed
50 percent.
-18-
r .
\
\
[ .
r .
I
l -
l
TABLE 4
BEFORE TAX ECONOMICS
1.4 B i 11 ion Barre 1 Field
10.000 PCT
END GROSS OIL GROSS GAS OIL TO NET GAS TO NET REVENUE TO NET NET OPER NET INCOftE CUKULATIVE CUK. DISC
KO-YR PRODUCTION PRODUCTION INTEREST INTEREST INTEREST INVEST KENT EXPENSES BEFORE FIT NET IHCOHE NET IHCOHE
---------KB--------KKF-------KB--------KKF-------KS--------Ks--------Ks-~------KS--------Kt--------K$----
8-83 o. o. o. o. o. o. o. 0. o. o.
8-84 0. o. o. o. o. 30000. 0. -30000. -30000. -24564.
B-85 o. o. o. o. o. 30000. o. -30000. -60000. -46792 ...
8-86 o. o. o. o. o. 2646. o. -26-46. -62646. -48566.
8-87 o. o. o. o. o. 2646. o. -2646. -65292. -50172.
8-88 o. o. o. o. o. 48154. o. -48154. -113446. -76607.
8-89 0. o. o. 0. o. 96314. 0. -96314. -209760. -124<153.
8-90 5100. o. 4463. o. 78317. 147840. 9923. -79446. -289206. -158576.
8-91 8500. 0. 7438. 0. 130528. 96314. 10187. 24ii27. -265179. -146273.
8-12 10210. 0. 8934. o. 156787. 48154. 1429. 1ono5. -157974. -103859.
8-93 10310. 0. 9021. o. 158323. 24079. 15479. 118765. -39209. -61844.
8-94 10310. o. 9021. 0. 158323. 24079. 16141. 118104. 78895. -24035.
8-95 10310. o. 9021. 0. 158323. o. 17067. 141256. 220.151. 16478.
8-96 10310. o. 9021. o. 158323. o. 20639. 137684. 357835. 52211.
8-97 10310. 0. 9021. 0. 158323. o. 21565. 136758. 494593. 84327.
8-98 9700. 0. 8488. o. 148956. o. 22094. 126Slt2. 621455. 111286.
8-99 9310. o. 8146. o. 142967. o. 22226. 120740. 742195. 134504.
8-00 7950. o. 6956. o. 122082. o. 21300. 100782. 842977. 152040.
8-01 6800. o. 5950. o. 104422. o. 20374. 84048. 927026. 165273.
8-02 5860. o. 5128. o. 89988. o. 19713. 70275. 997301. 175286.
8-03 4770. o. 4174. o. 73249. o. 17993 ... 55257. 1052557. 182410.
r---8-04 4110. o. 3596. 0. 63114. o. 16511. 46603. 1099160. 187847.
8-0S 3540. o. 3098. o. 54361. 0. 15188. 39173. 1138333. 191982.
8-06 2990. o. 2616. o. 45915. o. 13468. 32447. 1170780. 195081.
8-07 2420. o. 2118. 0. 37162. o. 12807. 24356. 1195136. 197187.
r ,
8-08 1960. 0. 1715. 0. 30098. o. 12674. 17424. 1212560. 198549. i
l " 8-09 1730. 0. 1514. 0. 26566. 0. 11484. 1'5083. 1227643. 199617.
8-10 1390. o. 1216. 0. 21345. 0. 11484. 9862. 1237504. 200248.
B-11 1180. -0. 1033. o. r. tSlio. Q. 10558. 7563. 1245067. 200687.
8-12
S TOT 139070. o. 121686. o. 2135594. 550225. 340301. 1245067. 1245067. 200687.
r -liFTER o. 0. o. o. o. 0. o. 0. 1245067. 200687.
I
l" TOTAL 139070. 0. 12168~. o. 2135594. 550225. 340301. 1245007. 1245067. 200687.
r ~
I CUH. 0. o. HET OIL REVENUE 2135594. 5 PCT 513421. 40 PCT -26503. L~ NET GAS REVENUE 0. 10 PCT 200687. 50 PCT -21350.
ULT. 139070. 0. IIET PROD REVENUE 0. 15 PCT 64846. 60 PCT -10405.
r ~ 20 PCT 6274. 80 PCT -9654.
CUH NET INC/INV(1l 0. CUH MET PU/INV!I) 0. 30 PCT -26280. 100 PCT -5878.
l • GROSS UELLS 0 LIFE <YEARS) 29.00
~Ofo!fH IN 1ST YEJ\R 12 ~ATE OF RETURN,PCT 21 • .30
r -iNITIAL U. I., PCT 100.0000 IHITI~L 11:1., PCT 87.5000
I l __
r L~
-19-
[,
TABLE 5
(
l
AFTER TAX ECONOMICS r
1 '4 Bi 11 ion Barre 1 Field
-END-GROSS GROSS REVENUE OPER. NET CAPITAL INC011E CASH CUM. r
110-YR OIL GAS TO IMT. EXPENSE INCOIIE INVEST. DEI"R. DEPL. TAX FLOU NET PIJ
liB-----IIIIF-----liS-----ns-----liS-----liS-----liS---liS----liS----11$----11$------
8-83 0. 0. 0. o. 0. 0. 0. o. o. 0. 0.
8-8-4 o. 0. o. o. 0. 30000. 0. 0. -10957. -19043. -15129.
8-85 o. o. o. o. 0. 30000. 0. 0. -10957. -19043. -28819.
8-86 o. o. o. 0. 0. 2646. 0. 0. -866. -1780. -29982.
8-87 o. o. o. 0. o. 2646. o. o. -866. -1780. -31035.
8-88 o. 0. 0. o. (). 48154. 0. o. -13938. -34216. -~9423.
8-89 o. 0. 0. o. o. 96314. 0. o. -27878. -68436. -82704.
8-90 5100. 0. 78317. 9923. 68~94. 147840. 3387. 0. -11660. -67786. -111315.
8-91 8500. 0. 130528. 1(•187. 120341. 96314. 1v335. 0. 24804. -777. -109623.
8-92 10210. o. 156787. 1429. 155359. 48154. 16332. 0. 52642. 54563. -87586.
8-93 10310. 0. 158323. 15479. 142844. 24079. 18646. o. 52509. 66256. -63964. [ ~
8-9-4 10310. 0. 158323. 16141. 142182. 24079. 19829. o. 51626. 66478. -42518.
8-95 10310. 0. 158323. 17067. 141256. 0. 21140. 0. 57524. 83733. -18503.
8-96 10310. o. 158323. 20639. 137684. o. 21140. 0. 55813. 81871. 2745. L 8-97 10310. 0. 158323. 21565. 136758. 0. 21140. 0. 55369. 81389. 21859.
8-98 9700. o. 148956. 22094. 126862. o. 19889. o. 51229. 75633. 37931.
8-99 9310. 0. 142967. 2Z226. 120740. o. 19090. o. -48680. 72060. 51788. r
B-OO 7950. 0. 122082. 21300. 100782. o. 16301. 0. 40458. 60324. 62284. L 8-01 6800. o. 104422. 20374. 8-4048. 0. 13943. 0. 33573. 50475. 70231.
8-02 5860. 0. 89988. 19713. 70275. 0. 12016. 0. 27900. 42375. 76269.
r··
8-03 4770. 0. 73249. 17993. 55257. 0. 9781. o. 21778. 33478. 80585. l 8-04 4110. o. 63114. 16511. 46603. 0. 8427. 0. 18282. 28321. 83889.
8-05 3540. o. 54361. 15188. 39173. o. 7259. 0. 1528~. 23889. 86411.
8-06 2990. o. 45915. 13468. 32447. 0. 6131. 0. 12603. 19844. 88306.
8-07 2420. o. 37162. 12807. 2H56. o. 4962. o. 9288. 15068. 89609.
8-08 1960. o. 30098. 12674. 17424. o. 4019. o. 6420. 11004. 904?0.
8-09 1730. o. 26566. 11484. 15083. 0. 3547. 0. 5524. 9558. 91146.
8-10 1390. o. 21345. 11484. 9862. 0. 2850. 0. 3358. 6504. 91563.
8-11 1180. 0. 18120. 10558. 7563. o. 2420. 0. 2463. 5100. 91858.
8-12
,_;;,r
S TOT 139070. 0. 2135594. 340301. 1795292. 550225. 262583. o. 570004. 675063. 91858. l ~ AFTER 0. o. 0. o. o. 0. o. o. o. o. 91858.
TOTAL 139070. o. 2135594. 340301. 1795292. 550225. 262583. o. 570004. 675063. 91858. L RECAP
GROSS U .1. NET DIS NET P.ll.
INTEREST FRACTION 1. 000000 1.000000 0.875000 LIFE, <YEARS) 29.00 PCT II$ f . OIL RESERVES,IIB 13907. 13907. 12169. GROSS OIL UELLS 0. --------
GAS RESERVES,IIIICF o. o. o. GROSS GAS UELLS 0. 5 262271.
PRODUCTS o. 0. o. RATE OF R£TURN,PCT 18.80 10 91858.
REVENUE,!!$ 278140. 278140. 213559. DISCOUNT RATE,PCT 10.0 15 21388. L OPERATING EXPENSE,IIS 34030. 3~030. 34030. PAYOUT YEARS 12.31 20 -6747.
TANGIBLES,IIS 26258. 26258. 2625tL ~0 -19010.
INTANGIBLES,IIS 28764. 28764. 28764. 40 -16211.
50 -11945.
INITIAL OIL !'RICE (S/Bl 20.00 U.l. BEFORE PATOUT,PCT 100.00 ?0 -6079. L IIHTIAL GAS PRICE ($/Ill o. U.l. AFTER PAYOUT,PCT 100.00 100 -2225.
L
-20-
l.
! .
STATE OF ALASKA LEASING PROCESS
Overview
The planning and execution of an oil and gas lease sale is a lengthy process,
beginning before the sale area is included in the State•s proposed five-year
leasing program. It involves a number of state agencies, with the Department
of Natural Resources as the lead agency. It also involves the public and
local communities. The process described here is an idealized version and one
the Department hopes to follow for future sales. Given the time constraints
in this process, those sales scheduled for late 1983 will be the first ones to
have fully undergone these steps.
Aside from certain legal noticing requirements, there are important reasons
why a process as lengthy as this one is necessary. The early announcement of
a potential sale encourages the early mobilization of public and private
resources for the purpose of gathering information (geologic/geophysical,
environmental, socioeconomic) relevant to the proposed sale area.
Certain aspects of the process require added emphasis. Approximately 30
months before a proposed sale date, the Department of Natural Resources begins
to acquire regional geophysical/geological data. This information is used in
conjunction with industry nominations and public comments to define a specific
sale area. This reduces the proposed sale area to a smaller, more compact
size and permits public and private agencies to more accurately focus their
sale-related evaluations. In the past, industry nominations have largely
determined the tract selections for a given sale.
As the information gathering process continues, the Department gathers
additional geophysical/geological data, including information about
geohazards. This information permits the Department to roughly assess the
hydrocarbon potential of the sale area. These rough approximations provide
other state and local agencies with information important to their assessments
of potential sale-related socioeconomic and environmental impacts.
The Oepartment•s evaluation process gradually moves from region to basin to a
tract specific analysis. These refinements permit the assessment of potential
trade-offs associated with tract deletions that may be suggested for reasons
of environmental concern. Without tract specific information, the Department
may unknowingly delete high potential tracts.
AS 38.05.180 requires that the Department conduct a thorough presale analysis
prior to each proposed sale. This analysis is used to select a bidding system
and lease terms tailored to a specific area and designed to yield the State a
maximum return on its hydrocarbon resources. For the analysis to be valid, an
intensive interpretation of geophysical/geological, engineering and economic
data is necessary.
Procedures
With this overview in mind, the steps in the process are set out below. (For
11 exempt 11 sales--those excepted from the five-year program requirement by AS
38.05.180(d) or (w)--most of these same steps are followed, but they are
compressed into a much shorter period of time.)
-21-
l. Approximately 26 to 61 months before a sale is proposed to take f
place: Department of Natural Resources chooses new areas to add to t
the leasing program or revises the schedule, based on its assessment
of oil and gas potential, industry interest, and informal state
agency review. DNR then invites the public to comment on the ( ·
proposed additions and revisions. The State's Agency Advisory I
Committee on Leasing (AACL) and officials of potentially affected
communities located near proposed sale areas also review the proposed r
additions and revisions. (
2. 24 to 59 months before the proposed sale date: The Five-Year Leasing
Program is presented to the Alaska Legislature.
3. 22 to 32 months before the proposed sale date: DNR issues a formal
Call for Nominations or Comments to the oil industry, State and
federal agencies, and the public for a general sale area shown in the
Five-Year Leasing Program. At the same time, DNR begins a search for
available seismic data and starts compiling surface and subsurface
geologic data on the nomination area.
4. 23 months: DNR analyzes the nominations or comments submitted by the
oil industry, interest groups, other agencies, and the public. On
the basis of this information, the nomination/comment area is scaled
down to the "proposed sale area."
5. 21 months: The availability of the new proposed sale area maps is
advertised. The map is sent to potentially affected communities to
use in planning for the proposed sale. Other State agencies,
including members of the AACL, are also invited to review the
proposed sale area boundaries. After making its final selection of
geophysical data, DNR begins contracting to puchase and process the
data over the next seven months. Meanwhile, DNR starts interpreting
the geologic data that has been gathered on the proposed sale area
and schedules field work to fill in any identified gaps.
6. 15 months: State members of the AACL begin researching and
summarizing the data they will contribute to the Social, Economic and
Environmental Analysis (SEEA) that may be prepared for major sales
pursuant to Administrative Order No. 52. A member of a potentially
affected community is appointed as ex-offi ci.o member of the AACL.
7. 12 months: The Department completes its preliminary geologic
analysis of the proposed sale area and provides the economjc and
engineering units with estimates of ranged reservoir parameters.
8. 10 to 11 months: If a SEEA is prepared for the area, the draft is
made available to the public and comments are solicited.
9. 9 to 10 months: Public meetings are held near the proposed sale area
to receive comments on the proposed action.
10. 8 to 9 months: Public review period for draft SEEA ends.
-22-
( ~
l
11. 8 months: DNR initiates land status research to determine leasable
acreage. Once engineering data are gathered, an economic analysis of
a proposed lease sale is begun.
12. 6 months: Geologic analysis, including the identification of
potential geohazards, is completed. DNR begins a preliminary
assessment of bidding methods to be used in the proposed sale.
13. 5 to 6 months: The draft SEEA is revised as a result of public and
agency review. Meanwhile, based on a combination of the information
contained in the SEEA, agency comments made directly to DNR, and
geological and geophysical information, the proposed sale area
boundaries undergo their final revision. A.preliminary tract map of
the revised sale area is prepared.
14. 3 to 4 months: Final version of the SEEA is printed and distributed.
15. 4 months: A preliminary analysis that sets out the issues and facts
regarding the proposed sale is made by DNR and is distributed to the
public for comment. At the same time, advertisements are published
in the proposed sale area stating that the preliminary finding on the
proposed sale is available and public response is invited.
16. 3 months: Comments are received from the general public and from
communities within the proposed sale area. Final decisions on the
sale, tracts to be included, and the mitigati~g measures that will be
enforced on the leases are made on the basis of these comments and
those of other state agencies. A final tract map is prepared. A
coastal management consistency determination is prepared and the
final decision pursuant to AS 38.05.035(a){l4) is written.
17. 2 months: Based on geophysical information, DNR prepares a final
prospect map (confidential) of the proposed sale area, completes the
required pre-sale economic analysis and selects a bidding method to
be used for the specific sale.
18. 2 months: Public notice of the final sale terms is initiated, with a
copy of the notice sent to affected communities and to all parties on
the DNR oil and gas mailing list.
19. 1 month: A final land status check and identification of third-party
interests are carried out.
20. Day zero: The lease sale is held on its scheduled date.
21. Within a week after the lease sale, the apparent high bids are
analyzed, and the Commissioner of DNR decides whether to accept the
high bids. The winning bidders are notified.
The following chart summarizes the major activities associated with sales
comprising the state•s current Five-Year Oil and Gas Leasing Program.
-23-
STATE OF ALASKA FIVE-YEAR OIL AND GAS LEA SING PROGRAM
PROPOSED PRO-
SALE AREA ~~~v J F M AM
39 Beaufort Sea 5183 p F
40 Upper Cook Inlet 9183 H
42 Minchumina Basin 1184
43 Beaufort Sea 5184
41 Bristol Boy Uplands 9184 M
46 Holitno Basin 1185 ~c R
4 7 Kuporuk Uplands 5185
45 Hope Basin 9185
48 Kuporuk Uplands 118e
49 Cook Inlet 5186
50 Camden Bay 9186
51 Prudhoe Bay Uplands 1187
52 Beaufort Sea 5187
53 Icy Cape 9187
NC = Call for Nomino11ons I Comments
C =Call for Comments
H
R = Nominations I Comments Received
M =Proposed Sale Area Mopped
s
p
M
~c
1983
J J AS 0 N D J
F s
p F s
i IH p
SE H
lsE
R M
NC R M
INC
SE =Draft Social, Economic And Environmental Analysis (SEEA)
1984
FM AM J J
F s
p F
H
SE H
R M ~E
INc R
AS
s
p
SE
M
~c
12 /01/82
0 N
F
H
R
1985 1986 1987
D J F M AM J J AS 0 N 0 J FM AM J J AS ON D J FM A MJ J A s
-
s
p F s
p F s
H p F s
H p F s
M SE H p F s
c R M isE H p F s
c R M isE H p F s
c R M jsE H p F s
H =Public Meetings on Sole
P = Preliminary Analysis I Preliminary .34 5 (o)(3) Notice IF ina I SEE A
F =Departments Final Decision I Final .345 (a)(4) (Notice Of Sole And Terms)/ ACMP
Determination
S =Sole
--,
PROPOSED SALE AREAS: 1983 -1987
This section discusses the petroleum geology of areas that the state proposes
to lease during 1983-1987 and provides a brief social, economic and
environmental description of each area.
The proposed sales included in the five-year program are at various stages in
the leasing process described earlier. Proposed sale areas for which formal
nominations or comments have not yet been solicited by the Department are
considered nomination areas. Generally, nominations and comments are
solicited 22 to 32 months before the sale. Once nominations and comments have
been received and analyzed, a proposed sale area map is prepared. The
following sales comprise the state•s Five-Year Oil and Gas Leasing Program.
DATE
May 1983
Sept. 1983
Jan. 1984
May 1984
Sept. 1984
Jan. 1985
May 1985
Sept. 1985
Jan. 1986
May 1986
Sept. 1986
Jan. 1987
May 1987
Sept. 1987
PROPOSED SALE AREA
Beaufort Sea (Sale 39)
Upper Cook Inlet (Sale 40)
Minchumina Basin (Sale 42)
Beaufort Sea (Sa~e 43)
Bristol Bay Uplands (Sale 41)
Holitna Basin (Sale 46)
Kuparuk Uplands (Sale 47)
Hope Basin (Sale 45)
Kuparuk Uplands (Sale 48)
Cook Inlet (Sale 49)
Camden Bay (Sale 50)
Prudhoe Bay Uplands (Sale 51)
Beaufort Sea (Sale 52)
Icy Cape (Sale 53)
These sale areas are identified on the following statewide map and can be
compared with the proposed federal lease sales depicted on the attached
overlay.
The Norton Basin Lease Sale (38), origina]ly proposed for January 1983, was
canceled on June 22, 1982.
-25-
\
lBO" rz___ I
FEDERAL OVERLAY
PROPOSED FEOE~AL OIL 8 GAS LEASING
~ DATE ··
57 NORTON BASIN fEB 1983
70 ST GEORGE BASIN APR 1993
83 N.AVA~IN BASIN I MAR 1984
97 OIAP IR FIELD JUNE 1994
88 COOK INLET . OCT 1984
89 ST GEdFI:GE BASIN DEC 1984
85 BARROW ARCH FEB. 1985.
92. N ALEUTIAN p.A.StN APR 1985
100 llOR Tml BA,SLN
107 NAVARIN BASI~.
97 OIAPIR FIE.LO
99 KODIAK
BASIN 83,107
o· C::.
/
/
!
/
i
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I
OCT 1985
MAR.-19"86
JUNEI9S6
OCT 1~86
~lAND ARE.l
UPPER KUSK.Ot<Wt~
SE.WARD PEN JNSLIL.A
IOITAROO/GEORGE
GOODNEWS BAY
KVJCHAJ<
ANVIK/ BONSJlA
STE£SE/WHtTE II-ITN
CENTRAL YUkON
VE:~E"'FIE
823 N.PRJt
172°
I
~UlF OF ALA.SI<A 88
c
..
ALASKA
Base adapted from u.s.G.S. Map E.
SCALE
STATE OF ALASKA
DEPARTMENT OF NATURAL RESOURCES
DIVISION OF MINERALS AND ENERGY MANAGEMENT
PROPOSED OIL a GAS LEASING PROGRAM
NOV EM BER 1982.
SALE NO ~
39 BEAUFORT SEA
40 UPPER COOK INLET
42 MINCHUMINA
43 BEAUFORT SEA
41 BRISTOL BAY UPLANDS
46 HOLITNA BASIN
KUPARUJ< UPLANDS
HOPE BASIN
KUPARUK UPLANDS
COOK INLET
CAMDEN BAY
PRUDHOE BAY UPLANDS
BEAUFORT SEA
SALE DATE
MAY 1983
SEPT.I983
JAN. 1984
MAY 1984
SEPT.I984
JAN. 1985
MAY 1985
SEPT.I985
JAN. 1986
MAY 1986
SEPT.I986
JAN. 1987
MAY 1987
160° \I 7o.:____
7
G
A c
.·
ALASKA
Base adapted from U.S.G.S. Mop E.
SCALE
STATE OF ALASKA
DEPARTMENT OF NATURAL RESOURCES
DIVISION OF MINERALS AND ENERGY MANAGEMENT
PROPOSED OIL 6 GAS LEASING PROGRAM
NOVEMBER 1962
SALE NO AREA
39 BEAUFORT SEA
40 UPPER COOK INLET
42 MINCHUMINA
43 BEAUFORT SEA
41 BRISTOL BAY UPLANDS
46 HOLITNA BASIN
KUPARU.K UPLANDS
HOPE BASIN
KUPARUK UPLANDS
COOK INLET
CAMDEN BAY
PRUDHOE BAY UPLANDS
BEAUFORT SEA
SALE DATE
MAY 1983
SEPT.I983
JAN. 1984
MAY 1984
SEPT.I984
JAN. 1985
MAY 1985
SEPT.I985
JAN. 1986
MAY 1986
SEPT.I986
JAN. 1987
MAY 1987
I
N
-...J
I
COM"ARI SON OF FEDERAL AND STATE LEASING SCHEDULES IN ALASKA
STATE FEDERAL*
BLM OCS SALES BLM UPLANDS OFFERINGS
Sale Proposed Proposed Proposed
Year No. Date Area Sale No. Date Area Date Area
1983 39 5/83 Beaufort Sea 57 2/83 Norton Basin 9/83 Upper Kuskokwim
40 9/83 t.pper Cook Inlet 70 4/83 St. George Bas I n 9/83 Seward Pen In su I a
1984 42 1/84 Ml nchumlna 83 3/84 Navarln Basin 9/84 I d ltarod
43 5/84 l:eaufort Sea 87 6/84 Dl aplr Fie I d 9/84 Goodnews Bay
41 9/84 Bristol Bay Uplands 88 10/84 Gu If of Ak -Cook Inlet 9/84 Kvl chak
89 12/84 St. George Basin
1985 46 1/85 Holltna Basin 85 2/85 Barrow Arch 9/85 An vi k/Bons I I a
47 5/85 Kuparuk Uplands 92 4/85 N. Aleutian Basin 9/85 Steese/White Mtn.
45 9/85 Hope Basin 100 10/85 Norton Bas In 9/85 Centra I Yukon
9/85 Venetie
1986 48 1/86 Kuparuk Up I ands 107 3/86 Navarln Basin
49 5/86 Cook Inlet 97 6/86 Dlaplr Field
50 9/86 Camden Bay 99 10/86 Kodiak
101 12/86 St. George Basin
1987 51 1/87 Prudhoe Bay Uplands 109 2/87 Barrow Arch
52 5/87 Beaufort Sea 86 6/87 ShumagIn
53 9/87 Icy Cape
*Schedule based on Alaska Outer Continental Shelf Office Final 5-Year OCS Oil and Gas Leasing Schedule (July 21, 1982) and verbal
communication with BLM staff. The BLM uplands schedule Is for offerings which wl I I be non-competitive unless Individual areas are
otherwise classified by the U.S. Geological Survey. Federal sale dates may change. They are presented here to Indicate the full scope of
planned oil and gas leasing activity In Alaska.
In addition to the sales shown here, BLM will manage the annual leasing of 2 million acres of National Petroleum Reserve Alaska lands. The
first two sales, totalling 2 mi Ilion acres, were held January 27 and May 26, 1982. Another sale Is planned for July 1983.
Acreage Indicated on the preceding overlay as Favorable Petroleum Geologic Provinces (FPGPl constltitute two areas of known petroleum
potential that are not currently scheduled to be leased.
GEOLOGICAL DESCRIPTIONS OF 1983-1987 PROPOSED SALE AREAS ................................................................ ~ .
The proposed five-year oil and gas leasing progr~m for the period 1983-1987
includes sales from six different geologic basins in Alaska. Those areas
include the North Slope Basin, the Cook Inlet Basin, the Bristol Bay Basin,
the Hope Basin, the Holitna Basin and the Minchumina Basin. The hydrocarbon
resource potential of two of these basins, the North Slope Basin and the Cook
Inlet Basin, is well documented by past discoveries and development in both.
On the other hand, sb little is known about some of the others that it is not
certain that they are actually sedimentary basins. Given this spectrum of
uncertainties, the following discussion describes the relative potential of
th1ese basins.
North Slope Basin
The North Slope Basin is one of the two basins (Cook Inlet is the other) in
Alaska which has been explored through the use of conventional geologic and
geOphysical tools. Field mapping of exposed sediments around the south flank
of the North Slope Basin was begun by the U.S. Geological Survey in the early
years of the twentieth century. Detailed mapping by the U.S. Geological
Survey, as well as by private industry and the State of Alaska, has continued
to this day. Thousands of line miles of seismic data have been col)ected and
hundreds of wells have been drilled to evaluate the prospects delineated by
these programs. Major discoveries have resulted at Prudhoe Bay, the Kuparuk
Field, Flaxman Island, Pt. Thomson, Duck Island-Sag Delta, and other areas
extending from the Naval Petroleum Reserve in Alaska (NPRA) in the west to the
border of the Arctic National Wildlife Refuge (ANWR) in the east. Rich source
rocks, thick productive reservoirs, adequate seals and numerous, diverse traps
have been documented. ·
Eight of the 14 proposed sales, including Sales 39, 43, 47, 48, 50,:51, 52,
and 53 are located in the North Slope Basin. The potential for all of these
sale areas is ~onsidered moderate to high, with the exception of Sale 53,
which is considered low to moderate.
Co~k Inlet Basin
Like the North Slope Basin, the Cook Inlet Basin has proven oil and gas
production. The basin contains a thick sequence of Tertiary age sediments
which include several excellent reservoir intervals and gas-prone source
rocks. Geochemical analysis of deeper Mesozoic age strata indicate that some
of these rocks are probably thermally mature, oil-source rocks. Most
production to date has been discovered in traps formed by high-relief,
reverse-faulted anticlines.
Recent exploratory drilling on federal outer continental shelf (OCS) acreage
in' Lower Cook Inlet resulted in no new discoveries, and industry interest in
that area, as evidenced by the results of the OCS Sale 60, appears to have
waned. These results and the extensiveness of past exploration activity in
Upper Cook Inlet argue against the liklihood of future major discov~ries in
either area. Nevertheless, the prospects for the discovery of small to medium
sited fields is good; as a result, the potential of the basin is considered
low to moderate.
-28-
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Bristol Bay and Hope Basins
Two of the remaining four basins for which sales are proposed, the Bristol Bay
Basin and the Hope Basin, have been inadequately evaluated by regional
geologic mapping and the drilling of a few, widely scattered exploratory
wells. All of the wells drilled in the two areas to date have been dry
holes. The Department has no information regarding the decisions which led to
the selection by industry of the specific locations for each of these tests.
As a result, it is difficult to assess whether their results are
representative of the respective basins. For example, it is uncertain what
part, if any, seismic definition of subsurface anomalies played in the
drilling of any of the wells.
In most cases locations were chosen because geologic surface mapping indicated
favorable structures. It is uncertain that these surface features actually
represented potential traps at depth. Until there has been considerably more
detailed seismic evaluation of these areas followed by additional wells it is
difficult to evaluate their ultimate potentials. However, based upon the
results to date, the potential of these basins is considered to be low to
moderate.
Minchumina and Holitna
In the truest sense of the word, the Minchumina and Holitna basins are
••wildcat" basins. Regional, reconnaissance level mapping provides most of
what is known about state-owned lands within these basins. In addition,. state
geologists and geophysicists have conducted gravity surveys and have collected
rock samples for source rock evaluations in the basin. The approximate limits
of both the Minchumina and the Holitna basins have been loosely defined by
regional gravity and aeromagnetic surveys. The thickness of the sedimentary
section which produced the observed gravity anomalies is unknown. The
potential of both the Minchumina and Holitna basins is currently considered
low.
-29-
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DESCRIPTION OF PROPOSED LEASE SALE AREAS
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-31-
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PRELIMINARY
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TOWNSHIPS OF THE
1
150o UMIAT MERIDIAN
STATE OF ALASKA
DEPARTMENT OF NATURAL RESOURCES
DIVISION OF MINERALS AND ENERGY MANAGEMENT
PROPOSED "OIL AND GAS LEASE SALE 39
BEAUFORT SEA PRELIMINARY TRACT MAP
SCALE I • 000,000 I lncll = 8 11111 ..
10 0 10 20 30 40 50 Mllea
DIRECTOR, D.M.E.M.
KAY BROWN
LEASING MANAGER,
PAMELA ROGERS
DRAWN BY DATE APPROVED /~-
0.0.$.
CHEC~~ BY!J)J!II
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NOTEoNO DECISION HAS YET ~
BEEN MADE ON WHETHER THE
STATE WILL HOLD THIS LEAS1--
SALE. THE STATE IS
GATHERING SOCIAL, ENVIRON
MENTAL, AND ECONOMIC
INFORMATION ON WHICH TO
BASE A DECISION.
L
L
BEAUFORT SEA SALE 39
Date Scheduled: May, 1983.
Description of Sale Area: The proposed sale area consists of approximately
261,000 acres of state-owned submerged lands and unleased upland acreage
extending westward from the western boundary of the 30th State Competitive
Oil and Gas Lease Sale Area (1979 Joint Federal/State Beaufort Sea Sale)
to an area on the Colville Delta in eastern Harrison Bay, approximately
eighteen miles southeast of Atigaru Point. The proposed sale area borders
o.c.s. Sale 71 (Diapir F~eld) which was held in October, 1982.
Approximately 5,760 acres in Tl3N, Rl2E, U.M. and Tl3N, Rl3E, U.M., north
of the Gwydyr Bay Unit will be added to the sale under AS 38.05.180(d).
Petroleum Potential: Petroleum potential in the proposed sale area is
considered to be moderate to high.
Other Resources: The proposed sale area supports populations of marine,
anadromous, and freshwater fish; waterfowl; seals; bowhead and belukha
whales; and polar bears. Simpson Lagoon is an important summer feeding
habitat for anadromous and marine fishes and the Colville River Delta is
used by a number of different fish species for spawning and overwintering
and as a nesting area for waterfowl and shorebirds from late May to early
August. The delta also is used for subsistence hunting and fishing by
residents of Nuiqsut.
Community Information: The North Slope Borough is currently preparing a
Coastal Management Plan for the sale area. It is anticipated that a
public hearing draft will be completed in mid-1983.
The North Slope Borough has recently adopted a Copmprehensive Plan and
Land Management Regulations that may impose restrictions on oil and gas
activity in the proposed sale area.
Local communities include:
Community Municipal Classification *Population
North Slope 1-brne rule borough 4,199
Borough
Barrow First class city 2,207
Prudhoe Bay/ Unincorporated 212
Deadhorse
Kaktovik Second class city 165
Nuiqsut Second class city 208
Wainwright Second class city 405
*Population based on 1980 Census Figures.
Status of Sale: No decision has yet been made on whether the state will hold
this lease sale. The state is in the process of gathering social,
environmental and economic information on which to base a decision. If it
is determined that this sale will best serve the interests of the state, a
written decision and notice of sale including terms of sale, bidding
methods, tract map and mitigating measures will be issued in March, 1983.
-33-
60
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STATE OF ALASKA
DEPARTMENT OF NATURAL RESOURCES
DIVISION OF MINERALS AND ENERGY MANAGEMENT
PROPOSED OIL AND GAS LEASE SALE 40
UPPER COOK INLET
SCALE 1'1,774,000 I inch= 28 miles (Approximate)
6 0 6 12 18 24 30 36 42 48 54 60 66 72
DIRECTOR, D.M.E.M. ~ /:?rr-(J DRAWN BY foATE APPROVED f.J//(./IJ~
KAY BROWN · ()...._, ~ 0.0.5. teASE MAP ~· coPvRI{H•• utc,.,c
Jilf't'IRO!IfM£NTAL INFOIItMA'riOI'f .AJilfO
LEASING MANAGERY.,-1 d AT A. C£NTER 1978 AL..l R1,,.,,. ~
CHECKED ~($[. R't'[O, INtLUOING lt£PR00UCT10'1
PAMELA ROGERS ~ /A~JL A BY/(/;fl/
WHOLE (iR IN PA~T I~ A"Y FORM
.UNIVERSAL TRANSVERS£ M£Jt'CATOft
PROJECTIOh ON Snr OEGR££ BANDS -,_.
[ '
NOTE,NO DECISION HAS YET r~
SEEN MADE ON WHETHER THE
STATE WILL HOLD THIS LEASE
SALE. THE STATE IS L-.
GATHERING SOCIAL, ENVIRON
MENTAL, AND ECONOMIC
INFORMATION ON WHICH TO
BASE A DECISION.
PROPOSED SALE AREr
UPPER COOK INLET-LOWER SUSITNA VALLEY SALE 40
Date Scheduled: September, 1983.
Description of Sale Area: The proposed sale area from which tracts will be
selected consists of approximately 1.45 million acres. The acreage
selected for leasing will consist of available state-owned land in the
lower Susistna Valley and on the Kenai Pennisula and submerged lands in
Cook Inlet.
Petroleum Potential: Petroleum potential in the area is considered to be
moderate.
Other Resources: The general sale includes the Susitna Flats and
Trading Bay State Game Refuges, and it is near the Kenai National Moose
Range. It includes productive waterfowl habitat for migrating and nesting
ducks, geese, sv1ans, and shorebirds.
Key anadromous fish stteams include the Kenai and Kasilof River systems.
The Susitna River system is the largest producer of salmon in the Cook
Inlet basin. Important moose habitat exists in the Trading Bay area.
The area encompassed by the sale includes important commercial and
recreational fishing and hunting areas.
Community Information: The Kenai-Soldotna area, Sterling Highway corridor,
Anchorage bowl, Matanuska Valley, and Parks Highway and Glenn Highway
corridors currently provide adequate infrastructure for development.
The general sale area is within the boundaries of two boroughs and the
Municipality of Anchorage, all of which have district coastal management
programs in varying stages of development. The Matanuska-Susitna Borough
distributed a public hearing draft plan in late 1982 which will likely be
submitted to the Alaska Coastal Policy Council in early 1983. The
Municipality of Anchorage has received approval from the Alaska Coastal
Policy Council for the Anchorage Coastal Management Program. The Kenai
Peninsula Borough completed a draft coastal development plan, but after
considerable public opposition the Borough decided not to complete a
coastal management program.
Local communities include:
Community
Kenai Peninsula
Borough
Kenai
Soldotna
Tyonek
Matanuska-Susitna
Borough
Houston
Palmer
Homer
Mun~cipal Classification
Second class borough
Home rule city
First class city
Unincorporated
Second class borough
Second class city
Home rule city
First class city
-35-
*Population
25,282
4,324
2,320
239
17,816
370
2' 141
2,209
(Local communities continued)
Community
Wasi 11 a
Municipality of
Anchorage
Nikishka
Salamatof
Kasilof
Clam Gulch
Ni nil chi k
Anchor Point
Big Lake
Kachemak
Municipal Classification
Second class city
Unified home rule
Municipality
Unincorporated
Unincorporated
Unincorporated
Unincorporated
Unincorporated
Unincorporated
Unincorporated
Second c1ass city
*Population estimates based on 1980 Census Figures.
*Population
l ,559
174,431
1 'l 09
334
201
50
341
226
410
403
Status of Sale: No decision has yet been made on whether the state will hold
this lease sale. The state is in the process of gathering social,
environmental and economic information on which to base a decision. If it
is determined that this sale will best serve the interests of the state, a
written decision and notice of sale including terms of sale, bidding
methods, tract map and mitigating measures will be issued in July, 1983.
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STATE OF ALASKA
DEPARTMENT OF NATURAL RESOURCES
DIVISION OF MINERALS AND ENERGY MANAGEMENT
PROPOSED OIL AND GAS LEASE SALE 42
DIRECTOR, O.M.E.M.
KAY BROWN
MIN,QtJJ:JoM1~~7 .5 ~~~.SIN
10 0 10 ZO 30 40 50 Mllu
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10 ~ 30 40 3-0 Kl .... t•u
DRAWN BY' DATE APPROVEDtJ//~/8,;t..
O.D.S.
NOTE,NO DECISION HAS YET
BEEN MADE ON WHETHER THE
STATE WILL HOLD THIS LEASE
SALE. THE STATE IS
~~J~~~~~EGNiA~C~A~~ONOMIC
' INFORMATION ON WHICH TO
BASE A DECISION.
PROPOSED SALE AREA -l.
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MINCHUMINA BASIN SALE 42
Date Scheduled: January, 1984.
Description of Sale Area: The 1.8 million acres proposed for leasing lie to
the west of the Denali National Park and Preserve and southwest of Lake
Minchumina.
Petroleum Potential: Petroleum potential in the area is considered to be low.
Other Resources: The proposed sale area is located within a currently
undeveloped area. Lake Minchumina is included in the basin and is the
headwaters of the Kantishna River, which is a major king and chum salmon
spawning tributary to the Tanana River. Other important salmon spawning
streams include Moose Creek and Foraker River. Northern pike, burbot,
arctic grayling, and several species of whitefish also are abundant in the
area. r~uskeg bogs surrounded by combination spruce/poplar,
spruce/hardwood forests provide habitat for numerous species of furbearers
and small game animals, including mink, muskrat, short-tailed weasel,
marten, land otter, beaver, spruce grouse and various waterfowl. This
same habitat provides winter range for moose and caribou. Black bear,
grizzly bear, wolverine and wolves are present throughout the basin.
Community Information: Minchumina basin and adjacent uplands are in the
unorganized borough, in an area commonly called the Upper Kuskokwim.
McGrath serves as the regional center for government services, trade and
transportation in the area. Most residents are engaged in traditional
subsistence activities and commercial trapping. There is some mining
activity in the summer. The Native people are Athapaskan. However,
McGrath is primarily non-native. The basin is not included within the
interim boundaries of the Alaska Coastal Management Program.
The Kuskokwim River serves as a major transportation route during the
summer (May through early October). During the winter, the area relies
primarily on air transportation. Except for a few strictly local roads,
the area is roadless. Major airstrips (with runways 5,000 1 or more) are
located at McGrath and Farewell. Minchumina Lake is accessible by boat
along the Tanana River.
Local communities include:
Community
McGrath
Nikolai
Takotna
Ophir
Tel ida
Municipal Classification
Second class city
Second class city
Unincorporated
Unincorporated
Unincorporated
*Population estimates based on 1980 Census Figures.
-38-
*Population
355
91
48
33
Status of Sale: No decision has yet been made on whether the state will hold ~-~
this lease sale. The state is in the process of gathering social, "
environmental and economic information on which to base a decision. If it
is determined that this sale will best serve the interests of the state, a
1
"
written decision and notice of sale including terms of sale, bidding
methods, tract map and mitigating measures will be issued in
November, 1983.
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SimJ»>!t-BEA U FORT+ SEA +
152°
STATE OF ALASKA
DEPARTMENT OF NATURAL RESOURCES
DIVISION OF MINERALS AND ENERGY MANAGEMENT
PROPOSED OIL AND GAS LEASE SALE 43
BEAUFORT SEA
SCALE I• 1,000,000 linch = 16 Mil ..
. 10 0 10 20 30 40 50 Miles
BAY
70°
150°
NOTE• NO DECISION HAS YET
BEEN MADE ON WHETHER THE
STATE WILL HOLD THIS LEASE
SALE. THE STATE IS
GATHERING SOCIAL, ENVIRON-
MENTAL, AND ECONOMIC
INFORMATION ON WHICH TO
BASE A DECISION.
PROPOSED SALE AREA
DISPUTED AREA ...
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BEAUFORT SEA SALE 43
Date Scheduled: May, 1984.
Description of Sale Area: The acreage proposed for leasing consists of
state-owned submerged lands between the western edge of Lease Sale 39 and
a point approximately nine miles west of Pitt Point. Areas in Harrison
Bay and near NPRA which are currently claimed by both the federal and
state governments may be offered in Sale 43 if it is determined that the
state owns these areas.
Petroleum Potential: Petroleum potential in the area is considered to be
moderate to high.
Other Resources: The area supports populations of marine, anadromous, and
freshwater fish; waterfowl; seals; bowhead and belukha whales; and polar
bears.
The area is used for subsistence by the residents of Nuiqsut and Barrow.
Community Information: The sale area is included within the interim
boundaries of the Alaska Coastal Management Program. The North Slope
Borough is preparing a district program for the area and a public hearing
draft is anticipated in mid-1983.
The North Slope Borough has recently adopted a Copmprehensive Plan and
Land Management Regulations that may impose restrictions on oil and gas
activity in the proposed sale area.
Local communities include:
Community Municipal Classification *Population
North Slope Home rule borough 4,199
Borough
Barrow First class city 2,207
Prudhoe Bay/ Unincorporated 212
Oeadhorse
Kaktovik Second class city 165
Nuiqsut Second class city 208
Wainwright Second class city 405
*Population estimates based on 1980 Census Figures.
Status of Sale: No decision has yet been made on whether the state will hold
this lease sale. The state is in the process of gathering social,
environmental and economic information on which to base a decision. If it
is determined that this sale will best serve the interests of the state, a
written decision and notice of sale including terms of sale, bidding
methods, tract map and mitigating measures will be issued in March, 1984.
-41-
56
STATE OF ALASKA
DEPARTMENT OF NATURAL RESOURCES
OIVISION OF MINERALS AND ENERGY MANAGEMENT
PROPOSED OIL AND GAS LEASE SALE 41
SCALE~~.~s~J.o~~ ~~~~ 4~~~kl\~J?r~imate)
0 6 12 28 24 30 38 42 80 miles
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NOTEoNO DECISION HAS YET
BEEN MADE ON WHETHER THE
STATE WILL HOLD THIS LE=l '
SALE. THE STATE IS
_GATHERING SOCIAL, ENVIRON ·
MENTAL, AND ECONOMIC . ~
INFORMATION ON WHICH TO
,BASE A DECISION.
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PROPOSED SALE AREA
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BRISTOL BAY UPLANDS SALE 41
Date Scheduled: September, 1984.
Description of Sale Area: The proposed sale area is located between the
Kvichak River and Port Heiden on the Alaska Peninsula. State land
holdings are currently limited with much land yet to be conveyed. The
proposed sale are consists of approximately 1.2 million onshore acres. AS
38.05.140(f) precludes the leasing of state-owned and controlled submerged
lands and shorelands in Bristol Bay drainage east of 159°49' west
longitude and north of 57°30' north latitude without the consent of the
Legislature. Little exploration activity has occurred, and drilling in
the past has not resulted in any significant finds. Federal leasing in
the area is also being considered.
Petroleum Potential: Petroleum potential in the area is considered to be low
to moderate.
Other Resources: Bristol Bay encompasses important fish and wildlife
habitats. The Bristol Bay salmon and herring fishery is the largest in
the State and the crab fishery is substantial. There is also a potential
for clam and bottom fisheries in the bay.
Bristol Bay is an important marine mammal use area. Large numbers of
harbor seals are found at the mouths of all of the major rivers. Round
Island, which is west of the sale area, is an important hauling out ~rea
for male walrus. A population of approximately 1,500 belukha whales
reside in the bay, and endangered gray whales migrate through the
nearshore waters of the bay twice annually. Other marine mammals commonly
found in the bay include beaked whales, porpoises, bearded seals, sea
lions, and sea otters.
Bristol Bay is a major waterfowl nesting area and migration route. In
addition to the millions of ducks, geese, and shorebirds that nest in the
area, geese, ducks, and whistling swans migrate along the coastal area of
Bristol Bay annually. The entire world's population of brant and emperor
geese may be found on the tidelands of Bristol Bay in the spring and
fall. Approximately 1.6 million seabirds also nest in this region, and
major colonies are located at Round Island, Cape Seniavin, and Cape
Newenham.
The portion of the lease area located between Izembek National Wildlife
Refuge and Kvichak Bay is critical habitat for moose, caribou, and brown
bear. Most of the moose found south of Becharof Lake overwinter in this
area. The entire Alaska Peninsula Caribou Herd calves and overwinters in
the sale area. All of the brown bear on the Alaska Peninsula south of
Becharof Lake periodically use this area for foraging and feeding. These
big game animals form the basis of the large subsistence and recreational
harvest in the southeastern Bristol Bay region.
The proposed sale area contains three state critical habitat areas.
-43-
Community Information: Except for the Bristol Bay Borough, the basin and
nearby areas are in the unorganized borough. Dillingham serves 1as the
regional center for the Bristol Bay area. Traditional subsistence
activities, commercial salmon fishing, and government activities form the
area•s economic base. Area residents are primarily Yupik Eskimo; most
non-Natives live in Dillingham and in the Bristol Bay Borough.
There are no deepwater ports in Bristol Bay, but Naknek and Dilljngham
have cargo-handling ports which rely on lightering cargo from ve~sels
anchored further offshore. Freight destined for inland location is
usually transported by river from Naknek or Dillingham. Air
transportation is also vital to the area. There are several airstrips in
the area with runways of s,ooo• or more. They include Dillingham,
Iliamna, King Salmon, Ugashik Bay and Port Heiden. Dillingham and King
Salmon handle most air traffic.
The Bristol Bay Cooperative Management Plan, which was required in the
Alaska National Interest Lands Act, is being prepared for the region and
is projected to be completed in early 1984. In addition, the sale area
·encompasses two coastal management districts. The Bristol Bay Borough
distributed a public hearing draft of the Bristol Bay Cooperative
Management Plan in October 1982. The program wi 11 1 ike ly be submitted to
the Coastal Policy Council in early 1983. The Bristol Bay Coastal
Resource Service Area, which encompasses much of the land around Bristol
Bay, with the exception of the Bristol Bay Borough, has been formed and
members of the Board have been elected. It is likely that a plan will be
submitted to the Coastal Policy Council in 1984.
Local communities include:
Cofl11lunity
Aleknagik
Bristol Bay
Borough
King Salmon
Naknek
South Naknek
Clark•s Point
Di 11 ingham
Egegik
Ekwok
New Stuyahok
Port Heiden
Igivgig
Illiamna
Kokhanok
Koliganek.
Levelock
Pilot Point
Portage Creek
Municipal Classification
Second class city
Second class borough
Unincorporated
Unincorporated
Unincorporated
Second class city
First class city
Unincorporated
Unincorporated
Second class city
Second class city
Unincorporated
Unincorporated
Unincorporated
Unincorporated
Unincorporated
Unincorporated
Unincorporated
*Population estimates based on 1980 Census Figurei.
-44-
*Population
154
l '094
545
318
145
79
1 '563
75
77
331
92
33
94
83
117
79
66
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Status of Sale: No decision has yet been made on whether the state will hold
this lease sale. The state is in the process of gathering social,
environmental and economic information on which to base a decision. If it
is determined that this sale will best serve the interests of the state, a
written decision and notice of sale including terms of sale, bidding
methods, tract map and mitigating measures will be issued in July, 1984.
-45-
P---------,5-8-o--------------------------------~-,5-6-o----------------------~"l
STATE OF ALASKA
DEPARTMENT OF NATURAL RESOURCES
DIVISION OF MINERALS AND ENERGY MANAGEMENT
PROPOSED OIL AND GAS LEASE SALE 46
HOLITNA BASIN
SCALE 1,1,000,000 linch: 16 Miles
10 0 10 20 • 30 40 50 Iiiii••
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NOTE,NO OECISION HAS YET
BEEN MADE ON WHETHER T
STATE WILL HOLD THIS LE
SALE. THE STATE IS
GATHERING SOCIAL, ENVIRON-
MENTAL, AND ECONOMIC t.·. -· INFORMATION ON WHICH T
BASE A DECISION.
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HOLITNA BASIN SALE 46
Date Scheduled: January, 1985.
Description of Sale Area: The area to be included in the Call for Nominations
and Comments is defined by the approximate limits of the Holitna
geological basin, which is located approximately eighty miles south of
McGrath.
Petroleum Potential: Petroleum potential in the area is considered low.
Other Resources: The Holitna River and its tributaries constitute one of the
major drainages of the Kuskokwim River, and it is probably the major king
salmon spawning stream in the Kuskokwim drainage. Salmon produced in the
Holitna River system contribute significantly to both the commercial and
subsistence fisheries of the Kuskokwim district. Sheefish, several
varieties of whitefish and cisco, Alaska black fish, northern pike, and
burbot are other species commonly found in this river. High
concentrations of moose occur in the Holitna drainage, and local residents
hunt moose extensively throughout this region. Relatively large
populations of black bear and grizzly bear also inhabit this area. The
Holitna drainage provides particularly important wintering habitat for
caribou. Suitable wetland habitats support nesting waterfowl, and· it is
possible that small numbers of tule geese may be among the species
utilizing these wetlands. Mergansers, pintails, green-winged teals,
harlequin ducks, and sandhill cranes are other common nesting water .
birds. Several species of raptors are also found in the Holitna basin
including rough-legged hawks, goshawks, osprey, and large numbers of
nesting bald eagles, a species protected under both Federal and State law.
Community Information: The Holitna Basin lies adjacent to and south of the
Kuskokwim River about two-thirds of the distance between Bethel and
McGrath. Bethel serves the Lower Kuskokwim region as a regional center,
and McGrath serves as a subregional center for the Upper Kuskokwim.
Bethel is by far the largest community in the area, with a population of
more than 3,500 persons. All of the other communities have populations of
fewer than 450 persons. The population is predominantly Native in all
communities, except McGrath.
There are no roads in the area, except local roads. Both McGrath and
Bethel have asphalt airstrips more than 5,000' in length. At Aniak, near
the northwestern extremity of the nomination area, there is a 5,000'
gravel airstrip. Bethel has a dock. Goods could be transported by barge
upriver, where there are several dock facilities.
The area from Bethel upriver just north of Tuluksak is part of the
Yukon/Kuskokwim coastal resource service area which is developing a
district coastal management program. Completion of a draft is anticipated
in 1983. The City of Bethel is developing a coastal management program
independent from that of the Yukon/Kuskokwim coastal resource service
area. Bethel expects to complete its draft district coastal management
program in early 1983.
-47-
Local communities include:
Community
McGrath
Stony River
Sleetmute
Red Devil
Georgetown
Crooked Creek
Napamiute
Chuathbaluk
Aniak
Upper Kalskag
Lower Kalskag
Tuluksak
Akiak
Akiachak
Be the 1
Lime Village
Sparrevohn Station
Municipal Classification
Second class city
Unincorporated
Unincorporated
Unincorporated
Unincorporated
Unincorporated
Unincorporated
Second class city
Second class city
Second class city
Second class city
Second class city
Second ~lass city
Second class city
Second class city
Unincorporated
Unincorporated
*Population estimates based on 1980 Census Figures.
*Population
355
62
107
39
108
105
341
129
246
236
198
438
3,576
48
26
Status of Sale: The Call for Nominations and Comments will be distributed in
January, 1983. No decision has yet been made on whether the state will
hold this lease sale. The state is in the process of gathering social,
environmental and economic information on which to base a decision. If it
is determined that this sale will best serve the interests of the state, a
written decision and notice of sale including terms of sale, bidding
methods, tract map and mi ti gating measures will be issued in
November, 1984.
-48-
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BEAUFORT SEA
STATE OF ALASKA
DEPARTMENT OF NATURAL RESOURCES
DIVISION OF MINERALS AND ENERGY MANAGEMENT
PROPOSED ·OIL AND GAS LEASE SALE 47
KUPARUK UPLANDS
SCALE I' 1,000,000
10 0 10 20
linch : 16 Mile a
30 40 50 Mlleo
NOTE,NO DECISION HAS YET
BEEN MADE ON WHETHER THE
STATE WILL HOLD THIS LEASE
L
GATHERING SOCIAL, ENVIRON• SALE. THE STATE IS l_·.
MENTAL, AND ECONOMIC
INFORMATION ON WHICH T<o
BASE A DECISION.
NOMINATION AREA
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KUPARUK UPLANDS SALE 47
Date Scheduled: May, 1985.
Description of Sale Area: The area to be included in the Call for Nominations
and Comments consists of state-owned lands southeast of the Kuparuk River
oil field. The area encompasses all or portions of twenty-nine townships
and contains approximately 600,000 acres. It extends from near the
Kuparuk River on the west to near the Sagavanirktok River on the east and
extends south from a line approimately nine miles south of Deadhorse to a
line approximately six miles north of Sagwon.
Petroleum Potential: Petroleum potential in the area is considered to be
moderate to high.
Other Resources: The Kuparuk Uplands supports a variety of terrestrial
mammals and birds. Caribou from the Central Arctic Caribou Herd use the
area, and the drainages of the Kuparuk and Sagavanirktok rivers are
recognized migratory corridors for this herd. Other terrestrial mammals
likely to be found in this area include arctic fox, wolverine, lemmings,
and wolves. Grizzly bears may occur along the major river valleys, and
have been known to range within 15-20 miles of the arctic coastline.
Millions of birds migrate through or near the area during the summer,
stopping to feed or rest on the small tundra ponds that dot the landscape.
Freshwater fish resources include grayling, char, burbot and whitefish.
Community Information: The northern portion of the proposed lease sale area
is included in the interim boundaries of the Alaska Coastal Management
Program. The North Slope Borough is preparing a district plan for the
area and a public hearing draft is anticipated to be completed in mid-1983.
The North Slope Borough has recently adopted a Copmprehensive Plan and
Land Management Regulations that may impose restrictions on oil and gas
activity in the proposed sale area.
Local communities include:
Community Municipal Classification
North Slope
Borough
Barrow
Prudhoe Bay/
Deadhorse
Kaktovik
Nuiqsut
Home rule borough
First class city
Unincorporated
Second class city
Second class city
*Population estimates based on 1980 Census Figures.
*Population
4,199
2,207
212
M5
Status of Sale: The Call for Nominations and Comments will be distributed in
May, 1983. No decision has yet been made on whether the state will hold
this lease sale. The state is in the process of gathering social,
environmental and economic information on which to base a decision. If it
is determined that this sale will best serve the interests of the state, a
written decision and notice of sale including terms of sale, bidding
methods, tract map and mitigating measures will be issued in March, 1985.
~~
168°
68 +
67° +
66° +
166° 164° 162°
+
STATE OF ALASKA
DEPARTMENT OF NATURAL RESOURCES
DIVISION OF MINERALS AND ENERGY MANAGEMENT
PROPOSED OIL AND GAS LEASE SALE 45
HOPE BASIN
SCALE I: 2,407t.000 I inch : 38 miles (Approximate)
6 0 t> 12 18 24 30 36 42 48 54 60 66 miles
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NOTEoNO DECISION HAS YET
BEEN MADE ON WHETHER THE
STATE WILL HOLD THIS LE:{--
SALE. THE STATE IS
.GATHERING SOCIAL, ENVIRON
MENTAL, AND ECONOMIC ·
INFORMATION ON WHICH TO
BASE A DECISION.
l
NOMINATION AREA
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HOPE BASIN SALE 45
Date Scheduled: September, 1985.
Description of Sale Area: The area to be included in the Call for Nominations
and Comments is defined by the approximate limits of the Hope geological
bas;n. State-owned land in the basin primarily is limited to submerged
lands.
Petroleum Potential: Petroleum potential in the area is considered to be low,
Other Resources: Kotzebue Sound is rich in bird life, with hundreds of
thousands of birds utilizing the various coastal habitats in this region.
May through September is a particularly dynamic time of year in terms of
avian wildlife, v::1en numerous species of waterfowl, shorebirds, and marine
birds nest, summer, and migrate through this area. Over· 200,00 waterfow1
and shorebirds nest in Kotzebue Sound and there are 20 seabird colonies in
this region. Chamisso Island is the largest seabird colony in Kotzebue
Sound. During spring and fall migration, the number of birds utilizing
wetlands of this region exceeds 400,000. Numerous species of raptors are
found throughout this area, including the endangered peregrine falcon.
Ringed seals are abundant during the winter when landfast ice is present,
and bearded seals and spotted seals are common inhabitants during the
summer months. Belukha whales are seasonally present in shallow waters,
and large concentrations occur in Eschscholtz Bay, an important belukha
whale calving area. The endangered bowhead whale and the Pacific walrus
have been observed occasionally in Kotzebue Sound.
Anadromous fish such as chum, pink and red salmon, sheefish, whitefish,
and arctic char are economically important resources and are harvested
both by commercial and by subsistence resource users. The Kotzebue Sound
chum fishery is the largest commercial fishing north of the Yukon River,
with an annual commercial harvest of up to 628,000 fish. Marine species,
including pelagic and bottom dwelling fish, occur in low densities.
Herring are widely distributed throughout Kotzebue Sound in the fall and
winter.
Community Information: The nomination area abuts portions of two regions:
the Northwest Alaska region whose regional center is Kotzebue and the
Bering Straits region whose regional center is Nome. Both Kotzebue and
Nome have populations of over 2,000 persons, while the rest of the coastal
communities in the area have populations of less than 500 persons. The
population in the region is predominantly Native.
Nome is connected by unpaved road to Teller, Solomon, Pilgrim Hot Springs
and Serpentine Hot Springs. All other roads are strictly local, although
there is a trail linking communities along the coast south of Nome.
·Kotzebue and Nome have airstrips approximately 6,000 1 long; al1 other
airstrips in the area are less than 3,000 1 long. Communities in the area
from Shishmaref south usually receive air service from Nome, while those
further north receive air service from Kotzebue.
-52-
There are no docks in the area except the port of Nome, which can
accommodate shallow-draft vessels. However, in Nome, as in other
communities in the area, cargo delivered by deep-draft vessels must be
lightered to shore by shallow-draft vessels. Water transportation can
occur during ice-free periods, which occur from June to October in Norton
Sound and from July to early October in Kotzebue Sound.
The NANA and Bering Straits Coastal Resource Service Areas (CRSA) of the
Coastal Management Program will be affected by the sale. The NANA CRSA
expects to have a public hearing draft of its program available in mid
1983 with action by the Coastal Policy Council projected to occur in late
1983. The first meeting of the Bering Straits CRSA was held in late
September, 1980. A work program has been developed, and adoption of the
coastal management program projected to occur in late 1983. ·
Local communities include:
Community
Kivalina
Kotzebue
Shishmaref
Diomede
Wales
Brevig Mission
Teller
Nome
Noorvik
Se 1 awi k
Buckland
Deering
Municipal Classification
Second class city
Second class city
Second class city
Second class city
Second class city
Second class city
Second class city
First class city
Second class city
Second class city
Second class city
Second class city
*Population estimates based on 1980 Census Figures.
*Population
241
2,054
394
139
133
138
212
2,301
492
361
177
150
Status of Sale: The Call for Nominations and Comments will be distributed in
September, 1983. No decision has yet been made on whether the state will
hold this lease sale. The state is in the process of gathering social,
environmental and economic information on which to base a decision. If it
is determined that this sale will best serve the interests of the state, a
written decision and notice of sale including terms of sale, bidding
methods, tract map and mitigating measures will be issued in July, 1985.
-53-
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BEAUFORT SEA
STATE OF ALASKA
DEPARTMENT OF NATURAL RESOURCES
DIVISION OF MINERALS AND ENERGY MANAGEMENT
PROPOSED OIL AND GAS LEASE SALE 48
KUPARUK UPLANDS
SCALE loi,OOO,OOO I lncll " 16 Mllea
10 0 10 20 30 40 SO Mllea
DIRECTOR, D.M.E.M.ra ~ DRAWN BY DATE APPROVED /.,t /!(, /6~
KAY BROWN ~a...., O.D.S. BASE MAPo@ COPYRIGHT ARCTIC
ENVIRONMeNTAL INFOIOMATION AND
LEASING MANAGER, )/ .t?,., CHECKED ~~1~R~~~7:c~~~MLifE~~~T!~
PAMELA ROGERS ~· ~n.h A BYt(!;f#' IN WHOLE OR IN PART IN ANY FORM
IJHIVERSAL TRANSVERSE MERCATOR
PROJECTION ON SIX DEGREE BANOI
I'
NOTEoNO DECISION HAS YET
BEEN MADE ON WHETHER THE
[
STATE WILL HOLD THIS LEASE l_·. SALE. THE STATE IS
GATHERING SOCIAL, ENVIRON-
MENTAL, AND ECONOMIC
INFORMATION ON WHICH TO
BASE A DECISION.
NOMINATION AREA
l:i-i'ii·j:j,i:i:i·j'::j:::i:':j::i!l:!:!:i:i:i.i:i,l:::j:ii:i:i:Ii:::::ji:!:j:j:j:i'i:j:j:j:j:j:j:l. l.
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KUPARUK UPLANDS SALE 48
Date Scheduled: January, 1986.
Description of Sale Area: The area to be included in the Call for Nominations
and Comments will include state-owned lands south of the Kuparuk River oil
field. The area encompasses all or portions of twenty-eight townships,
and contains approximately 560,000 acres. It extends from near the
Itkillik River on the west to near the Kuparuk River on the east and
extends south from leased state lands adjacent to the Kuparuk River field
to a line approximately eighteen miles north of the Umiat Meridian.
Petroleum Potential: Petroleum potential in the area is considered to be
moderate to high.
Other Resources: The Kuparuk Uplands nomination area supports a variety of
terrestrial mammals and birds. Caribou from the Central Arctic Caribou
Herd use the area, and the drainage of the Kuparuk River is a recognized
migratory corridor for this herd. Other terrestrial mammals likely to be
found in this area include arctic fox, wolverine, lemmings, and wolves.
Grizzly bears may occur along the major river valleys, and have been known
to range within 15-20 miles of the arctic coastline.
Millions of birds migrate through or near the area during the summer,
stopping to feed or rest on the small tundra ponds that dot the landscape.
Freshwater fish resources include grayling, char, burbot and whitefish.
Residents of Nuiqsut use the area for fishing and hunting caribou and
small mammals.
Community Information: The northern portion of the proposed lease sale area
is included in the interim boundaries of the Alaska Coastal Management
Program. The North Slope Borough is preparing a district plan for the
area, and a public hearing draft is anticipated to be completed in
mid-1983.
The North Slope Borough has recently adopted a Copmprehensive Plan and
Land Management Regulations that may impose restrictions on oil and gas
activity in the proposed sale area.
Local communities include:
Community Municipal Classification
North Slope
Borough
8arrow
Prudhoe Bay/
Deadhorse
Kaktovik
Nuiqsut
Home rule borough
First class city
Unincorporated
Second class city
Second class city
*Population estimates based on 1980 Census Figures.
*Population
4,199
2,207
212
165
Status of Sale: The Call for Nominations and Comments will be distributed i~
January, 1984. No decision has yet been made on whether the state will
hold this lease sale. The state is in the process of gathering social,
environmental and economic information on which to base a decision. If it
is determined that this sale will best serve the interests of the state, a
written decision and notice of sale including terms of sale, bidding
methods, tract map and mitigating measures will be issued in
November, 1985.
-56-
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STATE OF ALASKA
DEPARTMENT OF NATURAL RESOURCES
DIVISION OF MINERALS AND ENERGY MANAGEMENT
PROPOSED OIL AND GAS LEASE SALE 49
COOK INLET
SCALE 1=1,774,000 I inch = 28 miles (Approximate)
6 0 6 12 18 24 30 36 42 "tB 54 60 66 72
DIRECTOR, D.M.E.M.~ & DRAWN BY DATE APPROVED /.1~6/8;_
KAY BROWN t.vJ 'tJ w-7'---O.D.S. BASE MAP•@ COPYRIGHT ARCTIC
ENVIRONMENTAL l~FORWATJON ANO
LEASING MANAGE~p ,/~ CHECKED g:~~R~~·6~~:c~~~~N:l:.£:~;~~TICH
PAMELA ROGERS' ~.oti, ' -'~/d1_d/ BY!Jjlffl IN WHOLE OR IN PMiT IN A1-4Y F'ORM
!JNIVERSAL TRANSIJEFtSE MERCATOR
PROJECTIOfol ON SIX DEGREE BANOS
NOTE•NO DECISION HAS YET
BEEN MADE ON WHETHER THE
STATE WILL HOLD THIS LEASE
SALE. THE STATE IS
GATHERING SOCIAL, ENVIRON-
MENTAL, AND ECONOMIC
INFORMATION ON WHICH TO
BASE A DECISION.
PROPOSED SALE AREA
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COOK INLET SALE 49
Date Scheduled: May, 1986.
Description of Sale Area: The area to be included in the Call for Nominations
and Comments lies south of the village of Susitna and north of Augustine
Island and is bordered by Turnagain Arm to the east and Crescent Lake to
the west.
The acreage selected for leasing will consist of available state-owned
uplands and submerged lands.
Petroleum Potential: Petroleum potential in the area is considered to be
moderate.
Other Resources: Cook Inlet encompasses productive habitat for commercial
species of shellfish and finfish, as well as numerous associated species
of birds, fish, and marine mammals. Endangered animals known in the
nomination area include peregrine falcons and finback and gray whales.
The Clam Gulch (razor clam) State Critical Habitat Area, McNeil River
State Game (brown bear) Sanctuary, and Tuxedni National Wildlife Refuge
(seabirds) are in the vicinity of the nomination area. Kamishak Bay,
which is south of the area, is an important fishing ground for king and
tanner crabs, halibut, and herring. All five species of north Pacific
salmon are commercially fished throughout Cook Inlet.
Numerous anadromous streams, several of which are major fish producers,
exist in the vicinity of the nomination area. There also are important
habitat areas for moose, black bear, brown bear, caribou, seabirds,
waterfowl and marine mammals near or within the area.
The nomination area encompasses important commercial fishing areas as well
as important recreational hunting and fishing areas.
Community Information: The nomination area is within the boundaries of two
boroughs and the Municipality of Anchorage, all of which have district
coastal management programs in varying stages of development. The
Matanuska-Susitna Borough distributed a public hearing draft in late 1982
that will likely be submitted to the Coastal Policy Council in early
1983. The Municipality of Anchorage has received approval from the Alaska
Coastal Policy Council for the Anchorage Coastal Management Program. The
Kenai Peninsula Borough completed a draft coastal development plan, but
after considerable public opposition the Borough decided not to complete a
coastal management program.
Local communities include:
Community
Kenai Peninsula
Borough
Homer
Kachemak
Kenai
Seldovia
Soldotna
Municipal Classification
Second class borough
First class city
Second class city
Home rule city
First class city
First class city
-58-
*Pop·u 1 at ion
25,282
2,209
403
4,324
479
2,320
(Local communities continued)
Community
Clam Gulch
Ni nil chi k
Anchor Point
Tyonek
Matanuska-Susitna
Borough
Houston
Palmer
Wasi 11 a
Municipality of
Anchorage
Big Lake
Municipal Classification
Unincorporated
Unincorporated
Unincorporated
Unincorporated
Second class borough
Second class city
Home rule city
Second class city
Unified home rule
Municipality
Unincorporated
*Population estimates based on 1980 Census Figures.
*Population
50
341
226
239
17,816
370
2' 141
1 '559
174,431
410
Status of Sale: The Call for Nominations and Comments will be distributed in
May, 1984. No decision has yet been made on whether the state will hold
this lease sale. The state is in the process of gathering social,
environmental and economic information on which to base a decision. If it
is determined that this sale will best serve the interests of the state, a
written decision and notice of sale including terms of sale, bidding
methods, tract map and mitigating measures will be issued in March, 1986.
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STATE OF ALASKA
DEPARTMENT OF NATURAL RESOURCES
DIVISION OF MINERALS AND ENERGY MANAGEMENT
PROPOSED OIL AND GAS LEASE SALE 50
CAMDEN BAY
SCALE I' 1,000,000 I lnc'h = 16 Mllea
10 0 10 20 30 40 SO Miles
DIRECTOR, D.M.E.M. <t;;. ·/~ DRAWN BY DATE APPROVED /.l//fJPf8L
KAY BROWN vf 1' t.J-./L-O.D.S. BASE MAP<@ COPY~>IGHT AR~nc
ENVIRONMENTAL INFORMATION AND
LEASING MANAGER,/) 1 ,~ ~· CHECKED ~~ ~ ~ H~~ ;;7:t~~~~~:L ii£ :~O~~TIO
PAMELA ROGERS f'/7--r~ '_.) _-lH:lPAA BY/jj/]1/-
IN WHOLf OR IN PART IN ANY FCRW.
!JNIVERSAL T RAfroiSVERSE MERCATOR
PROJECTION ON S1X DEGREE BANnS
NOTE< NO DECISION HAS YET
BEEN MADE ON WHETHER THE
STATE WILL HOLD THIS LEASE
SALE. THE STATE IS
GATHERING SOCIAL, ENVIRON-
MENTAL, AND ECONOMIC
INFORMATION ON WHICH TO
B~SE A DECISION.
NOMINATION AREA
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CAMDEN BAY SALE 50
Date Scheduled: September, 1986.
Description of Sale Area: The area to be included in the Call for Nominations
and Comments will consist of state-owned submerged lands extending three
miles seaward from Flaxman Island to a point west of the Hulahula River.
The Arctic National Wildlife Refuge is south of the nomination area.
However, the State is not proposing at this time to offer the submerged
lands lying between the coastline of the mainland and the barrier islands.
Title to the submerged lands between the coastline of the mainland and the
barrier islands is in dispute, and is the subject of litigation pending
before a Special Master appointed to hear the case for the United States
Supreme Court.
The nomination map is meant to indicate submerged lands presently or
potentially available for state oil and gas leasing. State ownership of
submerged lands extends seaward to the three-mile limit.
Petroleum Potential: Petroleum potential in the area is considered to be
moderate to high.
Other Resources: Information on the resources of Camden Bay are being
acquired in a cooperative study effort pursuant to the Alaska National
Interest Lands Conservation Act. After this information is obtained, the
Department will be able to identify other resources in the area. ·
Community Information: The proposed lease sale is located within the interim
boundaries of the Alaska Coastal Management Program. The North Slope
Borough is preparing a district plan for the area, and a public hearing
draft is anticipated to be completed in mid-1983.
The North Slope Borough has recently adopted a Copmprehensive Plan and
Land Management Regulations that may impose restrictions on oil and gas
activity in the proposed sale area.
Local communities
Community
North Slope
Borough
Barrow
Prudhoe Bay/
Deadhorse
Kaktovik
Nuiqsut
include:
Municipal Classification
Home rule borough
First class city
Unincorporated
Second class city
Second class city
*Population estimates based on 1980 Census Figures.
-61-
*Population
9,234
2, 715
192
182
Status of Sale: The Call for Nominations and Comments will be distributed in
September 1984. No decision has yet been made on whether the state will
hold this lease sale. The state is in the process of gathering social,
environmental and economic information on which to base a decision. If it
is determined that this sale will best serve the interests of the state, a
written decision and notice of sale including terms of sale, bidding
methods, tract map and mitigating measures will be issued in July, 1986.
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150°
BEAUFORT SEA
148°
STATE OF ALASKA ~,~
DEPARTMENT OF ,NATURAL RESOURCES ,
DIVISION OF MINERALS AND ENERGY MANAGEMENT
PROPOSED OIL AND GAS LEASE SALE 51
PRUDHOE BAY UPLANDS
SCALE i' 1,000,000 I Inch = 16 Mile a
10 0 10 20 30 40 50 Mlloo
NOTE,NO DECISION HAS YET
BEEN MADE ON WHETHER THE
STATE WILL HOLD Tl-iiS LEASE
SALE. THE STATE IS
GATHERING SOCIAL, ENVIRON-
MENTA\., AND ECONOMIC
iNFORMATION ON WHICH TO
BoOSE A DECISION.
NOMINATION AREA
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PRUDHOE BAY UPLANDS SALE 51
Date Scheduled: January, 1987.
I Description of Sale Area: The proposed sale area consists of approximately
550,000 acres of state-owned upland acreage on the North Slope extending
westward from the Canning River to the Colville River delta.
A major portion of the lease sale was deleted from State Competitive Oil
and Gas Lease Sale 34 (Prudhoe Bay Uplands) held in September, 1982.
Additional acreage may be added to this sale if active leases expire prior
to the sale date. The proposed sale area is located about 20 miles
southeast of Prudhoe Bay.
Petroleum Potential: Petroleum potential in the proposed sale area is
considered to be moderate.
Other Resources: The Prudhoe Bay Uplands sale area supports a variety of
terrestrial mammals and birds. The western limit of the range of the
Porcupine Caribou Herd, with-a population surpassing 100,000 animals, is
located along the Canning River. Caribou from the Central Arctic Caribou
Herd also use the area for calving and wintering purposes, and the
Sagavanirktok River is a recognized migratory corridor for this herd.
Other terrestrial mammals likely to be found in this area include arctic
fox, wolverine, lemmings, and wolves. Grizzly bears may occur along the
major river valleys, and have been known to range within 15-20 miles of
the arctic coastline. -
Millions of birds migrate through or near to this area during the summer,
stopping to feed or rest on the small tundra ponds which dot the
landscape. Several species of raptors, including endangered subspecies of
the peregrine falcon, nest in the bluffs and cliffs of the Colville River;
others like the snowy owl and marsh hawk may be found in shallow ground
nests.
Freshwater fish resources include grayling, char, burbot and whitefish.
Subsistence hunting and fishing occurs throughout the region, particularly
in the Canning Rivers drainage.
Community Information: The proposed sale is within the area designated by the
North Slope Borough as the "mid-Beaufort region" for coastal zone
management purposes. The Borough submitt~d a coastal management program
for this region to the Alaska Coastal Policy Council for review, but
subsequently withdrew it. The plan is currently being revised, and a
public hearing draft is anticipated to be ready for review in mid-1983.
The North Slope Borough has recently adopted a Copmprehensive Plan and
Land Management Regulations that may impose restrictions on oil and gas
activity in the proposed sale area.
-64-
Local communities include:
Community Munici~al Classification *Po~ulation
North Slope Home rule porough 4,199
Borough
Barrow First class city 2,207
Prudhoe Bay/ Unincorporated .212
Deadhorse
Kaktovik Second class city 165
Nuiqsut Second class city 208
*Population estimates based on 1980 census figures.
Status of Sale: The Call for Comments will be distributed in January, 19a5.
No decision has yet been made on whether the state will hold this lease
sale. The state is in the process of gathering social, environmental and
economic information on which to base a decision. If it is determined
that. this sale will best serve the interests of the state, a written
decision and notice of sale including terms of sale, bidding methods,
tract map and mitigating measures will be issued in November~ 1986.
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154°
SE
STATE OF ALASKA l DEPARTMENT OF NATURAL RESOURCES
DIVISION OF MINERALS AND ENERGY MANAGEMENT
PROPOSED OIL AND GAS LEASE SALE 52
BEAUFORT SEA
SCALE '' 1,000,000 I Inch = 16 litllea
10 0 10 20 30 40 !SO Miles
···-
DIRECTOR, D.M.E.M.c:;t; . 1:?-rr)t.J DRAWN BY DATE APPROVED /.1 /Jft;, It!:/'~
KAY BROWN :r.,......,. • "-O.D.S. BASE MAP' @COPYRIGHT ARCnc li
ENVfROHWENTAl INFORUATION AND '·
LEASING MANAGER:f1: / ) CHECKED ~:;~R~~~~7:c~~~~N:l~£~~6h1~r-~ 'h~Z/~ BY/r);f/1
IN WHOLE OR IN PART IN ANY FOifM.
PAMELA ROGERS ·~ PN!VERSAL TRANSVERSE ~ERCATOR
PROJECTION ON SIX 0£GREE BANOS
NOTE,NO DECISION HAS YET
BEEN MADE ON WHETHER THE
STATE WILl. HOLD THIS LEASE
SAL~: THE STATE IS
GATI-IER!NG SOCIAL, ENVIRON-
MENTAL, AND ECONOMIC
INFORMATION ON WHICH TO
BASE A DECISION.
NOMINATION AREA
DISPUTED AREA
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BEAUFORT SEA SALE 52
Date Scheduled: May, 1987.
Description of Sale Area: The area included in the Call for Nominations and
Comments consists of approximately 135,000 acres of state-owned submerged
lands offshore of the National Petroleum Reserve, Alaska extending from
Pitt Point on the east to Tangent Point on the west.
Petroleum Potential: Petroleum potential in the area is considered to be
moderate to high.
Other Resources: The area supports populations of marine, anadromous, and
freshwater fish; waterfowl; seals; bowhead and belukha whales; and polar
oears.
The area is used for subsistence by the residents of Nuiqsut and Barrow.
Community Information: The sale area is included within the interim
boundaries of the Alaska Coastal Management Program. The North Slope
Borough is preparing a district program for the area, and a public hearing
draft is anticipated in mid-1983.
The North Slope Borough has recently adopted a Copmprehensive Plan and
Land Management Regulations that may impose restrictions on oil and gas
activity in the proposed sale area.
Local communities include:
Community Municipal Classification *Population
North Slope Home rule borough 4,199
Borough
Barrow First class city 2,207
Prudhoe Bay/ Unincorporated 212
Deadhorse
Kaktovik Second class city 165
Nuiqsut Second class-city 208
Wainwright Second class city 405
*Population estimates based on 1980 Census Figures.
Status of Sale: The Call for Comments will be distributed in
May, 1985. No decision has yet been made on whether the state will hold
this lease sale. The state is in the process of gathering social,
environmental and economic information on which to base a decision. If it
is determined that this sale will best serve the interests of the state, a
written decision and notice of sale including terms of sale, bidding
methods, tract map and mitigating measures will be issued in March, 1987.
STATE OF ALASKA
DEPARTMENT OF NATURAL RESOURCES
DIVISION OF MINERALS AND ENERGY MANAGEMENT
PROPOSED OIL AND GAS LEASE SALE 53
ICY CAPE
SCALE I' 1,000,000 II" eli : 16 Mlleo
10 0 10 20 30 40 !50 i\lll•o
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ICY CAPE SALE 53
Date Scheduled: September, 1987.
Description of Sale Area: The area included in the Call for
and Comments consists of state-owned uplands between Icy
Beaufort west of the National Petroleum Reserve, Alaska.
consists of about 261,000 acres.
Nominations
Cape and Cape
The sale area
Petroleum Potential: Petroleum potential in the are is considered to be low
to moderate.
Other Resources: The Icy Cape uplands sale area contains black brant molting
habitat and insect relief habitat for Western Arctic Herd caribou. In
some years, caribou also calve in the proposed sale area along the Kokolik
River. Kasegaluk Lagoon, which is adjacent to the proposed sale area,
supports large numbers of belukha whales, spotted seals, and sea ducks,
principally oldsquaw and king eiders.
Community Information: The sale area is included within the interim
boundaries of the Alaska Coastal Management Program. The North Slope
Borough is preparing a district program for the area, and a public hearing
draft is anticipated in mid-1983.
The North Slope Borough has recently adopted a Copmprehensive Plan and
Land Management Regulations that may impose restrictions on oil and gas
activity in the proposed sale area.
Local communities include:
Community
North Slope
Borough
Barrow
Kaktovik
Nuiqsut
Wainwright
Point Lay
Point Hope
Cape Lisburne
Kotzebue
Kivalina
Noatak
Municipal Classification
Home rule borough
First class city
Second class city
Second class city
Second class city
Unincorporated
Second class city
Unincorporated
Second class city
Second class city
Unincorporated
*Population estimates based on 1980 Census Figures.
Status of Sale: The Call for Comments will be distributed in
*Population
4,199
2,207
165
208
405
68
464
36
2,054
2~
273
September, 1985. No decision has yet been made on whether the state will
hold this lease sale. The state is in the process of gathering social,
environmental and economic information on which to base a decision. If it
is determined that this sale will best serve the interests of the state, a
written decision and notice of sale including terms of sale, bidding
methods, tract map and mitigating measures will be issued in July, 1987.
~~
EXPLORATION INCENTIVE CREDIT PROPOSAL: Invitation to Comment
,-
~· 1 1 A! rt' 4iii~lii;ttijbliPFtt¥ Ui&l&&iJii&
The Department of Natural Resources is proposing to extend the eligibility of
exploration incentive credits to include geophysical data. Under this
proposal, the Department would offer exploration incentive credits to industry
in exchange for geophysical exploration data. The Department is authorized to
award these credits under AS 38.05.180(i) which states in part:
" ••. The commissioner may also provide for credits to be earned by persons
performing geophysical work on state land, if that work is performed
during the two seasons immediately preceding an announced lease sale and
on land included within the sale area and the geophysical information is
made public following the sale. Credits may not exceed 50 percent of the
cost of drilling or geophysi~al work."
The intent of the law is twofold: 1) to encourage exploration in high risk,
rank wildcat areas and, 2) to increase the inventory of ~ublic information
concerning Alaska's lands.
The proposed use of these credits for geophysical work is a logical extension
of current Departmental policy. Beginning with Sale 36, held in May 1 1982,
and continuing with Sales 37 and 34, held in August and September 1982, the
Department has offered exploration incentive credits for the drilling of
exploratory wells. The credits have been tailored to meet the perceived
geological and financial risks associated with a specific sale area. As of
this writing, one major oil company has applied for credits to drill a well on
a tract purchased in Sale 36.
The Department is currently revising its regulations covering geophysical
exploration incentive credits. These proposed regulation changes must be
adopted before geophysical credits can be granted.
The proposed regulation changes would:
l) require that the geophysical data gathered be submitted at least nine
months before the announced sale date. This would give the Department
sufficient time to integrate the data into its presale analysis; and
2) repeal 11 AAC 83.8lO(c) which states: "Geophysical information which
accompanies any application for geophysical exploration incentive credit
made under (a)(l)-(a)(3) of this section will be made ~ublic
u~on receipt." The statute specifies that the data is to be made public
following the sale.
The department hereby gives notice of its intent to establish geophysical
credits for certain proposed sales. Geophysical credits are being considered
for Sale 45 (Hope Basin, September 1985), Sale 46 (Holitna Basin, January
1985) and Sale 53 (Icy Cape, September 1987). These areas can be
characterized as rank wildcat, high risk areas.
The public is invited to comment on this proposal. Comments are due March 1,
1983. Comments should be submitted to the Director, Division of Minerals and
Energy Management, Pouch 7-034, Anchorage, Alaska 99510.
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1982 OIL AND GAS LEASE SALES RESULTS
Since publication of the January 1982 Five-Year Leasing Program, the state has
held five oil and gas lease sales: sales 35, 36, 37, 37A and 34.
Sale 35 was held in Anchorage on February 2, 1982. Approximately 596,000
acres in Lower Cook Inlet were offered for lease. Most of the acreage (96%)
was offshore in an area the state and industry regarded as having a low
probability of commercial hydrocarbons. The acreage was offered under a
royalty bidding method with a minimum acceptable royalty bid of 12.5%. The
bonus was fixed at $10.00 per acre, and the initial lease term was 10 years.
Thirty-one of the 148 tracts offered received a total of 39 bids. Winning
royalty bids ranged from a high of 37.6 percent (Tract 001) to 12.76 percent
(Tracts 44 and 48). The average winning bid was 20.14%. The state received
$1,311,906.90 in fixed bonuses on 131,190.69 acres leased.
Sale 36 was held in Fairbanks on May 26, 1982, and offered prospective acreage
in the Beaufort Sea area near Flaxman Island, as well as tracts previously
offered but not leased in the 1979 Beaufort Sea sale. A total of 13 tracts
covering 56,862 acres were offered for lease. All tracts received bids.
Sale terms included a minimum royalty of 12.5 percent and a 40 percent net
profit share with the cash bonus as the bid variable. For the first time, the
state offered firms exploration incentive credits of $750 per foot drilled for
the initial exploratory well on a given tract, not to exceed 40% of the total
exploratory well costs. These credits are deductible against oil and gas
royalty payable in value and rental payments payable to the state; or taxes
payable under AS 43.55. In addition, the credits are assignable.
Thirty-seven bids were submitted on the 13 tracts. The winning bids totalled
approximately $32.58 million. Tract 011 received the highest bid of $15.35
million or about $6,400 per acre.
Fairbanks was the site of Sales 37 and 37A which were held on August 24,
1982. Sale 37 offered acreage in the Tanana and Copper River basins. Presale
investigation suggested that both areas were of relatively low hydrocarbon
potential. Lease terms included a 12.5 percent royalty and a 30 percent net
profit share balanced by an exploration incentive credit of $250 per foot
drilled, not to exceed 30 percent of the exploratory well costs. The initial
lease term was for seven years.
The state received 40 bids on 38 of the 217 tracts offered for Lease. All
tracts receiving bids were in the Tanana region. Sale 37 generated
$562,948.90 in high bonus bids on 195,208.18 acres of land, or an average of
$2.88 per acre. ARCO Alaska Inc. was the high bidder on 14 tracts offering an
average of $6.15 per acre.
Sale 37A offered one tract of 1874.6 acres in the Kenai Penninsu1a. A fixed
royalty of 43 percent was set for the tract, and the tract received two bonus
bids. The high bid of $97,479.20 or $52.00 per acre was tendered by Texaco
Inc.
-71-
Sale 34 was held on September 28, 1982 in Anchorage. This sale represented
the largest offering of acreage in State history. Approximately 1,231,517
acres to the south and east of the Prudhoe Bay field were offered for lease.
Two different bidding methods were employed. Tracts one through 14,
encompassing the northeastern portion of the sale area, carried a 16.67
percent royalty, 40 percent net profit share and exploration incentive credits
of $500 per foot drilled. All but one of these tracts (001) received bids.
The remainder of the sale area was offered with 12.5 percent royalty, 30
percent net profit share and accompanying exploration incentive credits of
$375 per foot drilled. All tracts carried an initial lease term of 10 years.
Uf the 261 tracts offered, 119 received bids. Winning bias totalled
$26,713,018.17 on 571,954 acres, or an average winning bid of $46.70 per
acre. Tract 005 received the highest winning bid of $987.80 per acre by ARCO
Alaska Inc.
Tables 6 through 10 present the lists of bids received at the 1982 lease
sales. All bidders and each of their bids are noted on the tables. Table 11
summarizes the sale results of all competitive oil and gas lease sales held
since 1959. Information such as acres offered, acres leased, amount bid per
acre, and bonus received is tallied along with the number of tracts offered
and the number leased. The bidding method utilized and brief description of
each sale is presented on the second portion of Table 11. A summary of the
current status of State of Alaska leases is shown on Table 12. More than
three million acres of state land comprise more than 1,300 individual lease
contracts. The majority of these leases were issued competitively with 254
leases issued noncompetitively and 128 conditionally. Conditional leases were
issued on lands whose transfer to the State had not been tentatively approved
at the time of the lease sale. The term of these leases will not begin until
the lands are patented or tentatively approved.
Figure 2 illustrates the increase in the amounts of bonus bids received
annually.
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153°30'
6t•oo' +
153•oo' 152°30' 1s2•oo'
+ +----1----+ _±_.___+ ---+---+
I R20W I I R18W I I R16W t
+---+---+---+---+--·-+ ......
N TION
T9N
TBN
T7N
T6N
30' +
T4N
T3N
15' +
TIS
oomm j ~-+~-~-+
+---+---+---+---+ --+=,f-.r
T35 I R24W I R23W I
+ --+ --..... """"'...-:::,.--+---.--'--t--T:-7'
13
<:J + +
THREE GEOGRAPHICAL
MILE LINE
THIS MAP IS NOT TO BE CONSTRUE[).
!5s:~ g~F~~~~L3T'¥'~0"S'tALE
MAPS ARE AVAIL1ABLE AT D.M.E.M., 555 CORDOVA ST. ANCH. AK.
PHONE 278-2611ll
+ + +
AUGUSTINE Y'""
STATE OF ALASKA LEGEND
DEPARTMENT OF NATURAL RESOURCES
DIVISION OF MINERALS AND ENERGY MANAGEMENT
OIL.S GAS LEASE SALE 35 ITATt: lAM! R,::FUili,SAMCTUARIU
AND CRITICAL HABITAT• ARE AS -·-·-·-·-·-·-LOWER COOK INLET SALE N0.35 IS SCHEDULED FOR
JANUARY 1981~~CT~1f~ HARft\8011 !DRAWN 1lt'~ FEBRUARY 2, 1982
REVISIONS ~II_ 0.0.5 THE PROPOS£0 SALE AREA INCLUDE:~ ONLY
OCTOBER 1981 ~!E ~~~~~~NA8E~,~c.s. li"''._u,&f rR,t.Nsii£RSE tv\~~ A#P'%~e:"o"l/\ltl:Nnal!o~,r;':.In-
P EL~;o•t: ~.// I( A-tO :i~~\~;;0og:~~IION SALE AND HOT UNDf.R £X18TIN8 LEA.et:
u
"' "' "l
"' 0 -< "' 0
..
"' "' ..
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+
SEWARD MERIDIAN
I
LIST OF BIDS -LEASE SALE 35 (Feb. 2, 1982) TABLE 6 .r
l iilill
Tract if No. of Bl ds Bidder % ownership Fixed Cash Bonus Royalty
001 3 Wi !fred L. Gray 100% $ 27,000.00 37.60090% [
Kelley Everette 5% $ 27,000.00 3!.00000% I C II f f Burg I In 15%
Earl Cook 15%
Jeff Cook 10%
[ ~ Joe Faulhaber 20%
M. E. Anderson 15%
Jim Dodson 10%
J lm Long 10%
hnarex, Inc. 100% $ 27,000.00 22.55707%
002 2 Kelley Everette 5% $ 18,250.70 29.00000%
Cliff Burglln 15%
J lm Long 4%
Don Pruhs 19% r Mark Webber 19%
Ron Biggers 19%
Mike Cook 19% [ ~
.Amarex, Inc • 100% $ 18,250.70 22.55707%
f -
006 Ke I I ey Everette 5% $ 23,719.00 31.00000% ( Cliff Burglln 20%
Joe Faulhaber 20%
Earl Cook 15%
Jeff Cook 10%
M. E. Anderson 10%
J lm Dodson 10% r Jim Lentine 10%
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010 .Amarex, Inc • 100% $ 57,060.00 14.84648%
011 hnarex, Inc. 100% $ 57,210.00 14.84648%
012 * Tesoro 100% $ 57,600.00 24.58211% f
013 Chevron u.s.A. Inc. 100% $ 57,600.00 12.95000%
014 Chevron U.S.A. Inc. 100% $ 57,060.00 12-95000% r:
019 Chevron u.s.A. Inc. 75% $ 44,410.00 16.95000%
Beard 01 I Company 25% L
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LIST OF BIDS -LEASE SALE 35 (Feb. 2' 1982) TABLE 6
Tract # No. of Bids Bidder %ownership Fixed Cash Bonus Royalty
024 * Tesoro 100% $ 57,600.00 26.91253%
028 .ARCO AI aska, Inc • 100% $ 57,600.00 21.40000%
031 ARCO AI ask a, Inc. 100% $ 57,600.00 21.40000%
035 Chevron u.S.A. Inc. 75% $ 57,600.00 16.95000%
Beard Oi I Company 25%
0"<"7 ~I Chevron u.S.A. Inc. 75% $ 44,800.00 16 • ~l5•J(.I(',i
Beard Oil Company 25%
Oi.-4 Union Oi I Company of Ca lifornl a 100% $ 18,530.00 12.76000$
048 Union 011 Company of California 100% $ 44,800.00 12.76000%
050 ARCO AI aska, Inc. 100% $ 56,460.00 21.40000%
"'''·----
057 2 Chevron U.S .A. Inc. 75% $ 7,500.00 33.9:5000%
Beard Oi I Company 25%
Kelley Everette 5% $ 7,500.00 17.00000%
Cliff Burgi In 35%
Bi II Moore 20%
Vernon Hines 20%
Pau I Greimann 20%
065 ARCO AI ask a, Inc. 100% $ 57,600.00 16.80000%
070 2 Chevron u.S .A. Inc. 75% $ 4,300.00 33.95000%
Beard Oi I Company 25%
Kelley Everette 5% $ 4,300.00 16. (.:>OOOC%
Cliff Burgi In 35%
Bill Moore 20%
Vernon Hines 20%
Pau I Grelmann 20%
~---·--""·~-·
076 2 .ARCO AI aska, Inc • 100% $ 56,540.00 ;6.60000%
Chevron u.S .A. Inc. 100% $ 56,540.00 : 2 .. :-J~::e:i_>o~: __ ,_ ..... -.---·-····-····"-~
077 Chevron U.S .A. Inc. 100% $ 56,780.00 ; 2 .. 9 > .. )(JO%
"~ 079 Chevron U.S .A. Inc. 100% $ 57,600.00 12.95000%
082 2 Chevron u.s.A. Inc. 100% $ 57,600.00 19.85000%
ARCO AI ask a, Inc. 100% $ 57,600.00 16.80000%
-75-
LIST OF BIDS -SALE 35 (Feb. 2, 1982) TABLE 6
rr~ ill
Tract II No. of Bids Bidder % ownership Fixed Cash Bonus Roy a I ty
094 Monte J. Allen 30% $ 21,683.00 21.87889%
r Frank J. Novosel 50%
Johnle Jones 20%
l
096 Kelley Everette 5% $25,726.50 16.00000%
Cliff Burgi In 25%
Joe Fau I haber 20%
Earl Cook 15%
Jeff Cook 10%
J lm Dodson 10%
Earnest Carlson 15%
099 Monte J. Allen 30% $ 23,700.00 17.78999%
Frank J. Novosel 50%
Johnle Jones 20%
101 Chevron u.s.A. Inc. 100% $ 37,628.40 17.85000%
122 Chevron u.s.A. Inc. 100% $ 47,850.00 12.95000%
124 Chevron u.S .A. Inc. 100% $ 55,699.30 14.25000%
f ~ 23U 2 R. Dianne Stevens 100% $ 6,800.00 30.99999%
Kelley Everette· 5% $ 6,800.00 26.00000% L CllffBurglln 35%
Bill Moore 20%
Vernon HI nes 20% I ' Pau I Grelmann 20%
l ~
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-76-L
L
i49"tl0' 30'
Grid Datum is
70015'
STATE OF ALASK
Department of Natural Resources
PROPOSED OIL a GAS LEASE SALE 36
BEAUFORT SEA
148"00' 30'
0 c
SAL£. DATE: May 26,1982
SCALE
E
147°00' --------
N
+ ..,
5 0 5 10M LES
~i(Q 'r
5 0 5 IONAUTICAL MILES
30'
3d
N
+
-,-
1
I
I
-~--
UMIAT
MERIDIAN
30'
TIOIII
TSN
,-
LIST OF BIDS -LEASE SALE 36 (May 26, 1982) TABLE 7
Mtt*
Tract # No. of Bids Bidder %ownership Bid amount Bid/Acre 20% deposit
[
3 108,250.00 28.24 21,650.00 Shell Oil Company 80%
Murphy Of I Company 20%
Chevron u.S.A. 100% 104,555.00 27.28 20,911.00
Ke I I ey Everette 5% 26,831.00 7.00 5,500.00
c. Burg lin 15%
K. K. Everette 20%
M. Webber 10%
K. Scollan 10%
T. Tethal 10%
B. Burgi in 20%
F. McGu II uary 10%
002 2 Texaco Inc. 100% 3,750,670.94 672.15 750,134.19
Kelley Everette 5% 39,067-00 8,000.00
c. Burg I in 15%
K. K. Everette 20%
F. McGullvary 10%
M. Webber 10%
K. Scol I an 10%
T. Tethal 10%
B. Burgi In 20%
003 Ke I ley Everette 5% 30,163.00 6,500.00
c. Burgi In 25%
K. K. Everette 20%
c. Slaybaugh 10%
B. Tollefson 10%
B. Burgi! n 30%
004 2 Getty Of I Company 100% I, 153,000.00 202.52 230,600.00
Kelley Everette 5% 39,858.00 7.00 8,000.00
c. Burg I in 15%
K. K. Everette 20%
J. Johnson 10%
z. Gatti 10%
B. Burg I in 40%
L
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-78-
f
[-:
LIST OF BIDS -LEASE SALE 36 (May 26, 1982) TABLE 7
Tract # No. of Bids Bidder % ownership Bid amount Bid/Acre 20% deposit
005 3 Getty orr Company 100% 345,000.00 6).56 69,000.00
She II Oi I Company 80% 72,852.00 12.99 14,570.40
Murphy 01 I Company 20%
Ke I ley Everette 5% 61,655.00 11.00 12,500.00
c. Burgi in 25%
K. K· Everette 20%
E. B. Ponack iO%
B. Tollefson 10%
B. Burg I In 30%
006 2 J. A. Bachner 40% 81,113.13 15.625 :6,222.03
J. F. Dieringer Jr. 20%
R. E. Wagner 40%
Kelley Everette 5% 57,123.00 11.00 12,000.00
c. Burg I In 15%
K. K. Everette 20%
J. Johnson 10%
B. Tollefson 10%
B. Burgi in 40%
007 Ke I I ey Everette 5% 61,325.00 1 1.oo 12,500.00
c. Burg I In 15%
K. K. Everette 20%
F. McGu i I vary 10%
z. Gaff I 10%
B. Tollefson !0%
B. Burg I in 30%
008 Kelley Everette 5% 39,858.00 7.00 B,ooo.oo
c. Burglin 15%
K. K. Everette 20%
E. B. Ponack 10%
B. Tollefson 10%
B. Burg I In 40%
-79-
'-i
i
•L•I•S•T•O•F.aBai•D•S•---L•E•AS•E--S•A•L•Em3.6_.(•M•ay._2•6•,--19•8•2•) .......................... T•'A•B•L•E--7._ .. _.~.1 8
Tract# No. of Bids Bidder %ownership Bid amount Bid/Acre 20% deposit
009 6
010 4
Exxon Corp.
Sohio Alaska Pet. Co.
B.P. Alaska Exploration Inc•
She I I 01 I Company
Amoco Prod. Co.
Mob! I 01 I Corp.
Chevron U.S.A. Inc•
Kelley Everette
c. Burg I In
K. K. Everette
M. Webber
K. Scollan
B. Burg I In
J. A. Bachner
J. F. Dierl nger Jr.
R. E. Wagner
Phi II Ips Pet. Co.
Mob! I 01 I Corp.
Exxon Corp •
Sohio Alaska Pet. Co.
B.P. Alaska Exploration Inc.
She I I 01 I Company
Ke I ley Everette
c. Burg I In
K. K. Everette
M. Webber
B. Tollefson
B. Burg I in
-80-
50%
33.5%
16.5%
100%
100%
50%
50%
5%
15%
20%
10%
10%
40%
40%
20%
40%
50%
50%
50%
33.5%
16.5%
100%
5%
15%
20%
10%
10%
40%
4,224,852.00 990.84 844,970.40
1,037,000.00 243.20 207,400.00
302,310.00 70.90 60,462.00
238,525.00 55.95 47,705.00
89,544.00 21.00 18,000.00
64,086.12 15.03 12,817.22
4, 109,750.00 2,140.50 821,950.00
3,520,710.00 1,833.70 704,142.00
2,583,000.00 1,345.31 516,600.00
21,120.00 11.00 4,500.00
L
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L
LIST OF BIDS -LEASE SALE 36 (May 26, 1982) TABLE 7
Tract # No. of Bids Bidder
011 6
012 5
Sohlo Alaska Pet. Co.
B.P. Alaska Exploration Inc.
Phi I I ips Pet. Co.
fl.bbil Oil Corp.
Chevron u.S.A.
Gu If 011 Corp.
Ke II ey Everette
c. Burg II n
K. K. Everette
T. Tetha I
M. Webber
B. Burglln
Gulf Oil Corp.
Sohlo Alaska Pet. Co.
Phillips Pet. Co.
fl.bbi I Oil Corp.
Chevron u.S.A.
J. A. Bachner
J. F. Dleri nger Jr.
R. E. Wagner
Kelley Everette
c. Burgi in
K. K. Everette
F. McGu i I vary
c. Slaybaugh
B. Tollefson
B. Burg lin
%ownership Bid amount Bid/Acre 20% deposit
86.66662% 15,355,000.00 6,397.916667 3,071,000.00
33.33334% 13,333,250.00 5,555.52
33.33333%
33.33333%
100%
5%
15%
20%
10%
10%
40%
100%
1,027,416.77 428.09
28,800.00 12.00
2,570,026.80 745.80
2,666,650-~!i)
6,000.0(1
514,005.36
100% 2,115,000.00 613.755078 423,000.00
-81-
33.33334%
33.33333%
33.33333%
40%
20%
40%
5%
15%
20%
10%
10%
10%
30%
200,970.00
52, 103.52
4!,352.00
58.32 '40,194.00
15. 12 10,420.70
12.00 8,500.00
r
I
~L·I-STaaOaF.aBaiD_S._-.L·E·A·S•E•S•A·L~E--36_.(•M•ay._2•6•,--19•8•2•)_. .. _. .. _. .. _. .... _. .. _..T•A•B•L•E•7_..__._.~r~. -= I Tract # No. of Bids Bidder %ownership Bid amount Bid/Acre 20% deposit
013 3 Exxon Corp. 50% 754,443.00 224.88 150,888.60
Sohio Alaska Pet. Co. 33.5%
B.P. Alaska Exploration Inc. 16.5%
J. A. Bachner 40% 54,346.78 16.199997 10,869.36
J. F. Di erl nger Jr. 20%
R. E. Wagner 40%
Kelley Everette 5% . 40,260.00 12.00 8,500.00
c. Burglln 15%
K. K. Everette 20%
F. McGullvary 10%
B. To I Jefson JO%
B. Burgi In 40%
L
[ ~
-82-
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I
t
MIDDLE TANANA BASIN PORTION OF SALE 37
STATE OF ALASKA
DEPARTMENT OF NATURAL RESOURCES
DIVISION OF MINERALS AND ENERGY MANAGEMENT
OIL a GAS LEASE SALE 37
MIDDLE TANANA BASIN a COPPER RIVER BASIN
TRACT MAP
THIS MAP IS NOT TO BE CONSTRUED
AS AN OFFICIAL TRACT MAP.
T6S
A SET OF I' 63,360 SCALE TRACT.
MAPS ARE AVAILABLE AT D.M.E.M.,
555 CORDOVA ST. ANCH. AK. PH. 276 2653
SHEET I OF 2
LIST OF BIDS -LEASE SALE 37 (Aug. 24, 1982) TABLE 8
Tract # No• of Bids Bidder % ownership Bid amount Bid/Acre 20% deposl t
005 c. Burg lin 15% 3,456.00 fo 35 1,000.00
K. Everette 5%
K. K. Everette 35%
B. Burg II n 45%
006 c. Burg lin 15% 3,462.75 lo 35 I ,000.00
K. Everette 5%
K. K. Everette 35%
B. Burg II n 45%
007 c. Burgi in 15% 3,457-35 lo 35 1,000.00
K. Everette 5%
K. K. Everette 35%
J. Burg II n 45%
008 c. Burg lin 15% 3,456.00 lo 35 I, 000.00
K. Everette 5%
K. K. Everette 35%
B. Burg I in 45%
014 Tim Brockman 100% 5.00 1.00
042 Tl m Brockman 100% 5.00 1.00
043 c. Burg I in 15% 6,336.00 I• I 0 I, 500.00
K. Everette 5%
K. K. Everette 35%
o. Burgi! n 45%
045 c. Burgi In 15% 7,715.25 lo35 2,000.00
K. Everette 5%
K. K. Everette 35%
B. Burgi in 45%
046 c. Burg I in 15% 6,336.00 i • I 0 1,500.00
K. Everette 5%
K. K. Everette 35%
B. Burg I in 45%
060 Shell Oil Co. 100% 5,820.00 I· 01 1,164.00
065 c. Burg II n 15% 7, 739.55 lo35 2,000.00
Ko Everette 5%
K. K. Everette 35%
o. Burg lin 45%
-84-
f -
LIST OF BIDS -LEASE SALE 37 (Aug. 24' 1982) TABLE 8
!lll
Tract # No. of Bids Bl dder % ownership Bid amount Bid/Acre 20% deposit
066 c. Burg I in 15% 7,763.85 I. 35 2,000.00
K. Everette 5%
K. K· Everette 35%
Mary Gustafson 45%
067 TIm Brockman 100% 5.00 1.00
I-
069 Tl m Brockman 100% 5.00 1.00 [
071 c. Burg I In 15% 7,776.00 r. 35 2,000.00
K. Everette 5%
K. K· Everette 35%
B. Burg II n 45%
095 She II 011 Co. 100% 4,385.00 1.00 877.00
098 Shell 011 Co. 100% 5,820.00 I. 01 I, 164.00
101 She II Oi I Co. 100% 5,700.00 .98 1,140.00
104 Tl m Brockman 100% 5.00 1.00 [ ~
107 She II Oi I Co. 100% 5,720.00 I. 01 1,144.00
108 Shell 011 Co. IOO% 5,740.00 I. 01 I, 148.00 L
110 She II 011 Co. 100% 5,820.00 I .01 I, 164.00
112 Shell Oil Co. 100% 5,740.00 I. 01 I, 148.00
~-
113 2 She II Oi I Co. 100% 5,820.00 I. 01 I, 164.00 r
Tim Brockman 100% 5.00 1.00 t
123 ARCO A I ask a, Inc. 100% 35,424.00 6. 15 7,084.80 r
124 ARCO Alaska, Inc. 100% 35,036.55 6.15 7,007.31
125 ARCO A I ask a, Inc. 100% 35,147.25 6. 15 7,029.45 L
126 ARCO Alaska, Inc. 100% 35,424.00 6.15 7,084.80 r '
127 ARCO A I ask a, Inc. 100% 35,424.00 6. 15 7,084.80 L
128 ARCO Alaska, Inc. 100% 35,036.55 6.15 7,007.31 r L
129 ARCO A I ask a, Inc. 100% 35,147.25 6. 15 7,029.45
130 ARCO Alaska, Inc. 100% 35,424.00 6.15 7,084.80 L
-85-L~
I I
r,
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i
1 ..
I
i L ~
LIST OF
Tract #
132
135
136
137
153
i54
BIDS -LEASE SALE 37 (Aug. 24,
No. of Bids Bidder
ARCO A I aska, Inc.
2 AACO Alaska, Inc.
Tim Brockman
ARCO Alaska, Inc.
ARCO A I ask a, Inc.
ARCO AI ask a, Inc.
ARCO A I ask a, inc.
1982) TABLE 8
% ownership Bid amount Bid/Acre 20% deposit
100% 35,257.95 6ol5 7,051.59
100% 35,424.00 6.15 7,084.80
100% 5.00 1.00
100% 35,257.95 6. 15 7,051.59
100% 35,368.65 6.15. 7,073.73
100% 15,744.00 6.15 3, 148.80
100% 15,744.00 6oi5 3, i48.80
-86-
,_ ~
--'!!!--
/ I ~
I I ,.,_
-""'
32
RI5W RI4W
(SEWARD MERIDIAN)
STATE OF ALASKA
DEPARTMENT OF NATURAL RESOURCES
DIVISION OF MINERALS AND ENERGY MANAGEMENT
COMPETITIVE OIL AND GAS LEASE SALE 37A
CHAKOK RIVER
TRACT MAP
SCALE 1•24,000 1" c 2000'
LEGEND
BASE MAP
U.S G.S. SELDOVIA ID-5) QUADRANGLE
1•63,360 SERIES !TOPOGRAPHIC)
A PORTION OF SELDOVIA I0-5) H.>.S
BEEN PHOTOGRAPHKALLY ENLARGED
TO APPR'JXIMATELY I 24,000 SCAL[
CONTOUR INTERVAL 100 FEET
WATER DEPTH IN FEET
STERLING HIGHWAY • ~-........,......
[ PROPOSED TRACT ]
T3S
T4S
59" 51'
LIST OF BIDS -LEASE SALE 37A (Aus. 24, 1982) TABLE 9
Tract # No. of Bids Bidder %ownership Bid amount Bid/Acre 20% deposit
37A 2 Texaco Inc. 100% 97,479.20 52.00 19,495.84
Tl m Brockman IOO% 500.00 iOO.OO
l-
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l_
-88-
....._:
:!>O' 14~Qoo' >o'
~--~-------------·----~-~--------+ -----TO"IS'
+ +
30 147"00'
LIST OF BIDS -LEASE SALE 34 (Sept. 28, 1982) TABLE 10
Tract II No. of Bl ds Bl dder % ownership Bid amount Bid/Acre 20% deposl t
002 ARCO A l ask a, Inc. 50% 50, !42.40 20.72 10,028.48
Union OJ I Company of California 50%
003 2 ARCO A I aska, Inc. 50% 775,886.80 890.80 155,!77.36
Union Oi I Company of California 50%
John Andrew Bachner 20% !4,423.76 16.56 2,884. 76
James F. Dieringer, Jr. 5%
Ann Bachner 20%
Ke l th Forsgren tO%
Richard E. Wagner 35%
Janet M. Gil I am tO%
004 2 ARCO A I aska, l nc. 50% 750,080.00 146.50 !50,016.00
Union Ol I Company of California 50%
John Andrew Bachner 25% 39,270.40 7.67 7,854.08
Ann Bachner 25%
Richard E. Wagner 50%
005 2 ARCO Alaska, Inc. 50% 3,695,359.80 987.80 739,071.96
Un ton Ol I Company of Ca I ifornia 50%
Murphy Ol l Company tOO% 70, !43.75 18.75 !4,028.75
006 2 ARCO A I ask a, Inc. 50% 2,757,004.80 7!7.97 55!,400.96
Union OJ l Company of California 50%
Murphy Oi l Company 100% 2!, 312.00 5.55 4,262.40
007 2 John Andrew Bachner 25% 44, 179.20 7.67 8,835.84
Ann Bachner 25%
Richard E. Wagner 50%
Charles Weller tOO% 6, l 05.60 1.06 I, 222.00
r"
l_ 008 5 ARCO At ask a, Inc. 50% 935, 152.50 !67.50 187,030.50
Union Oi I Company of Ca It for n I a 50%
r -
l_
B.P. Alaska Exploration Inc. tOO% 845,205.00 !51.39 169,041.00
Murphy 01 I Company 100% 110,264.25 19.75 22,052.85
r-
i Shell Oil Company 50% L 23,000.00 4.1 I 4,600.00
Amoco Production Company 50%
l-Charles Weller 100% 5, 917.98 1.06 I, 184.00
[
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L1 ST OF .BIDS -LEASE SALE 34 (Sept. 28, 1982) TABLE 10
Ill
Tract t1 No. of Bids Bidder % ownership BId amount Bid/Acre 20% deposit
009 5 ~0 Alaska, Inc. 50% 3,250,377.90 579.70 650,075.58
Union Oil Company of California 50%
B.P. Alaska Exploration Inc. 100% 344,080.00 61.37 68,816.00 l
Murphy 01 I Company 100% 192,600.45 34.35 38,520.09
Shell 01 I Company 50% 51,000.00 9.09 10,200•00
Amoco Production Company 50%
Charles Weller 100% 5,943.42 1.06 I, 189.00
010 4 ARCO A I ask a, Inc. 50% 5,127,033.60 890.11 I , 025, 406. 72
Union 011 Company of California 50%
Murphy 01 I Company 100% 197,856.00 34.35 39,571.20
She II Oil Company 50% 31 ,ooo.oo 4.1 I 6,200.00
Amoco Production Company 50%
Ch..-les Weller 100% 6, 105.60 lo06 I, 222.00 [ ~
011 6 B.P. Alaska Exploration Inc. 100% 1,050, 710.00 182.41 210,142.00
AACO Alaska, Inc. 50% 212,025.60 36.81 42,405.12
Union 01 I Company of Cal ifornla 50%
Mwrphy Oil Compeny 100% 113,760.00 19.75 22,752.00 [ ~
Shell Oi I Company 50% 61,000.00 10.59 12,200.00
. lwtoco Product I on COIIpa ny 50%
John Andrew Bachner 25% 44,179.20 7.67 8,835.84
Ann Bachner 25%
Richard E. Wagner 50%
Chilrl$s Weller 100% 6, 105.60 1.06 I ,222.00 l
012 3 ARCO A Iaska, Inc. 50% 45,222.30 8.1o 9,044.46
Union 01 I Company of california 50% ~-
Shell Oil Company 50% 31, ooo.oo 5.55 6,200.00
AMoco Production Company 50%
Charles W.ller 100% 5,917.98 1.06 I, 184.00 l '
!
[.
-91-
LIST OF BIDS -LEASE SALE 34 (Sept. 28, 1982) TABLE 10
Tract II No. of Bids Bidder % ownership Bid amount Bid/Acre 20% deposit
013 2 Ke I I ey Everette 5% 6,448.05 I· 15 1,500.00
c. Burgi in 15%
Kelley Key Everette by c. Burg I in
P of A 20%
John J. Sexton by c. Burglln
P of A 20%
Bruce Burg I I n by c. Burglln
P of A 30%
r-
Charles Weller 100% I 5,943.42 1.06 I, 189.00 I
014 4 ARCO A I ask a, Inc:. 50% 501,120.00 87.00 100,224.00
Union 01 I Company of California 50%
I-
Shell 01 I Company 50% 23,000.00 3.99 4,600.00
I -Amoco Production Company 50%
l_
5% Ke II ey Everette 6,624.00 I· 15 1,500.00
~-c. Burg I In 15%
Kelley Key Everette by c. Burg I In
P of A 20%
John J. Sexton by c. Burglln
L P of A 20%
Bruce Burg I I n by c. Burg II n
P of A 30%
L Charles Weller 100% 6, 105.60 1.06 1,222.00
015 4 ARCO A I ask a, Inc. 50% 212,025.60 65.44 42,405.12
L Union 01 I Company of California 50%
Murphy 01 I Company 100% 111,294.00 34.35 22,258.80
r~ John Andrew Bachner 20% 16,459.00 5.08 3,291.84
James F. Dieringer, Jr. 5%
Ann Bachner 20%
L Keith Forsgren 10%
Richard E. Wagner 35%
Janet M. Gi I lam 10%
L Kelley Everette 5% 3,726.00 1. i 5 1,000.00
c. Burgi In 25%
Loi6
James Burglin CPOA> 70%
3 ARCO A I ask a, inc. 50% 227,310.60 60.60 45,462.12
Union 01 I Company of California 50%
L Murphy 01 I Company 100% 130,722.35 34.85 26, 144.47
L Kelley Everette 5% 4,313.65 1. I 5 1,000.00
c. Burgi In 25%
Bruce Burglin by
c. Burgi in P of A -92-70%
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LIST OF BIDS -LEASE SALE 34 (Sept. 28, 1982) TABLE 10
Ill
Tract II No. of Bids Bidder % ownership Bid amount Bid/Acre 20% deposit
r-
017 4 Dyko Petroleum Corporation 100% 793,920.00 320.00 158,784.00
Murphy 01 I Company 100% 15,431.82 6.22 3,086.37
John Andrew Bachner 20% 12,603.48 5.08 2,500.70
r~
• James F. Dieringer, Jr. 5%
Ann Bachner 20% r. Keith Forsgren 10%
Richard E. Wagner 35% L
Janet M. Gill am 10%
f.
Ke I ley Everette 5% 2,853.15 ). 15 I, 000.00 I
c. Burgi in 25%
Brl an Burg I in <POAl 70%
018 4 Dyko Petroleum Corporation 100% 207,360.00 80.00 41,472.00
Murphy Oi I Company 100% 48,600.00 18.75 9, 720.00 [ ~
John Andrew Bachner 20% 13, 167.36 5.08 2,633.48
James F. Dieringer, Jr. 5%
Ann Bachner 20%
Ke lth Forsgren 10%
l:__;.
Richard E. Wagner 35% [ . Janet M. Gillam 10%
Kelley Everette 5% 2,980.80 ). 15 I ,000.00
c. Burg I In 25% ! .
David Burg.! In/by 70% l c. Burgi in POA
019 4 Dyko Petroleum Corporation 100% 306,240.00 8o.oo 61,248.00 r-.
Exxon Corporation 100% 22,000.00 5.74 4,400.00
f
John Andrew Bachner 20% 19,446.24 5.08 3,889.25 I
James F. Dieringer, Jr. 5%
Ann Bachner 20% L Keith Forsgren 10%
Richard E. Wagner 35%
Janet M. Gi II am 10%
Ke I ley Everette 5% 4,402.20 ). 15 I, 000.00
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c. Burgi in 95%
020 3 Dyko Petro I eum Corporatl on 100% 172,800.00 30.00 34,560.00 L
Murphy Oi I Company 100% 35,827.20 6.22 7, 165.44 [.
Charles Weller 100% 6,105.60 ).06 I, 222.00
-93-L
l
LIST OF BIDS -LEASE SALE 34 (Sept. 28, 1982) TABLE 10
Tract II No. of Bl ds Bidder % ownership Bid amount Bid/Acre 20% deposit
021 2 Dyko Petroleum Corporation 100% 168,900.00 30.00 33,780.00
Charles Weller 100% 5,967.80 1-06 I, 194.00
022 2 Exxon Corporation 100% 142,000.00 25.1 I 28,400.00
John Andrew Bachner 20% 28,722.32 5.08 5, 744.4 7
James F. Dieringer, Jr. 5%
Ann Bachner 20%
Ke lth Forsgren 10%
Richard E. Wagner 35%
Janet M. Gi I lam 10%
~ 023 4 Dyko Petroleum Corporation 100% 172,800.00 30.00 34,560.00
Exxon Corporation 100% 145,000.00 25.:7 29,000.00
John Andrew Bachner 20% 29,260.80 5.08 5,852. 16
James F. Dieringer, Jr. 5%
Ann Bachner 20%
Keith Forsgren 10%
Richard E. Wagner 35%
Janet M. Gi II am 10%
Charles Weller 100% 6, 105.60 lo06 I, 222.00
026 2 John Andrew Bachner 20% 28, 722o32 5o08 5,744.47
James F. Dieringer, Jr. 5%
Ann Bachner 20%
Keith Forsgren 10%
Richard E. Wagner 35%
Janet M. Gill am 10%
She II 011 Company 50% 10,500.00 1.85 2,100.00
Amoco Production Company 50%
027 John Andrew Bachner 20% 29,260.80 5.08 5,852.16
James F. Dieringer, Jr. 5%
Ann Bachner 20% ,-Keith Forsgren 10% i
Richard E. Wagner 35%
Janet M. Gill am 10%
~-
L_.,
I.
I
L ,
I.
I
L
-94-
r-
\ L~
f '
LIST OF BIDS -LEASE SALE 34 (Sept. 28, 1982) TABLE 10 r-=s
Tract # No. of Bids Bidder % ownership Bid amount Bid/Acre 20% deposit
028 4 Dyko Petroleum Corporation 100% 264,640.00 80.00 52,928.00
Exxon Corporation 100% 24,000.00 7.25 4,800.00
John Andrew Bachner 20% 16,804.64 5.08 3,360.93
['
' James F. Dieringer, Jr. 5%
Ann Bachner 20%
Keith Forsgren 10%
Richard E. Wagner 35%
Janet M. Gill am 10%
Charles Weller 100% 3,506.48 lo 06 702.00 l
029 3 Exxon Corporation 100% 208,000.00 50.15 41,600.00
John Andrew Bachner 20% 21,066.76 5.08 4,213.36
James F. Dieringer, Jr. 5%
Ann Bachner 20% I ~ Kel th Forsgren 10%
Richard E. Wagner 35%
Janet M. Gi II am 10% L
Charles Weller 100% 4,395.82 lo06 880.00
030 3 Exxon Corporation 100% 289,000.00 50.17 57,800.00 L
John Andrew Bachner 20% 29,260.80 5.08 5,852.16
James F. Dieringer, Jr. 5% ~ ~ Ann Bachner 20%
Kel th Forsgren 10%
Richard E. Wagner 35% L Janet M. Gill am 10%
Charles Weller 100% 6,105.60 1.06 1,222.00
0~1 2 Exxon Corporation 100% 51, ooo.oo 8.98 10,200.00
John Andrew Bachner 20% 28,839.16 5.08 5, 767.84 L James F. Di erl nger, Jr. 5%
Ann Bachner 20%
Keith Forsgren 10% L Richard E. Wagner 35%
Janet M. Gill am 10%
032 Exxon Corporation 100% 143,500.00 25.17 28,700.00 ,-
L
-95-L_
[ __
=' 34 (Sept. 28, 1982) TABLE 10 LIST OF BIDS -LEASE SALE
--Tract II No. of Bl ds Bidder % ownership Bid amount Bid/Acre 20% deposit
033 3 Exxon Corporation 100% 289,000.00 50.17 57,800.00
John Andrew Bachner 20% 29,260.80 5.08 5,852.16
James F. Dieringer, Jr. 5%
Ann Bachner 20%
Keith Fqrsgren 10%
Richard E. Wagner 35%
Janet M. Gi I lam 10%
ARCO Alaska Inc. 50% 12,556.80 2. 18 2,511.S6
Union Oi I Company of California 50%
034 2 John Andrew Bachner 20% 29,260.80 5.08 5,852. 16
James F. Dieringer, Jr. 5%
Ann Bachner 20%
Keith Forsgren 10%
Richard E. Wagner 35%
Janet M. Gi I lam 10%
Shell Oil Company 50% 10,500.00 1.82 2, 100.00
Amoco Production Company 50%
--035 2 She I I 01 I Company 50% 204,000.00 35.93 ·40,800.00
Amoco Production Company 50%
John Andrew Bachner 20% 28,839.16 5.08 5, 767.84
James F. Dieringer, Jr. 5%
Ann Bachner 20%
Ke lth Forsgren 10%
Richard E. Wagner 35%
Janet M. Gi I lam 10%
f-036 2 She I I 01 I Company 50% 352,000.00 61.74 70,400.00
Amoco Production Company 50%
Exxon Corporation 100% 36,000.00 6. 31 7,200.00
'. 037 2 She II Oil Company 50% 102,000.00 17.70 20,400.00
Amoco Production Company 50%
I -
I. Exxon Corporation 100% 36,000.00 6.25 7,200.00
038 2 Chevron u.s.A. Inc. 100% 53,012.00 10.63 10,602.40
r·
l_. ARCO Alaska Inc. 50% 37,901.20 7-60 7,580.24
Union 01 I Company of Call fornl a 50%
I-
l_ 040 2 Exxon Corporation 100% 41' ooo.oo 7. II 8,200.00
'-ARCO Alaska Inc. 50% 25_,056.00 4.35 5,011.20
I u'n ion 01 I Company I of California 50% l ~
l ,
,--
LIST OF BIDS -LEASE SALE 34 (Sept. 28, 1 9"82) TABLE 10
Tract II No. of Bids Bidder % ownership Bid amount Bid/Acre 20% deposl t
041 Exxon Corporation · 100% 41, ooo.oo 7ol6 8,200.00 1-
044 :2 Exxon Corporation 100% 289,000.00 50.17 57,800.00
She II 01 I Company 50% 102,000.00 17.70 20,400.00
[ -
Amoco Production Company 50%
045 3 Exxon Corporation 100% 144,000.00 25.15 28,800.00 [
i
She I I Oi I Company 50% 102,000.00 17.81 20,400.00
Amoco Production Company 50%
Kelley Everette 5% 6,583.75 lo 15 1,500.00
c. Burg I In 15%
Kelley Key Everette CPOA> 30%
John J. Sexton (POA) 20%
Bruce Burglln CPOA> 30%
[ ~ 046 Ke II ey Everette 5% 6,610-20 lol5 1,500.00
c. Burg II n 15%
Kelley Key Everette [ by C. Burgi ln<POA> 30%
John J. Sexton CPOA)
by C. BurglinCPOA> 20% ,-Bruce Burglln CPOA)
by C. Burg I In CPOA> 30% l_
047 Exxon Corporation 100% 145,000.00 25.17 29,00Q.OO [ ~
048 Char I es We I I er 100% 2,713.60 lo06 543.00
049 Char I es We II er 100% 5,298.94 lo06 I, 060.00 L
050 Char I es We I I er 100% 5,310.60 lo 06 1,063.00
05.1 Charles Weller 100% 2, 713.60 1.06 543.00 l_
054 3 John Andrew Bachner 20% 22,406.40 3-89 4,481.28 l. James F. Dieringer, Jr. 5%
Ann Bachner 20%
Keith Forsgren 10% [-Richard E. Wagner 35%
Janet M. Gl I I am 10%
Ke I I ey Everette 5% 6,624.00 lo 15 I I 500.00 l-c. Burg II n 25%
Mary Gustafson 70%
Charles Weller 100% 6, 105.60 lo06 I I 222.00 L
-97-L
l_
'
LIST OF BIDS LEASE SALE 34 (Sept. 28, 1982) TABLE 10 -
~ Tract II No. of Bids Bidder % ownership Bid amount Bid/Acre 20% deposit
055 3 John Andrew Bachner 20% 21, 717o87 3o89 4,343.58
James F. Dieringer, Jr. 5%
Ann Bachner 20%
Ke l th Forsgren 10%
Richard E. Wagner 35%
Janet M. Gi I I am 10%
Kelley Everette 5% 6,420.45 I. 15 !,500.00
c. Burgi in 15%
Kef ley Key Everette/by
C. Burg! in (POAJ 30%
John J. Sexton/by
c. Burg I l n <POAJ 20%
David Burgi! n/by
c. Burg I in, (POAJ 30%
Charles Wei fer 100% 5, 917.98 lo06 I, 184.00
056 2 John Andrew Bachner 50% 14,466.06 2.58 2,893.21
Richard E. Wagner 50%
Ke I 1. ey Everette 5% 6,448.05 '· 15 I, 500.00
c. Burglln 15%
Kelley Key Everette/by
C. Burgi in (POAJ 30%
John J. Sexton/by
C. Burg II n <POAJ 20%
Mary Gustafson/by
c. Burg I l n, <POAJ 30%
057 2 John Andrew Bachner 50% 14,860.80 2.58 2,972.!6
Richard E.·wagner 50%
r -
Kelley Everette 5% 6,624.00 '· 15 I, 500.00
I ~ c. Burg lin !5%
Kel ley Key Everette/by
I -C. Burgi in <POAJ 30% !
I John J. Sexton/by I"
C. Burg I l.n (POAJ 20%
r-Barbara Burglin/by
L~ c. Burg lin, (POAJ 30%
060 John Andrew Bachner 20% 7,180.58 (.27 1,436.12 r James F. Dieringer, Jr. 5% l, Ann Bachner 20%
Keith Forsgren 10%
[_ ~ Richard E. Wagner 35%
Janet M. Gill am 10%
L~
-98-
L
r~
LIST OF BIDS -LEASE SALE 34 (Sept. 28, 1982) TABLE 10 ,-.
Tract II No. of Bids Bidder % ownership Bid amount Bid/Acre 20% deposit
[ '
061 2 John Andrew Bachner 20% 29,260.80 5.08 5,852-16 I_
James F. Dieringer, Jr. 5%
Ann Bachner 20%
Keith Forsgren 10% r '
Richard E. Wagner 35%
Janet M. Gill am 10%
She II 011 Company 50% 10,500.00 lo82 2,100.00 r Amoco Production Company 50%
062 John Andrew Bachner 20% 4,876.80 1.27 975.36
James F. Dieringer, Jr. 5%
Ann Bachner 20%
Keith Forsgren 10% L Richard E. Wagner 35%
Janet M. Gill am 10%
Ke I I ey Everette 5% 4,416.00 lo 15 1,ooo.oo L c. Burglin 15%
Kelley Key Everette/by
c. Burgi In <POAJ 30% L John J. Sexton/by
C. Burg I In (POAl 20%
Joseph Burglln/by r-c. Burg I In, <POAl 30% L
063 2 John Andrew Bachner 20% 4, 763.77 lo27 952.76
James F. Dieringer, Jr. 5% r·
Ann Bachner 20% !_
Keith Forsgren 10%
Richard E. Wagner 35% L Janet M. Gi I lam 10%
Kelley Everette 5% 4,313.65 lo 15 I ,000.00 r ' c. Burg I In 15%
Kelley Key Everette/by I-
C. Burg I In <POAl 30%
John J. Sexton/by L C. Burg I In (POAl 20%
James Burglin/by
c. Burg I In, <POAl 30%
L
L
L
-99-[-
l
LIST OF BIDS -LEASE SALE 34 (Sept. 28, 1982) TABLE 10
Tract II No. of Bids Bidder % ownership Bid amount Bid/Acre 20% deposit
064 2 John Andrew Bachner 20% 4, 776.47 I .27 955.30
James F. Dieringer, Jr. 5%
Ann Bachner 20%
Keith Forsgren 10%
Richard E. Wagner 35%
Janet M. Gi I I am 10%
Ke I I ey Everette 5% 4,325.15 I· 15 1,ooo.oo
c. Burglin 15%
Kelley Key Everette/by
C. Burgi in CPOA) 30%
John J. Sexton/by
C. Burgi in CPOA> 20%
Bruce Burg I I n/by
c. Burg I in, CPOA> 30%
065 2 John Andrew Bachner 20% 4,876.80 1.27 975.36
James F. Dieringer, Jr. 5%
Ann Bachner 20%
[_. Keith Forsgren 10%
Richard E. Wagner 35%
Janet M. Gi II am 10%
[ Ke I I ey Everette 5% 4,416.00 I• 15 I ,000.00
c. Burg I in 15%
t -
Kelley Key Everette/by
c. Burgi in CPOA> 30%
John J. Sexton/by
c. Burg I in CPOA> 20% ,-Brian Burgi In/by
c. Burg I In, CPOA> 30%
L066 John Andrew Bachner 20% 4,876.80 lo27 975.36
James F. Dieringer, Jr. 5%
Ann Bachner 20%
Keith Forsgren 10%
L Richard E. Wagner 35%
Janet M. G i II am 10%
r ~067 John Andrew Bachner 20% 4,790.44 1.27 958.09
James F. Dieringer, Jr. 5%
Ann Bachner 20%
L
Keith Forsgren 10%
Richard E. Wagner 35%
Janet M. Gi II am 10%
L068 She I I Oi I Company 50% 21,000.00 8.20 4,200.00
Amoco Production Company 50%
L070 Shell Oi I Company 50% 16,000.00 3.15 3,200.00
Amoco Production Company 50%
-100-
L
,-
,LIST OF BIDS -LEASE SALE 34 (Sept. 28, 1982) TABLE 10 r~-Tract II No. of Bf ds Bidder % ownership Bid amount Bid/Acre 20% deposit
071 She II Oil Company 50% 226,000.00 88.28 45,200.00 [-
Amoco Production Company 50% l
072 She II Oi I Company 50% 154,000.00 60.15 30,800.00
Amoco Production Company 50%
073 She II 01 I Company 50% 31' ooo. 00 6.09 6,200.00
Amoco Production Company 50%
074 John Andrew Bachner 20% 7,315.20 1.27 I, 463.04
James F. Dieringer, Jr. 5%
Ann Bachner 20%
Keith Forsgren 10%
Richard E. Wagner 35%
Janet M. Gill am 10%
075 John Andrew Bachner 20% 7,209.79 I• 27 I, 441.96
James F. Dieringer, Jr. 5% L Ann Bachner 20%
Keith Forsgren 10%
Richard E. Wagner 35% ,-
Janet M. Gill am 10% L
076 2 John Andrew Bachner 20% 7,240.27 I· 27 1,448.06
James F. Dieringer, Jr. 5% [-
Ann Bachner 20%
KeIth Forsgren 10%
Richard E. Wagner 35% ! -Janet M. Gi I I am 10%
Ke I I ey Everette 5% 6,556-15 lo 15 I, 500.00
c. Burg II n 15% L Arlin Hogenson/by
C. Burg I 1 n (POAl 30%
Dean Morrison/by
C. Burg I In <POA) 30%
Mary Gustafson 20%
077 John Andrew Bachner 20% 7,315.20 1-27 I, 463.04
James F. Dieringer, Jr. 5%
Ann Bachner 20%
Keith Forsgren 10%
[ ~ Richard E. Wagner 35%
Janet M. Gil I am 10%
L 078 She II Oi I Company 50% 127, ooo.oo 33.07 25,400.00
Amoco Production Company 50%
r
-101-L
l
LIST OF BIDS -LEASE SALE 34 (Sept. 28, 1982) TABLE . 10
Tract # No. of Bids Bidder % ownership Bid amount Bid/Acre 20% deposit
084 Ke I I ey Everette 5% 6,624.00 1. I 5 I, 500.00
c. Burgi In 15%
Arlin Hogenson/by
C. Burg I In CPOA> 30%
Dean Morrison/by
C. Burgi in <POA> 30%
Barbara Burglin/by
c. Burgi in <POA> 20%
085 Kelley Everette 5% 6,583.75 I. 15 I, 500.00
c. Burg I in 15%
Donna Malone/by
c. Burgi in (POA> 30%
Dean Morrison/by
C. Burg I In <POA> 30%
Joseph Burglin/by
C. Burg I In <POA> 20%
087 Kelley Everette 5% 6,624.00 I· 15 1,500.00
c. Burg I in 15%
Donna Malone/by
c. Burglln <POA> 30%
Dean Morrison/by
c. Burglin (POA> 30%
James Burglin/by
C. Burg I in (POA> 20%
109 2 Kelley Everette 5% 5,080.70 I· 15 1,500.00
c. Burg I in 15%
John Hagberg/by
C. Burg I In CPOA> 30%
Alan Johnston/by
c. Burgi in (POA> 30%
Mary Gustafson 20%
Charles Weller 100% 4,683.08 1.06 937.00
112 Charles Weller 100% 5,945.54 lo06 I, 190.00
I 13 Charles Weller 100% 6,105.60 1·06 I, 222.00
117 Charles Weller 100% 6, 105.60 1.06 I, 222.00
118 Ke I I ey Everette 5% 5,080.70 I· 15 I, 500.00
c. Burgi In 15%
John Hagberg/by
C. Burg I in (POA> 30%
Alan Johnston/by
c. Burg I in (POA> 30%
Bruce Burg I In
by c. Burg I In 20%
L~
I. -102-
t
I
l ~
LIST OF BIDS -LEASE SALE 34 (Sept. 28, 1982) TABLE 10 L
C#AA1 ...
i r Tract II No. of Bids Bl dder % ownership Bl d amount Bid/Acre 20% deposl t
119 Ke I I ey Everette 5% 6,425.05 lo 15 I, 500.00 t ~ c. Burgi In 15%
Kelley Key Everette/by
c. Burglln (POA> 30%
Angela D. Ryan/by I C. Burgi in <POA> 20%
Brian Burglln
by c. Burg I In 30% !
120 2 ARCO AI ask a, Inc. 50% 11,218.00 2.00 2,243.60
Union Oi I Company of Ca llfornl a 50%
l Ke I I ey Everette 5% 6,450.35 I· 15 I ,500.00
c. Burglln 15%
Kelley Key Everette/by
c. Burgi In (POA> 30%
Angela D. Ryan/by
C. Burgi In <POA> 20% L David Burglln
by c. Burg I In 30%
121 2 ARCO Alaska, Inc. 50% 11,001.60 I· 91 2,200.32 L Union Oil Company of Ca llfornl a 50%
Kelley Everette 5% 6,624.00 lo 15 1,500.00 r -c. Burg I In 15%
Kelley Key Everette/by
C. Burg I In <POA> 30%
Angela D. Ryan/by I ~ c. Burg lin (POA> 20%
Barbara Burg II n
by c. Burg I in 30% L
J22 2 Ke II ey Everette 5% 2,673.75 lol5 1,000.00
c. Burg I In 25%
L Barbara Burglin/by
c. Burg II n 70%
Charles Weller 100% 2,464.50 r.o6 493.00 L
123 2 Ke I ley Everette 5% 2,884.20 1·15 1,000.00
c. Burg II n 25% L Barbara Burglin/by
c. Burg lin 70%
Charles Weller 100% 2,658.48 r.o6 532.00 L
.124 Charles Weller 100% 4,070.40 1.06 815.00
L
-103-L
l~
LIST OF BIDS -LEASE SALE 34 (Sept. 28, 1982)
' Tract # No. of Bids BJ dder
125
126 2
127
128
129 2
130
132
168
169
173
Chari es Weller
Kef ley Everette
c. Burg lin
Kelley Key Everette/by
C. Burgi In (POA>
John J. Sexton/by
c. Burgi in <POAl
David Burglln
by c. Burg lin
Charles Weller
Ke I ley Everette
c. Burgi in
Kef ley Key Everette/by
C. Burg I in (POAl
Davl d Burg II n
by c. Burglin
Charles We II er
Ke II ey Everette
c. Burg I in
Kelley Key Everette/by
c. Burgi In CPOA>
John J. Sexton/by
C. Burg I in <POAl
David Burglln
by c. Burg I In
Charles Weiler
Ke I I ey Everette
c. Burglln
Kelley Key Everette/by
c. Burgi In <POA>
John J. Sexton/by
c. Burgi in <POAl
Mary Gustafson
Char I es Weller
Charles Weller
Charles Weller
ARCO Alaska, Inc.
Union Oi I Company of California
-104-
TABLE 10
%ownership Bid amount Bid/Acre 20% deposit
100%
5%
15%
30%
20%
30%
100%
5%
15%
30%
50%
100%
5%
15%
30%
20%
30%
100%
5%
15%
30%
20%
30%
100%
100%
100%
50%
50%
3,331.58 lo06 667.00
4,416.00 '· 15 1,000.00
4,070.40 1.06 815.00
4,416.00 lo 15 I, 000.00
3,998.32 lo06 soo.oo
5,152.00 I• 15 I, 000.00
4, 748.80 1.06 950.00
6,477.95 I· 15 I, 500.00
6,105o60 lo06 I, 222.00
6,068.50 1.06 I, 214.00
1,219.00
375,066.00 100.50 75, 013.20
LIST OF BIDS -LEASE SALE 34 (Sept. 28, 1982)
Tract # No• of Bids Bidder
174
175
176
179
180
187
190
191
192
196
198
199
ARCO Alaska, Inc•
Union 01 I Company of California
ARCO Alaska, Inc•
Union 01 I Company of California
ARCO Alaska, Inc•
Union 01 I Company of California
ARCO A I ask a, Inc •
Union 01 I Company of California
ARCO A I ask a, Inc •
Union 01 I Company of California
ARCO Alaska, Inc•
Union 01 I Company of California
ARCO Alaska, Inc•
Union 01 I Company of California
ARCO Alaska, Inc.
Union Oi I Company of California
ARCO Alaska, Inc•
Union Oi I Company of California
Ke II ey Everette
c. Burgi In
Kelley Key Everette/by
C. Burg I In (fOAl
John J. Sexton/by
C. Burgi In (fOAl
Mary Gustafson
Ke I I ey Everette
c. Burg I in
Zell a Gaff i by/
c. Burgi In (fOAl
Mike Everette by/
C. Burgi In (fOAl
Barbara Burglln by/
C. Burgi in (fOAl
Ke I I ey Everette
c. Burg I in
Zell a Gaff i by/
c •. Burg I In CfOAl
Mike Everette by/
C. Burgi In (fOAl
Joseph Burglin by/
C. Burgi in (fOAl
% ownership
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
5%
15%
30%
20%
30%
5%
15%
30%
30%
20%
5%
15%
30%
30%
20%
r-
TABLE 10
Bid amount Bid/Acre 20% depo::-1-llll
375,014.40 97.66 75,002.88
250,022.40 65.1 I 50,004.48
4 75,046.90 126.95 95,009.38
11,218.00 2,243.60
1 1, 001.60 I• 91 2,200.32
7,650.60 I, 530.12
·7,671.10 I, 534.22 L
45,043.20 7-82 9,008.64
45,064.00 8o00 9,012.80
4, 315.95 I. 15 I, ooo.oo
4,416.00 I • 15 I ,000.00 f ·~
L
4,416.00 I· 15 1,000.00
L
LIST OF BIDS -LEASE SALE 34 (Sept. 28, 1982) TABLE 10
-Tract # No. of Bids Bidder % ownership Bid amount Bid/Acre 20% deposl t
. 201 Ke II ey Everette 5% 6,624.00 I· 15 1,500.00
c. Burg II n 15%
Ladessa Nordale by/
c. Burgi in <POA) 30%
Mike Everette by/
C. Burgi In (POA) 30%
James Burg I I n by/
c. Burg lin (POA) 20%
203 Kelley Everette 5% 6,503.25 I· 15 I, 500.00
c. Burg I in 15%
Ke I I ey Key Everette by/
C. Burgi In (POA) 30%
Angela o. Ryan by/
C. Burg I In (PQA) 20%
Joseph Burglln by/
c. Burgi In <POA) 30%
209 Kelley Everette 5% 4,416.00 I· 15 I, 000.00
c. Burg lin 15%
Ke I I ey Key Everette by I
c. Burg I in (PQA) 30%
Bruce Burg II n by/
c. Burg lin (POA> 50%
213 Char I es Weller 6,044.12 1.06 1,209.00
~ 214 Charles Weller 6,105.60 lo06 1,222.00
'217 Kelley Everette 5% 6,557.30 1-15 I, 500.00
c. Burg I in 15%
Ke I I ey Key Everette by/
C. Burg II n <POA> 30%
John J. Sexton by/
c. Burglln <POA> 20%
Barbara Burglln by/
c. Burgi In <POA> 30%
219 Kelley Everette 5% 6,624.00 I· i 5 I ,500.00
c. Burg lin 15%
Kelley Key Everette by/
C. Burgi In <POA) 30%
John J. Sexton by/
C. Burg I In (POA> 20%
Joseph Burglln by/
c. Burgi In (POA> 30%
-106-
I :
LIST OF BIDS -LEASE SALE 34 (Se~t. 28. 1982) TABLE 10 -ei'm
Tract II No. of Bids Bidder % ownership Bid amount Bid/Acre 20% deposit
221 Ke I I ey Everette 5% 6,557.30 I· 15 1,500.00 f' c. Burglln 15%
Kelley Key Everette by/
C. Burgi In (POAl 30% f -
Angela D. Ryan by/
c. Burgi In (POAl 20%
Bruce Burglln by/ [--c. Burgi In (POAl 30%
222 Kelley Everette 5% 6,624.00 I· 15 I, 500.00
c. Burg lin 15%
Kelley Key Everette by/
C. Burg I In (POAl 30%
John J. Sexton by/
l-c. Burgi In (POAl 20%
James Burg II n by/
c. Burg I In <POAl 30%
[ 223 Kelley Everette 5% 4,416.00 lo 15 1,000.00
c. Burgi In 15%
Kelley Key Everette by/ L c. Burg I In <POAl 30%
Brian Burg II n by/
c. Burgi In <POA> 50% r~ 229 3 John Andrew Bachner 50% 13,658.82 3.57 2,731.76
Richard E. Wagner 50%
Kelley Everette 50% 4,055.56 I· 15 1,500.00 L
c. Burg lin 50%
Charles Weller 100% 4,399.90 lo06 812.00 r '
230 Char I es Weller 100% 4,070.40 1.06 815.00
231 Charles Weller 100% 4,069.34 1·06 814.00 l ~
242 Ke II ey Everette 5% 6,624.00 I· 15 I, 500.00 L c. Burgi in 15%
Michael Everette by/
c. Burgi In {POAl 30%
L Ladessa Nordale by/
c. Burglln (POA> 30%
Bruce Burg I i n by/
c. Burg I In (POA> 20% L
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LIST OF BIDS -LEASE SALE 34 (Sept. 28, 1982) TABLE 10
, Tract # No. of Bids Bidder %ownership Bid amount Bid/Acre 20% deposit
243 Ke I I ey Everette 5% 6,477.95 I· 15 1,500.00
c. Burglln 15%
Madeline Lawrence by/
C. Burg I in (POAl 30%
Arlin Hogenson by/
c. Burg I In <POAl 30%
Brian Burglln by/
C. Burg I In <POAl 20%
245 Kelley Everette 5% 6,624.00 I. 15 I ,500.00
c. Burg I in 15%
Made I i ne Lawrence by I
C. Burg I In (POAl 30%
Arlin Hogenson by/
c. Burgi In <POAl 30%
David Burg I in by/
c. Burgi In <POAl 20%
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Sale No. and Date
I· Dec. I O, 1959
2o July 13, 1960
3. Deco 7o 1960
4 .• Jan. 25, 1961 s. May 23, 1961
6. Aug. 4, 1961
7. Deco 19, 1961 a. April 24, 1962
9. July II, 1962
10. May 8, 1963
I I• C A N C E L L E D
12. Dec• II, 1963
13. Dec. 9, 1964
14. July 14, 1965
15. Sept. 28, 1965
16. July 19, 1966
17· Novo 22, 1966
18· Jan• 24, 1967
19. Mar• 28, 1967
20. July 25, 1967
21. Mar. 26, 1968
22. Octo 29, 1968
23. Sept. I 0, 1969
24. M11y 12, 1971
25. Sept. 26, 1972
26. Dec. I I, 1972
27. M11y 9, 1973
28. Dec. 13, 1973
29. Oct. 23, 1974
29A. C A N C E L L E D
29B. July 24, 1979
30. Dec• 12, 1979
31. Sept. 16, 1980
33. May 13, 1981
32. Aug. 25, 1981
35. Feb. 2, 1982
36. May 26, 1982
37. Aug. 24, 1982
3 7A. Aug. 24, 1902
34. Sept. 28, 1982
38. C A N C E L L E 0
0 51 6g I 0/25/82
r---,.....---rl
Acres
Offered
88,055.00
17,567.51
73,047.70
400.00
97,876.00
13,257.00
255,708.44
1,061.70
315,668.93
167,583.06
346,782.40
1,194,373.00
754,033.00
403,042.06
184,410.05
19,229.70
47,729.00
2,560.00
311,249.89
346,623.00
Ill, 199.48
450,858.47
196,635.07
325,401.42
399,920.96
.308,400.81
166,648.04
278,269.43
34,678.04
341,140.18
196,268.00
815,000.00
202,836.74
601, 171.50
56,862.41
852,603.08
I, 874.60
I, 231, 517.00
11,211,542.67
COMPETITIVE OIL AND GAS LEASING OF STATE LANDS
Percent Acres. Tracts Tracts Bonus Leased Leased $/Acre Offered Leased Rece lved
87.66 77, 191.00 52.08 37 31 $4, 020., 342.43 93.96 16,505.57 24.70 27 26 407,654.54 31.30 22,866.70 I• 55 26 9 35,325.31 100.00 400.00 679.04 3 3 271,614.40 98.06 95,980.00 74.71 102 99 7,170,464.88 100.00 13,257.00 8.35 6 6 110,671.55 73.14 187,025.40 79.47 68 53 14,863,049.33 100.00 I ,061. 70 4.80 8 8 5,097.00 87.77 264,437.13 59.43 89 76 15,714,112.60 84.43 141,490.51 29.23 200 158 4,136,224.92
71.25 247,089.00 l2o31 . 308 207 3,042,680.74 60.51 722,659.00 7o66 610 341 5,537,100.94 53.45 403,000.00 15.25 297 159 6,145,472.59 74.87 301,751.28 15.49 293 216 4,674,343.74 72o66 133,987.29 52.55 205 153 7,040,880.17 96e67 18,589.70 7.33 36 35 136,279.67 88.82 42,397.00 34.88 23 19 1,478, 777.23 R E J E C T E D 12/9/74
82.39 256,447.31 73ol4 295 220 18,757,340.88 47.59 164,961.00 J8o24 JOB 147 3, 009, 224.00 54.20 60,272.15 17.29 230 125 I, 042, 21 9. 90 91.50 412,548.47 2,181.66 179 164 900,041,605.34 47.10 92,617.97 4.92 244 106 455,640.57 54.78 178,244.71 7.43 259 152 1,324,673.40 44.50 177,972.56 . a. 75 218 105 1,557,848.84
36.93 113,891.71 9.93 210 96 I, 130,324.51 58.69 97,803.69 253.77 98 62 24,819,189.91 50.00 127,119.65 8.19 164 82 I, 040, 909.98
100.00 34,678.04 4.56 20 20 158,041.78 86.80 296,.307.65 1,914.87 71 62 567,391,497.48 10o.oo 196,268.00 63.12 78 78 12,387,469.60 .50.99 429,978.16 10.00 202 103 4,299, 781.60 75ol5 152,428.22 10.00 78 59 I, 524,282.20 21.82 131,190.69 ro.oo 149 31 1,311,906.90 100.00 56,862.41 573.02 13 13 32,583,451.87 19.80 168,849.00 3.33 217 .33 562,943.90 100.00 '· 874.60 52.00 I I 97,479.20 46.44 571,954.00 46.71 261 119 26,713,018.17 -l
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57.19 6,411,958.27 261.23 5,633 rn 3,377 I, 674,998,942.07
STATE COMPETITIVE SALE AREAS
SALE
I• Wide B~y; offsh· Kenet to Ninilchik;
Kecheln~k Bey
2. Kenel Penlnsule; West Forefends;
Nush8gek Bey
3. Ketelle; Kellfonsky Beech;
Herendeen Bey; offsh· Kodlek
4. Uplends Ninilchik
5. Tyonek; Controller Bey; Pevlov Bey
6. Controller B~y <Speclet Sete>
1. Icy, Y~kut~t & Kechem~k Beys;
So· Kenai Penin.; N. Cook Inlet
a. Big Leke
9. Tyonek; w. Forefends; Knlk Anm!K81gln lslend;
Chlslk lslend; So. Kenel Pentn.; Wide Bey
10. Tyonek; Kenel Offshore & Uplends
II• Yekutet Bay CANCELLED
DATE
12/10/59
7/13/60
12/7/60
1/25/61
5/23/61
8/4/61
12/19/61
4/24/62
7/11/62
5/8/63
12. Below Forelands; Knlk & Turnagain Arms; Upper 12/1 1/63
Cook Inlet; Kenai Pentn.; Tyonek to Katunu River
13. Fire Island; w. Forelands; Trinity lslends; 12/9/64
Prudhoe West
14. Prudhoe West to Cennlng River 7/14/65
15. Fire lslend & N. Cook Inlet; K81gln lstend &
Redoubt B~y; Kntk; s. Kenel Penlnsule
t6. Kenel Penin• & Kntk; Middleton Island; Fire
Island, Redoubt Bay; Kalgln lslend,
llllamne Mt.; N. Cook Inlet·
11. Big Leke; Kenel
18. Katella; Prudhoe
19. Lower Cook Inlet
20. Big Lake; Knlk; llllemna Mt.; Beluge; N. Cook
Inlet; Kalgln Island; Ninilchik
21. Port Heiden & Port Moiler
22. Big Lake; Knlk; Beluge; West Forelends;
Ninilchik; Kachemak & Kenel
23. Colville to Canning River
24. Big Lake; Knlk; Kenai; West Forelands
9/28/65
7/19/66
11122166
1124/67
3/28/67
7/25/67
3/26/68
10/29/68
9/10/69
5/12171
-110-
DESCRIPTION
Offshore
Offshore/Up I ands
Offshore
Uplands
Offshore/Up lends
Tidelands
Offshore/Up lends
Up lends
Offshore/Uplands
Offshore/Up lends
Offshore/Up I ends
Offshore/Up lends
Offshore/Uplands
Offshore/Up lends
Off shore/Up I ands
Offshore/Up I ands
Offshore/Uplands
Offshore/Up lends
Offshore/Uplands
Offshore
Uplands
Offshore/Uplands
Up lends
TABLE 11
BIDDING
METK>D
Cash Bonus,
Fixed Royalty
Cash Bonus,
Fixed Royalty
Cash Bonus,
Fixed Royalty
Cash Bonus,
Fixed Royalty
Cash Bonus,
Fixed Royalty
Cash Bonus,
Fixed Royalty
Cash Bonus,
Fl xed Roy a I ty
Cash Bonus,
Fixed Royalty
Cash Bonus,
Fixed Royalty
Cash Bonus,
Fixed Royalty
Cash Bonus,
Fixed Royalty
Cash Bonus,
Fixed Royalty
Cash Bonus,
Fixed Royalty
Cash Bonus,
Fixed Royalty
Cash Bonus,
Fixed Royalty
Cash Bonus,
Fixed Royalty
Cash Bonus,
Fixed Royalty
Cash Bonus,
Fixed Royalty
Cash Bonus,
Fixed Royalty
Cash Bonus,
Fixed Royelty
Cash Bonus,
Fixed Royalty
Cash Bonus,
Fixed Royelty
Cash Bonus,
Fixed Royalty
25. Big Lake; Knlk; Beluga; North Cook Inlet
26. Cook Inlet <Between Forelands & Turnagc.ln Ann>
27~ Tuxednl; Ninilchik; Kenai; Kalgln
28. N In I I chI k; Kachemllk Blly; ae Juga
29. Kalgln & West Forelands; Chlslk; Ninilchik
N. Cook Inlet; Turnagllln; Big Lake
29A. Point Thomson CANCEL L E 0
298. Copper River Basin
30. Beaufort Sea (Joint Federal & State Sl!le>
31. Prudhoe Up I ands
32. Lower Cook Inlet
33. Upper Cook Inlet
35. Lower Cook Inlet
36. Beaufort Sea
37. Middle Tanana & Copper River Basins
37A. Chakok River, Exempt
34. Prudhoe Uplllnds
38. Norton Basin CANCELLED
9/26/72
12/11/72
5/9/73
12/13/73
10/23/74
7/24/79
12/12/79
9/16/80
8/25/81
5/13/81
2/2/82
5/26/82
8/24/82
8/24/82
9/28/82
-111-
Offshore/Uplands
Offshore/Uplands
Offshore/Uplands
Offshore/Uplands
Offshore Uplands
Up I ands
Offshore
Uplands
Offshore/Uplands
Offshore/Uplands
Offshore/Uplands
Offshore/Uplands
Uplands
Uplands
Uplands
TABLE 11
Cash Bonus,
Fixed Royalty
Cash Bonus,
Fixed RoyaltY
Cash Bonus,
Fixed Roylllty
Cash Bonus,
Fixed Royalty
Cash Bonus,
Fixed Royalty
Cash Bonus,
Fixed Royalty
L
I=
I ~
Cash Bonus w/Fixed I
Sliding Scale Royalti
Net Profit ShareCNPS)
Bid Variable w/F!xed
Royalty and Fixed l
Cash Bonus
Cash Bonus Bid Variable
with Fixed Royalty an~~.·
Fixed NPS
Royalty Bid Variable ·
with Fixed Cash Bonus
Royalty Bid VarlableJ'
with Fixed Cash Bonu ,
Royalty Bid VarlableJ~
with Fixed Cash 8onu 1
Cash Bonus Bid Variable
with Fixed Royalty and
Fixed NPS l
Cash Bonus Bid
Variable with Fixed
Royalty and Fixed 1-F~-
Cash Bonus, l
Fixed Royalty
Cash Bonus Bid J
Variable with Fixed
Royalty am1 7lxed 1-F
L
Category
Active Leases
Total Acres
Offshore
Onshore
Net Profit Share Leases
Offshore
Onshore
Segregated Leases
Unitized Leases
Entire Lease in Unit
Partially in Unit
CURRENT STATE LEASE INVENTORY
(December 20, 1982)
No. of
Leases
1,484
266
122
384
314
70
Royalty (Producing) Leases
Entire Lease
186
163
23 Partially
Minimum Royalty Leases
Entire Lease
Partially
Competitive Leases
Noncompetitive Leases
Conditional Leases
-112-
48
39
9
1,240
244
128
TABLE 12
No. of
Acres
4, 028,342
1,306,859
2, 721,483
898,395
135,073
763,322
113,563
845,773
449,364
86,170
3,587,442
440,900
283,134
$ 1750
1500
en
a:: 1250
<t
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01000
0
LL.
0 750
(/)
z
0
-500 _J
__J -~
250
CUMMULATIVE BONUS BIDS
1959 THROUGH 1982
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59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 N
YEAR~
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ORIGIN OF HYDROCARBONS APPENDIX A
ORIGIN OF HYDROCARBONS
The occurrence of a major petroleum reservoir depends upon many geological
processes that must occur in a certain order. Geologists and geophysicists
study the surface and subsurface geology of an area to determine whether and
exactly where these geological processes may have occurred. If oil and gas
have accumulated in a particular area, the more that is understood about the
geology the greater the chance of a discovery, yet, the process of
accumulation of oil and its eventual discovery is so complicated that luck is
an important factor. Surprises often occur and no one can ever predict
precisely where or how much oil will be discovered.
Necessary geological events:
The process of petroleum formation and accumulation is a very slow one; it
usually requires millions of years. First, large quantities of organic
material must collect in one place. This usually takes place in quiet water
such as the sea floor. Dead marine plankton, it is thought, is the main
ingredient. Over thousands and possibly millions of years, large amounts of
the organic matter collect in mud on the sea floor. These layers of
organic-rich mud sink deeper and deeper into the earth as new layers of
sediment collect above them. When the layers of organic-rich mud have been
depressed to a depth of at least several thousand feet, the natural heat of
the earth and pressure from the weight of overlying sediments change the
organic material into oil.
Depending upon the amount of heat, and the type of organic material, oil, gas,
or both may be formed. Generally, very high heat and/or "woody" plant
material will cause gas to form. Once formed, the naturally buoyant oil and
gas tend to rise upward through the overlying sedimentary rocks, if an open
migration path is available.
The migration pathways may be fractures, faults or permeable rocks usually
located above the source rocks. Once the upward migration has begun, the
petroleum must encounter and collect in rocks with many microscopic void
spaces. This type of rock, usually a sandstone or limestone, is referred to
as the reservoir rock.
Once the petroleum migrates into such reservoir rock, large quantities may
accumulate. The shape of the reservoir rock is an important factor in the oil
accumulation process. The reservoir rock must be shaped so that petroleum
will continue to migrate into the reservoir until it is more or less full of
oil. The shape and position of the reservoir rock must prevent oil and/or gas
from escaping so that petroleum may be concentrated. The feature that
prevents escape of hydrocarbons is called the trap. A common type of trap is
the anticline, in which the reservoir rocks have been deformed into an upward
fold which, in shape resembles a large inverted bowl. An important part of
the trap is its seal, usually impermeable beds of rock, located at the upper
surface of the reservoir rock so that oil or gas cannot migrate outward and
upward away from the reservoir. Beds of fine-grained rocks, such as
claystone, usually form the seal.
The anticline is one example of what is known as a structural trap.
Structural traps are formed by the deformation of horizontal beds by folding
and/or faulting into a trap configuration. Stratigraphic traps are another
type of trap. They are probably less common and more difficult to locate than
the structural trap. Stratigraphic traps depend upon natural deposition or
post-depositional changes in the reservoir rock, rather than folding or
faulting. For example, an ancient deeply buried porous beach sand may serve
as an excellent petroleum trap if it is surrounded by fine-grained ancient mud
flat sediments. In the case of the offshore bar, the trapping mechanism
depends upon the type and original position of the rocks, not upon folding or
faulting, so it is called a stratigraphic trap. ---
The absence of any one of these factors --source rock (organic-rich,
five-grained rocks), migration pathway, reservoir, or sealed trap insures that
a commercial amount of hydrocarbons will not accumulate within a given basin.
Even if all of the factors are present, they must have occurred or developed
at precisely the right time with respect to each other. To illustrate this
point, consider the following basin-histories:
A subsiding basin is filled with vast quantities of
orgainc-rich shales which are buried deep enough to
generate large quatities of oil and gas. During their
burial, these shale beds are folded and faulted to form
numerous attractive traps. Unfortunately, there are no
reservoir beds in the basin in which the migrating
hydrocarbons may collect.
or
A basin has excellent reservoirs as well as excellent
source rocks and traps but because the basin is shallow,
the potential source rocks never subsided enough to
experience the heat and pressure necessary to generate
hydrocarbons •••
or
A basin has excellent reservoirs, thermally mature source
rocks, seals and large traps, but the traps originated long
after generation of hydrocarbons and their migration to the
surface of the basin •••
or
A basin has excellent reservoirs, rich source rocks,
impermeable seals, large, well-defined traps; however, the
thermal history of the area includes late episodes of
heating of the sediments much higher than termperatures
required to destroy gas •••
These examples show only a few of the many ways that missing ingredients
the wrong sequence of events can thwart petroleum accumulation.
or
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Exploration for oil and gas
Geologists and geophysicists use their respective exploration tools in order
to determine the location of petroleum reservoirs. Basically, geologists
study surface rocks and rock samples from any previously drilled wells in an
area in order to determine whether the required organic-rich source rocks were
ever deposited and whether they were heated to a high enough temperature for
their enclosed organic matter to have been converted to petroleum. Geologists
also study the complete sequence of rocks searching for potential reservoir
beds. They also study the general style of deformation within a basin in
order to determine possible migration paths and whether the proper timing of
folding has occurred. Geophysicists study sedimentary thickness, folding and
faulting through the use of gravity, magnetic and seismic methods. First, the
more general geophysical techniques of gravity and magnetic studies are used
to determine broad areas of interest, the sedimentary basins.
A sedimentary basin is simply a depression in the earth's surface within which
sediments have collected. In order for a basin to be prospective for
petroleum, it usually must be several thousand feet thick and encompass many
thousands of acres. Once the geophysicist has identified a basin, he will
study folding and faulting in the basin by evaluating the response of
subsurface rocks to seismic waves which are initiated on the surface of the
basin and transmitted into the underlying rocks. Reflection seismic data
which form the basis of this evaluation are used to generate maps that
indicate the location of any anticlines, faults or potential stratigraphic
traps within the basin. If suitable drilling targets are identified during
this evaluation, a well may be drilled. As the well is being drilled, rock
samples are collected to aid in determining whether the well will produce oil
and to learn more about the petroleum potential of the entire basin. If the
well proves not to be a commercial discovery, the geological information is
used to help determine whether drilling should be attempted elsewhere in the
basin.
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FINAL NOTICES FOR 1982 LEASE SALES APPENDIX B
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JAYS. HAMMOND, GOVERNOR
MINERALS AND ENERGY MANAGEMENT Pouch 7-005
Anchorage, Alaska 99510
Phone: (907) 276-2653
December 16, 1981
-NOTICE-
COMPETITIVE OIL AND GAS LEASE SALE 35
The Department of Naturql Resources, Division of Minerals and Energy
Management (DMEM), hereby gives formal notice in accordance with AS
38.05.345(a)(4) of its intention to offer lands for competitive oil and gas
lease in Lower Cook Inlet. This proposed sale is scheduled to be held on ·
February 2, 1982, at the Captain Cook Hotel, 5th and "K" Streets, Anchorage,
Alaska. Bids will be accepted at the Division of Minerals and Energy
Management, 555 Cordova Street in Anchorage ( 3rd floor) , on February 1', 1982,
between 9 a.m. and 4:30 p.m. Bids that are sent by mail must be sent to:
DMEM, Pouch 7-005, Anchorage, Alaska 99510, and must be received at DMEM by
February 1, 1982. On February 2, 1982, bids will be accepted at the Dist;:overy
Room in the Captain Cook Hotel between 8 and 9 a.m. Bids will be. opened
between 9 and 10 a.m. At 10 a.m., A public reading of the bids will be~in.
fhe sale will be conducted by the Department of Natural Resources under the
authority of Alaska Statute 38.05.180. Bidders awarded leases at this sale
will acquire the right to explore for, develop and produce the oil and gas
that may be discovered within the leased area. In order to bid at the sale,
bidders must prequalify prior to the sale date. Potential bidders should
consult DMEM for prequalification procedures. Under 11 AAC 82.445, a bid will
not be considered unless supported by the bid deposit and the information
required, unless any omission is determined by the Commissioner to be
immaterial or due to excusable inadvertence and the omission is corrected
within one week after receipt of a notice of deficiency.
The State reserves the right to delete or contract proposed tracts at any time
up to and including the day of the sale. At the present time, the State plans
to offer 149 tracts totaling approximately 596,000 acres. About 96 percent of
the proposed sale area is offshore acreage in Cook Inlet. Surface tracts lie
north and west of the City of Kenai, on the western shore of Cook Inlet, near
Redoubt Bay, and on Kalgin Island. An additional tract (23U), located west of
Soldotna, was added to the proposed sale area at the request of the University
of Alaska. The entire proposed sale area is within the Kenai Peninsula
Borough. Communities in the vicinity of the proposed sale include Kenai,
Soldotna, Kasilof, Clam Gulch, Ninilchik, Anchor Point, and Homer. A small
portion of the proposed sale area includes the Kalgin Island Critical Habitat
Area, an important habitat for fish and wildlife populations. A set of ten
tract maps showing the exact dimensions and acreage of each tract is available
at DME~1.
Any lease issued as a result of this proposed sale will be executed on Form
No. DMEM-4-81 (ROYALTY). The bidding method will be royalty bidding with a
minimum.bid of 12.50000 per cent and a fixed cash bonus of $10.00 per acre.
Total royalty bids must be expressed in per cent to five decimal places.
Leases will be awarded on the basis of the highest royalty bid of 12.50000% or
more. All tracts will have a primary term of 10 years. Annual rental will be
$1.00 per acre for the first year, $1.50 per acre for the second year, $2.00
per acre for the third year, $2.50 per acre for the fourth year, and·$3.00 per
acre for the fifth and following years.
Any bidder who obtains a lease from the State of Alaska as a result of this
sale will be responsible for the construction of access roads and capital
improvements as may be required by the appropriate platting authority. All
operations on leased lands will be subject to prior approval by the State 8S
required by the lease and leasing regulations. SUrface entry will be
restricted only as necessary to protect the holders of surface interests as
shown on the Departmental status plats or as necessary to protect identified
resource values.
On many tracts, or portions of tracts, the State no longer owns surface
rights. A list of third party interests in the tracts, current as of December
16, 1981, is available at DMEM. Since changes in land status occur quite
frequently, potential bidders should consult state and federal status plats
and the records of the Kenai recorder's office in order to determine current
third party interests. AS 38.05.130 requires oil and gas lessees to make
provisions to pay the surface owner for any damage sustained by the surface
owner as a result of oil and gas exploration or development. If the surface
owner and the oil and gas lessee cannot reach an agreement, the oil and gas
lessee may enter upon the land after posting a surety bond insuring that both
the surface owner and his lessees are covered against any damages that they
might sustain by reason of entry by the subsurface lessees. Upon request of
the surface owner or lessee, the Department of Natural Resources will
determine an appropriate bond amount after giving the parties an opportunity
to be heard.
In addition, 11 AAC 83.155 provides that each lessee shall indemnify the state
and hold it harmless from any claims, demands, liabilities and expenses
arising from or in connection with damage incurred under AS 38.05.130.
11 AAC 83.158 requires that before undertaking operations on the leased area,
the lessee must make provision for full payment of all damages sustained by
the owner of the surface estate as well as by the surface owner's lessees and
permittees. If the surface estate is owned by a third party rather:than by
the State of Alaska, the lessee must also notify the surface owner of his
right to request that the Commissioner of the Department of Natural Resources
require a plan of operations before·allowing operations to be undertaken on
the leased area.
The Department of Natural Resources has determined that all water bodies
within the sale area are public or navigable. Easements, if necessary to
insure public access, will be reserved during the review of individual lease
plans of operations.
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Prior to the commencement of lease operations, a minimum oil and gas lease
bond of $10,000 per operation is required. In the alternative, a statewide
oil and gas lease bond of $500,000 for operations conducted on more than one
lease may be filed. These bonding provisions do not affect the Commissioner's
authority to require additional unusual risk bonds as may be necessary.
In addition, the Alaska Oil and Gas Conservation Commission (AOGCC) requires a
bond of $100,000 for a single well or a $200,000 bond to cover wells statewide
before drilling operations will be permitted by AOGCC.
In support of the lease sale, the Director of the Division of Minerals and
Energy Management has prepared a final written finding under AS
38.05.035(a)(l4) which sets forth the facts and applicable law upon which he
has determined that the proposed action will best serve the interests of the
State. The Director's written finding and decision is available to the public
upon request at the Division of Minerals and Energy Management, 555 Cordova
Street in Anchorage or by writing DMEM at Pouch 7-005, Anchorage, Alaska
99510. The latest detailed information concerning the proposed sale is
available to prospective bidders and members of the public at DMEM .
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Glenn Harrison
Director
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MINERALS AND ENERGY MANAGEMENT
Information to Bidders
A. Acceptance and Rejection of Bids
JAYS. HAMMOND, GOVERNOR
Pouch 7 -Ou5
Anchorage, Alaska 99510
Phone: (907)2?6-2n55
The State hereby expressly reserves the right to reject any bid on Rny
tract. No bid for any tract will be accepted and no lease for any tract
will be awarded to any bidder unless the following conditions have been
met:
1. The bidder has complied with this notice and applicable st~tP
regulations and statutes.
2. The bid is the highest valid royalty hid.
3. The amount of the bid has been determined to be adequate by the
Commissioner of Natural Resources.
4. No bid containing or accompanied by any condition, quAlification, r
material alteration will be considered.
B. Pre-Qualification of Bidders
In order to submit bids for this sale, bidders must be qualified trJ hi~
prior to the sale date of February 2, 1982. (Jualifi.cation procPdrm~s ;w'
as follows:
1. Individuals -An individual bidder must have a Statement ot
Qualifications on file at DMEM certifying that he or she is at least
18 years old and a citizen of the United States, or is eligible for
and has filed for citizenship, or is an alien person entitled to ~
similar lease by virtue of a treaty between the United States and th~
nation of which the alien person is a citizen. The statement must
include the bidder's name, address, and telephone number and must b1;
signed and dated. If an agent is signing the bid form on behalf of 2
bidder, an original, notarized power-of-attorney document evidencing
the authority of the agent to act on behalf of the individual must be
on file at DMEM. Statements of qualifications submitted for State Oil
and Gas Lease Sale 33 or 32 will be adequate for Sale 35 as long as
the information is current. If the power-of-attorney document qivcs
an agent the power to bid only in a specific sale, a new
power-of-attorney must be submitted for Sale 35.
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2. Corporations -Corporations must have the following documents on file
at DMEM prior to the lease sale:
3.
a. Copy of 1981 Certificate of Compliance.
b. The current address and phone number of the corporation.
c. A list of the current officers of the corporation that are
authorized to sign a bid on behalf of the corporation.
d. An original notarized power-of-attorney authorizing any agent
who is not a current officer but who has been cesignateo by
the corporation to sign a bid on behalf of the corporation.
A Certificate of Compliance can be obtained by sending sixty cents to
State of Alaska, Department of Commerce and Economic Development,
Corporation Section, Pouch D, Juneau, Alaska 99811 and requesting the
certificate. The Certificate of Compliance provides written proof
that the corporation has paid all taxes, complied with all Rpplicatdr
laws, and is thus qualified to do business in the State.
Corporations that have not previously qualified to do business in
Alaska - A corporation that has not previously qualified to do.
business in Alaska must submit the following documents to DMEM:
a. Tf the corporation is a foreign corporation, it must submit a
copy of its Certificate of Authority. If the corporatio~ is 8
domestic corporation, it must submit a copy of its Certificate
of Incorporation. A foreign corporation is one that has been
incorporated outside the State of Alaska. A domestic
corporation is one that has been incorporated within the Statf.
of Al8ska.
b. Ttw r'urrcnt <lddres~; ancl phonL: number lli tilt' 1'(11pur;d ror,.
c. A list of the current officers of the corporation th~t are
authorized to sign a bid on behalf of the corporation.
d. An original notarized power-of-attorney authorizing any agent
who is not a current officer but who has been oesignateo by
the corporation to sign a bill on behalf of the corporation.
In order to receive a Certificate of Authority, foreign corporations
must submit a packet of completed forms entitled ''Instructions for
qualifying a foreign corporation to do business in the State of
Alaska" to the Department of Commerce and Economic Development,
Corporation Section, Pouch D, Juneau, Alaska 99811. In order to
receive a Certificate of Incorporation, domestic corporations must
submit Articles of Incorporation to the Department of Commerce ;:mu
Economic Development. These forms can be obtained by writing or
telephoning DMEM. Upon proper application, the Department of Commerce
and Economic Development will issue a Certificate of Authority or
Certificate of Incorporation. Please allow two to three weeks for the
processing of these certificates.
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4. Partnerships and other unincorporated associations - A partnership or
unincorporated association must submit the following documents to DMEM
prior to the lease sale:
a. A statement describing the business relationships of membeis
of the association or partnership.
b. A statement of qualifications for each member stating that
each member is at least eighteen years of age and a citizen of
the United States, or is eligible for anc has fileo for
citizenship, or is an alien person entitled to a similar Jr·ase
by virtue of a treaty between the Uniteci States and the p;=Jtion
of which the alien person is a citizen.
c. If an agent is signing the bid form on behalf of the
partnership or association, an original nctorized
power-of-attorney defining the agent's authority to sign the
bid on behalf of the partnership or association.
C. Bid Submission
All bids will be accepted by the Director of the Civision of Minerals anrJ
Energy Management or his authorized agent at 555 Cordova Street (3rd
floor), Anchorage, Alaska, between the hours of 9:00a.m. and 4:30p.m. on
February l, 1982. Bids that are mailed to the Director, DMEH Pouch 7-IJlJ':,,
Anchorage, Alaska 99510 must be received no later than February 1, l~Bi.
Bids will also be accepted at the Division's temporary office at tiK~
Discovery Room in the Captain Cook Hotel between 8 and 9 a.m. on Febru<)ry
2, 1982. No bids tendered after 9:00 a.m. on the day of the sale,
February 2, 1982, will be accepted.
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Bids wilJ be received 8nd processed on February 2 in the follow'r~c rlanr,Pr: ~ ~
l. 8:00 a.m. -9:00 a.m. -bids will be received.
2. 9:00 a.m. -closing of bid submission.
3. 9:00a.m.-10:00 a.m. -opening of the bids by DMEM personnel. rhc
opening of bids is for the sole purpose uf
publicly announcing and recording bids
received. No bids will be accepted or
rejected at this time.
4. 10:00 a.m. -public reading of the bids will begin.
n. Form for Submission of Bids
1. 1\ '~PparatP bid mtJst br. suhmltterJ ror e:-~ch tr<wl.
2. Each bid must be submitted separately in a single envelope. The
envelope should be marked "State of Alaska Competitive Oil ana Gas
Lease Sale 35; not to be opened until 9:00a.m., February 2, l98L;
Tract fl " No other statements, informstion, or identificrit.irm
should appear on the outside of the envelope.
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The following items must be contained in each envelope:
a. An executed bid form ( OtAEM 717/81) or an exact copy of that
form. All bidders should state their name, company (if
applicable), address, and telephone number on the bid form.
b. Bid Deposit: Check or money order made payable to the
"Department of Revenue, State of Alaska." The check shoulo be
a cashier's or certified check drawn on any solvent bank in
the United States, a money order, or cash in the total amount
of 2D% of the amount of the total fixed cash bonus. No bid
for less than a full tract will be consiGered.
3. Pursuant to ll AAC 82.430, joint bids must disclose, and the bid form
must be signed by or on behalf of, each person who has any working
interest in the bid or who may receive any working interest in any
lease issued in this sale by virtue of any agreement or understanding,
oral or written. This requirement does not mean that persons who are
interested in a bid only as stockholders in a corporation must sign
the bid and lease form and does not mean that the designated
information must be furnished as to those persons. Joint bids must
state the percentage of interest of each bidder and must designate one
person who is authorized to receive notices on behalf of all the
bidders.
E. Method of Handling Bid Deposits
l. Bid deposits submitted with bids shall be in U.S. dollars and shall be
tendered in cash or by money order, cashier's check or certified
check. All such bid deposits will be safeguarded against theft,
misappropriation and loss.
2. Any cash, money orders, cashier's checks or certified checks submitteo
with the apparent high bid will be deposited immediately after the
sale in an interest-bearing account. Such deposit does not constitute
and shall not be construed as acceptance of any bid on behalf of the
State of Alaska.
3. Any cash, money order, cashier's checks or certifjed checks submitted
with apparent low bids will be immediately placed in a secure vault.
Bjd deposits submitted by obviously unsuccessful bidders will be
available for return to the bidder or the bidder's representative
4.
5.
beginning at 3:00 p.m. on February 2, 1982 or they will be held in a
secure vault until instructions for other disposition are receiveo
from the bidder or his representative.
Upon rejection by the State of Alaska of any apparent high bid, the
amount of the bid deposit for that bid plus interest actually earned
on that bid deposit will be returned by state warrant to the bidder by
certified mail to an address designated by the bidder.
Upon acceptance of a bid by the Commissioner of Natural Resources, the
~uccessful bidder will be notified by certified mail of the lease
award and will be sent two copies of the lease for signature. Within
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30 days of the date that bidder receives notification of the lease
award, the bidder must: 1) sign both copies of the lease; 2) return
them to the Division of Minerals and Energy Management for execution;
3) pay the balance of the cash bonus and accrued interest; and 4) pay
first year's annual rental. Interest of 10.40 per annum (which is the
market interest rate for 90-day U.S. Treasury bills prevailing during
the week of December 7-11) will be charged on the balance of,the fixed
cash bonus accruing from the date of the successful bidder's receipt
of the notification of the lease award to the date of payment. The
successful bidder owes interest ftom the day that he receives the bid
acceptance letter until the day before the money is paid. Interest
should be paid on the fixed cash bonus only and not on the first year
of rental. Payment of the balance of the cash bonus, accrued interest
and rental shall be accomplished in the followina manner:
The successful bidder will wire transfer federal funds in the
amount of the balance of the fixed cash bonus and accrueo _i_ntuc:.:,L
together with the first year's rental to the General Investment
Account of the State of Alaska at the Bank of America, NT & SA,
San Francisco, California, to the attention of Elizabeth Stephens,
Securities Clearance Department, #3298. The wire transfer should
specify on whose behalf and on what tracts the balance, interest,
and rental is being paid. If possible, bidders should use only
one wire transfer. Interest calculations should be baseo on a
360-day year times the actual number of days that interest is oweo.
In addition, the successful bidder shall simultaneously send the
following information by telex to the State of Alaska, Department
of Revenue, Treasury Division, attention of : Al Jahner at Telex
#099-45333: The amount of rental, interest, and balance of fixe~
cash bonus being paid per tract; the name(s) of the bidder(s) on
whose behalf the funds are being wire transferred; and the
originating bank of the wire transfer.
F. Tracts with Identified Wildlife Values
Portions of tract 1 include critical calving grounds, core summerinp
habitat and summering range of the Kenai lowland caribou herd. See
the "mitigating measures" portion of this information brochure for
further information regarding surface entry restrictions on portions
of tract 1. Portions of tracts 67 and 70 are within the Kalgin Island
Critical Habitat Area. The management of State Critical Habitat Areas
is the responsibility of the Alaska Department of Fish and Game.
Prior to the development of any lands within thr' Kalgl n IsLmd
Cri.t ical Habitat Area, a permit must be obtalneu from the AI a:;k;~
repartment of Fish and Game.
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MITIGATING MEASURES
AS 38.05.035(a)(l4) and the departmental delegation of authority give the
director, Division of Minerals and Energy Management, the authority to impose
conditions or limitations, in addition to those imposed by law, to ensure that
a disposal is in the state's best interest. The following proposed
stipulations and terms of sale have been developed considering the Social,
Economic and Environmental Analysis (SEEA) for Sale 35, interagency
discussion, and experience with prior lease sales in the Cook Inlet area.
LEASE STIPULAT.IONS
1. Spill Prevention Control and Countermeasure (SPCC) Plan:
A Spill Prevention, Control and Countermeasure Plan must be submitted to
the Department of Environmental Conservation for approval prior to onshore
drilling operations and construction of onshore oil and gas storage
facilities (with 8 capacity of greater than 660 gallons), transfer, ;1n1l
transportation facilities. In addition to addressing the preventior1,
detection and cleanup of oil, the SPCC plan for drilling operations should
include, but not be limited to, methods for controlling blowouts, location
of spill clean-up equipment, identification and location of a suitable
alternative drilling rig, and the time required to obtain, mobilize,
rig~up, and commence drilling of a relief well, if needed.
2~ Discovery of historic or archeologic objects:
In the event any site, or structure, or object of historic or archeologic
significance should be discovered during the conduct of any operations on
the leased area, the lessee will report immediately such findings to the
Director, Division of Minerals and Energy Management, and make every
reasonable effort to preserve and protect such site, structure, or otJJ,:cl
from damage until the Director, aftef consultation with the State Historic
Preservation Officer, has given directions as to its protection.
3. Special stipulations for tract 1 only, which includes portions of the
critical calving grounds, core summering habitat and summering range of
the Kenai lowland caribou herd, are as follows:
A. Surface entry within the critical calving grounds (that portion of
tract 1 which includes E 1/2 Sec. 20 and E 1/2 Sec. 17, T 6N, R llW,
Seward Meridian) is prohibited, except that surface entry for seismic
exploration will be allowed during the winter (from approximately
October lfl to March 31). The timing of seismic operations shall
receive prior approval from the Department of Fish and Game.
A. No lease related activity will be permitted within the core summerin0
habitat (that protion of tract 1 which includes Sec. 9, NW 1/4 and s
1/2 Sec. 10, Sections 15 and 16, T 6N, R llW, Seward Meridi~n) during
the period April 1-0ctober 15.
C. Support activities will be confined to existing roads. No new roa1Js,
permanent facilities or above-ground pipelines will be constructed
within the core summering habitat.
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D. Facilities in the core summering habitat (described above) and those
in the summering range (that portion of tract 1 which includes S l/2
Sec. 3 and NE 1/4 Sec. 10, T 6N 1 R llW, Seward Meridian) which
require year-round access will be located only in forested areas.
II'IFORMATION TO BIDDERS: PLANS OF OPERATIONS AND OTHER TFRMS OF SALE
1. Bidders are advised that if the state owns the surface of the leased area,
or if the lease reserves a net profit share to the state, or if a surface
owner other than the state so requests, the lessee must submit a oetailed
plan of operations to the Division of Minerals and Energy Management prior
to conducting any exploratory or development operations. The following
conditions and restrictions will be imposed as a condition of the approval
of plans of operations.
A. The siting of onshore facilities, except for road and pipeline
crossings which will be aligned perpendicular to water courses, will
be prohibited within 500 feet of all shot~lines, streambanks, and
lakes unless it is shown to the satisfaction of the Director,
Division of Minerals and Energy Management, that alternative site
locations outside 500 feet are not feasible or prudent. In adaitiun,
the siting of facilities within one quarter mile of the banks of the
Kenai River will be discouraged, ano may be prohibiteo.
B. Impermeable 1 i ning and diking will be required for sewage ponds ;ind
onshore oil storage facilities (with a storage capacity greater than
660 gallons). A buffer zone of up to 1,500 feet will be required to
separate oil storage facilities (with a capacity greater than 660
gallons) and sewage ponds from freshwater supplies, streams, lakes,
wetlands and marine areas unless it is shown to the satisfaction of
the Director, Division of Minerals and Energy t~anagement, that such a
requirement is not feasible or prudent. Impermeable diking will be
required for sump and reserve pits.
C. All lease activities and structures must be designed to maintain
normal ~ater flow or drainage patterns and to allow free movement ana
safe passage to fish and mammals, both onshore and offshore, unless
such a design is shown to the satisfaction of the Division of
Minerals and Energy Management after consultation with the Department
of Fish and Game, not to be feasible or prudent.
D. Exploration activities should be supported by winter trails, air
service, existing roads and port facilities except for local roaos in
the vicinity of exploration sites. Construction of year-round roads
will be prohibited during the exploration phase of oil and gas
development projects unless it can be shown to be in the State's
interest to have a permanent road constructed. When alloweu,
year-round roads must be designed, constructed, and maintained to the
satisfaction of the Director, Minerals and Energy Management.
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E. Facilities and surface transportation routes should be located to
avoid sensitive fish and wildlife habitat and minimize damage to
sensitive wetlands, and should be consolidated to the extent feasible
and prudent.
F. No restriction of public access to, or use of, the lease area will be
permitted as a consequence of oil and gas activities except in the
immediate vicinity of drill sites, buildings and other related
structures. The location of restricted areas shall be identified in
the plan of operations.
G. The Director, Division of Minerals and Energy Management, may require
as a condition for approval of lease operations an environmental
training program for personnel involved in exploration or development
activities (including personnel of the lessee's contractors and
subcontractors). The program should be designea to inform each
person working on the project of specific types of environmental,
social and cultural concerns which relate to the sale area and to
ensure that personnel understand and use techniques necessary to
preserve archeological, geological and biological resources. The
program also should be designed to increase the sensitivity ana
understanding of personnel to community values, customs, lifestyles
and biological concerns in areas in which they will be operating.
H. In the event unlisted peregrine falcon nests are discovered, the
lessee shall immediately report the nest(s) to the Director, Division
of Minerals and Energy Management. Mitigating measures will be ·
required by DMEM and the Department of Fish and Game to ensure th~t
lease activities are in compliance with the state and federal
Endangered and Protected Species Act.
I. In the event that unlisted bald eagle nests are discovered, the
lessee shall immediately report the nest(s) to the Director, Division
of Minerals and Energy Management. The Commissioners of the
Department of Natural Resources and the Department of Fish and Game
will require the following measures to ensure that lease activities
comply with the Federal Bald Eagle Protection Act.
J.
1) Permanent facilities will be prohibited within 500 feet of all
bald eagle nests.
2) Surface entry will be prohibited within 500 feet of active bald
eagle nests between April 1 and August 31. Temporary
activities, which do not alter the habitat, may be allowed
outside of this time period.
Surface entry and facility siting within one-half mile of the bnnks
of Harriet Creek are prohibited unless it is shown to the
satisfaction of the Director, Division of Minerals and Energy
Management, that alternatives are not feasible or prudent. Whenever
possible, road, trail and pipeline crossings will occur at right
angles to the creek.
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2. Solid waste disposal is subject to the approval of the Commissioner,
Department of Environmental Conservation.
3. An Oil Discharge Contingency Plan will be requireo for offshore operations
pursuant to AS 46.04.030.
4. Discharge of produced water, drilling muds, and cuttings:
A.
8.
c.
Disposal of produced water to subtidal marine waters of Cook Inlet
will be permitted except as indicated in Term No.8 (below).
Discharge of produced waters to freshwater bodies; intertidal habitat
and estuarine waters at river mouths is prohibited.
Disposal of produced waters in upland areas, including wetlands, wil1
be by subsurface disposal techniques, except that the Commissioner of
the Department of Environmental Conservation may give consideratin11
to alternate disposal methods where it is shown to 11 is sat isfact i•m
that subsurface disposal techniques are not feasible or prudent.
Discharge of drilling muds and cuttings to lakes, streams, rivers,
intertidal areas and tidally influenced mouths of rivers is
prohibited. Drilling muds and cuttings free of hydrocarbon
contamination may be discharged to subtidal marine waters, except
that in subtidal marine waters shallower than the 3 fathom isobath,
discharge will be restricted to the period occuring two hours beforP
and two hours after each high tide event.
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5. Upon abandonment of drilling sites, roads, buildings, airstrips or othe1· r·
facilities, such facilities wiJ.l be removed and the sj te rehabilitateu, l _
unless it is shown to the satisfaction of the· Director, Divis i.on of
Minerals and Energy Management after consultation vvith otller state ~--.
~gencies, that such removal and rehabilitation is not in the state's
interest.
6. The land in the proposed sale area is contained within the coastal zone r-
and is thereby subject to the Alaska Coastal Zone Management Act, l _
AS 46.40. The Director, Division of Minerals and Energy Management, may
require, as a condition for approval of lease operations, modifications or
stipulations as may be necessary to ensure consistency with the Act, or to r-
otherwise provide for sound planning and management of coastal resources. ..
7. Plans of operations for lease activities and specific permit applicatirlfis [ __ -.
which are subject to approval by the U.S. Corps of Engineers or whicl1
requh·e a Certificate of Reasonable Assurance from the Department of
Environmental Conservation should be submitted simultaneously for stcltt=
agency review and approval, at least 60 days prior to the proposed conduct {-
of such activities. -~
8. To protect important clam beds located along the western shore of Cook I
Inlet. (see figure 1 for approximate locations) disposal of produced L-
waters in subtidal areas is prohibited in the following two locations: ~
A. within Chinitna Bay, including all waters west of a line drawn
between Sea Otter Point and Spring Point.
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B. from Crescent River northward to a point one-half mile north of
Redoubt Point, including all waters shallower than the 3 fathom
isobath or within subtidal waters 300 meters seaward of the lower
limit of the clam beds.
9. The management of State Critical Habitat Areas is the responsibility of
the Department of Fish and Game under AS 16.20.260: Prior to the
development of any lands within the Kalgin Island Critical Habitat Area a
permit must be obtained from the Department. Permits will be issued upon
receipt and approval of detailed plans of the proposed project which must .
meet the following requirements:
A. The consolidation of facilities and activities associated with lr:asc~
operations will be mandatory.
B. All facilities must be designed and constructed to: l) have minimal
impacts on fish and wildlife resources and public use; 2) mitigate
adverse impacts; ~nd 3) minimize visual impacts on public use areas.
C. Mitigation measures will be required for all lease operations that
result in unavoidable adverse impacts having a significant effect un
fish and wildlife, their habitats, or human use, as determined by the
Alaska Department of Fish and Game.
0. Lease facilities must include all available design features to
minimize the possibility of accidental oil spills or fires resulting
from vandalism or hunting accidents.
F. Facilities must be designed and constructed to prevcnl tt~ sprea~ ut
hydrocarbons and facilitate cleanup. Facilities that store or
process greater than 660 gallons of petroleum products, and all
pipelines, must be approved by the Department as to their location,
size, time of construction, and operation.
F. Upon abandonment of facilities, the lessee must restore the area to
its former productivity unless the Department determines it is in the
best interest of the public to retain some or all of the improvements
made by the lessee.
G. No restriction of public access to the Kalgin Island Critical Habit3t
Area will be permitted as a consequence of oil and gas activities.
Restriction of public use of small, limited areas in the immeoidte
vicinity of facilities may be allowed with the approval of the
Department of Fish and Game.
H. No surface discharge of produced waters will be allowed. Dispo:oai tJf
drilling muds and cuttings within the Critical Habitat Area will only
be approved by the Department when it does not adversely affect wate1
quality, wetlands, public use, or habitat.
I. Borrow removal will be permitted where it does not adversely affect
fish and wildlife populations or their habitats or where there is an
opportunity to enhance fish and wildlife populations.
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April 7, 1982
MINERALS AND ENERGY MANAGEMENT
-NOTICE-
JAYS. HAMMOND, GOVERNOR
555 CORDOVA STREET
POUCH 7·005
ANCHORAGE, ALASKA 99510
(907) 276·2653
COMPETITIVE OIL AND GAS LEASE SALE 36
The Department of Natural Resources, Division of Minerals and Energy
Management (DMEM) gives formal notice under AS 38.05.345(a)(4) of its
intention to offer lands for competitive oil and gas lease. Sale 36 includes
about 41,500 acres of Beaufort Sea submerged lands north of Prudhoe Bay near
the Midway Islands and about 15,500 acres of both submerged lands and uplands
in the Flaxman Island-Canning River region west of the Arctic National
Wildlife Refuge.
The sale will be conducted by the Department of Natural Resources under the
authority of Alaska Statute 38.05.180. Bidders awarded leases at this sale
will acquire the right to explore for, develop and produce the oil and gas
that may be discovered within the leased area. In order to bid at the sale
bidders must prequalify prior to the sale date. Potential bidders should
consult DMEM for prequalification procedures. Under 11 AAC 82.445, a bid will
not be considered unless supported by the bid deposit and the information
required, unless any omission is determined by the Commissioner to be
immaterial or due to excusable inadvertence and the omission is corrected
within one week after receipt of a notice of deficiency.
Sale 36 is scheduled to be held on May 26, 1982 at the Travelers Inn, 620
Noble, Fairbanks, Alaska. Bids will be received and processed on May 26 in
the following manner:
l. 7:30a.m. -9:00a.m. -bids will be received in the "Rampart Room".
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2. 9:00 a.m. -closing of bid submission. l -
3. 9:00 a.m. -10:00 a.m. -bids will be opened.
4. 10:00 a.m. - a public reading of the bids will begin in the "Gold Room".
Bids also will be accepted from 9 a.m. to 3 p.m. on May 25, 1982 in Room 31
(3rd floor), 555 Cordova Street, Anchorage, Alaska. Bids that are sent by
mail must be sent to: Director, DMEM, Pouch 7-005, Anchorage, Alaska 99510,
and must be received by May 24, 1982.
Any lease issued as a result of this sale will be executed on Form No. DMEM
l-82 (NET PROFIT SHARE) which was revised April 7, 1982. The sections in the
new lease form that reflect substantive changes from the prior lease form
(DMEM-4-81 ROYALTY) are: 1) Paragraph 34(d) has been revised to reference a
Department of Natural Resources regulation for the purpose of determining
"minimum value"; 2) Paragraph 35 has been expanded to include an interest
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provision for underpayments and adjustments of royalty in value; and 3)
Paragraph 38 has been added to incorporate a Net Profit Share provision. In
addition, minor editorial changes have been made in Paragraphs 8, 25, and
34(c).
The bidding method will be cash bonus bidding with a fixed royalty of 12.5%
and a fixed net profit share of 40%.
All tracts will have an initial primary term of 10 years.
Lessees will be eligible for exploration incentive credits for exploration
wells as provided in 11 AAC 83.800, 11 AAC 83.805, 11 AAC 83.815, and 11 AAC
83.820 as those regulations exist on the effective date of the lease. Credits
will be earned at a rate of $750 per foot drilled for the first exploratory
well per tract, provided that credits cannot exceed 40% of the total
exploratory well costs. The credits must be earned and used within 10 years
of the effective date of the lease.
Annual rental will be $1.00 per acre for the first year, $1.50 per acre for .
the second year, $2.00 per acre for the third year, $2.50 per acre for the
fourth year, and $3.00 per acre for the fifth and following years.
Any bidder who obtains a lease from the State of Alaska as a result of this
sale will be responsible for the construction of access roads and capital
improvements as may be required by the appropriate platting authority. All
operations on leased lands will be subject to prior approval by the state as
required by the lease and leasing regulations. Surface entry will be
restricted only as necessary to protect the holders of surface interests as
shown on the departmental status plats or as necessary to protect identified
surface resource values.
The Department of Natural Resources has determined that all water bodies
within the sale area are public or navigable. Easements, if necessary to
ensure public access, will be reserved during the review of individual lease
plans of operations. Prior to the commencement of lease operations, an oil
and gas lease bond for a minimum amount of $10,000 per operation is required.
In the alternative, a statewide oil and gas lease bond of $500,000 for
operations conducted on more than one lease may be filed. These bonding
provisions do not affect the Commissioner's authority to require additional
unusual risk bonds as may be necessary. In addition, the Alaska Oil and Gas
Conservation Commission (AOGCC) requires a bond of $100,000 for a single well
or a $200,000 bond to cover wells statewide before drilling operations will be
permitted by AOGCC.
The state reserves the right to delete or contract proposed tracts at any time
up to and including the day of the sale. Thirteen tracts totaling
approximately 56,862 acres will be offered. Tracts C-36-001 through C-36-008
and C-36-013 were included in the Joint State/Federal Beaufort Sea Sale held
in December, 1979 and as a result are delineated by the U.S. Department of
Interior U.T.M. Survey System. Tracts C-36-009 through C-36-012 in the
Flaxman Island-canning River area are shown by the State of Alaska Survey
Protraction System on a separate tract map. Both of these tract maps are
available at DMEM.
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' The proposed sale area is within the North Slope Borough. Communities in the
vicinity of the proposed sale include Kaktovik, Nuiqsut, Barrow, and Prudhoe
Bay/Deadhorse.
In January, about 6,200 acres were added to the proposed sale. This acreage
includes tract C-36-013 and portions of tracts C-36-009 and C-36-012. The
added acreage in tract C-36-012 was previously subject to a valid state oil
and gas lease and has been added to Sale 36 under AS 38.05.180(d)(l). Tract
C-36-013 and sections 13, 14, and portions of sections 10, 11, 12, 15, and 22
of tract C-36-009 are contiguous to submerged land already under state lease
and have been added to the sale under AS 38.05.180(d)(2). On March 4, 1982
the Department of Natural Resources held a hearing as required by the
statute. The Commissioner has made a written finding that the leasing of this
acreage will result in a substantial probability of early evaluation and
development.
AS 38.05.035(a)(l4) and the departmental delegation of authority give the
Director, Division of Minerals and Energy Management, the authority to impose
conditions or limitations, in addition to those imposed by law, to ensure that
a disposal is in the state's best interest. To meet this requirement, the
Director has developed environmental and social terms and conditions for
tracts leased in Sale 36. Lease stipulations will be enforced throughout the
term of the lease. Measures will also be imposed through approval of plans of
operations and other permits as needed to mitigate undesirable social and
environmental effects of lease rel~ted activities.
The stipulations and terms describe standards that must be met by the
operators with regard to water quality and appropriation, gravel extraction,
oil.spill prevention and cleanup, construction of roads, pipelines and other
lease related structures and facilities, public access, disposal of waste,
drilling muds and cuttings and produced waters, timing and routing of
exploration and development activities, rehabilitation of abandoned sites, and
additional permits and approvals. These stipulations and terms are necessary
to protect the unique biological, archeological, and social aspects of the
sale area.
In support of the lease sale, the Director of the Division of Minerals and
Energy Management has prepared a final written finding under AS
38.05.035(a)(l4) which sets forth the facts and applicable law upon which she
has determined that the proposed action will best serve the interests of the
state. The Director's written finding and decision is available to the publj_c
upon request at the Division of Minerals and Energy Management, 555 Cordova
Street in Anchorage or by writing DMEM at Pouch 7-005, Anchorage, Alaska
99510. Additional information on the proposed sale is available to
prospective bidders and members of the public at OMEM.
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April 7, 1982
MINERALS AND ENERGY MANAGEMENT
Sale 36
Information to Bidders
A. Acceptance and Rejection of Bids
JAYS. HAMMOND, GOVERNOR
555 CORDOVA STREET
POUCH 7-005
ANCHORAGE, ALASKA 99510
(907) 276·2653
Phone: (907)276-2653
The State hereby expressly reserves the right to reject any bid on any
tract. No bid for any tract will be accepted and no lease for any tract
will be awarded to any bidder unless the following conditions have been
met:
1. The bidder has complied with this notice and applicable state
regulations and statutes unless the commissioner determines that an
omission was immaterial or due to excusable inadvertance and if the
omission is corrected within one week after receipt of a notice of
deficiency.
2. The bid is the highest valid cash bonus bid.
3. The amount of the bid has been determined to be adequate by the
Commissioner of Natural Resources.
4. No bid containing or accompanied by any condition, qualification, or
material alteration will be considered.
B. Pre-Qualification of Bidders
In order to submit bids for this sale, bidders must be qualified to bid
prior to the sale date of May 26, 1982. Qualification procedures are as
follows:
1. Individuals -An individual bidder must have a Statement of
Qualifications on file at DMEM certifying that he or she is at least
18 years old and a citizen of the United States or is eligible for and
has filed for citizenship, or is an alien person entitled to a similar
lease by virtue of a treaty between the United States and the nation
of which the alien person is a citizen. The statement must include
the biddervs name, address, and telephone number and must be signed
and dated. If an agent is signing the bid form on behalf of an
individual, a notarized power-of-attorney document evidencing the
authority of the agent to act on behalf of the individual must be on
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file at DMEM. If a g~.,;ardian, trustee, or legal representative of an f'
individual is signing on behalf of that individual, a certified copy 1
of the court order authorizing him to act in that capacity and to
fulfill the individual's obligations arising under any lease issued to r_·
the individual must be on file at DMEM. A signed statement as to the l
citizenship and age of the guardian, trustee, or legal representative
and the individual must also be submitted to DMEM.
2. Corporations -Corporations must have the following documents on file
at DMEM prior to the lease sale:
a. Copy of 1982 Certificate of Compliance.
b. The current address and phone number of the corporation.
c. A list of the current officers of the corporation that are
authorized to sign a bid on behalf of the corporation.
d. A notarized power-of-attorney authorizing any agent who is
not a current officer but who has been designated by the
corporation to sign a bid on behalf of the corporation.
A Certificate of Compliance can be obtained by sending 60 cents to
State of Alaska, Department of Commerce and Economic Development,
Corporation Section, Pouch D, Juneau, Alaska 99811 and requesting the
certificate. The Certificate of Compliance provides written proof
that the corporation has paid all taxes, complied with all applicable
laws, and is thus qualified to do business in the state. If
information previously filed by corporations that have previously
qualified to do business in Alaska is still current, this information
may be incorporated together with a statement as to any material
changes or amendments. However, a 1982 Certificate of Compliance is
required for this sale.
3. Corporations That Have Not Previously Qualified To Do Business in
Alaska - A corporation that has not previously qualified to do
bus1ness in Alaska must submit the following documents to DMEM:
a. If the corporation is a foreign corporation, it must submit
a copy of its Certificate of Authority. If the corporation
is a domestic corporation, it must submit a copy of its
Certificate of Incorporation. A foreign corporation is one
that has been incorporated outside the State of Alaska. A
domestic corporation is one that has been incorporated
within the State of Alaska.
b. The current address and phone number of the corporation.
c. A list of the current officers of the corporation that are
authorized to sign a bid on behalf of the corporation.
d. A notarized power-of-attorney authorizing any agent who is
not a current officer but who has been designated by the
corporation to sign a bid on behalf of the corporation.
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In order to receive a Certificate of Authority, foreign corporations
must submit a packet of completed forms entitled "Instructions for
qualifying a foreign corporation to do business in the State of
Alaska" to the Department of Commerce an,d Economic Development,
Corporation Section, Pouch D, Juneau, Alaska 99811. In order to
receive a Certificate of Incorporation, domestic corporations must
submit Articles of Incorporation to the Department of Commerce and
Economic Development. These forms can be obtained by writing or
telephoning DMEM, Pouch 7-005, Anchorage, Alaska, 99510 (276-2653).
Upon proper application, the Department of Commerce and Economic
Development will issue a Certificate of Authority or Certificate of
Incorporation. Please allow two to three weeks for the processing of
these Certificates.
4. Partnerships or Other Unincorporated Associations - A partnership or
unincorporated association must submit the following documents to DMEM
prior to the lease sale:
a. A statement describing the business relationships between
members or partners.
b. A statement of qualifications for each member stating that
each member is at least 18 years of age and a citizen of the
United States, or is eligible for and has filed for
citizenship,,or is an alien person entitled to a similar
lease by virtue of a treaty between the United States and
the nation of which the alien person is a citizen.
c. If an agent is signing the bid form on behalf of the
partnership or association, a notarized power-of-attorney
defining the agent's authority to sign the bid on behalf of
the partnership or association,
C. Bid Submission
All bids will be accepted by the Director of the Division of Minerals and
Energy Management or her authorized ~gent in Room 31 (3rd Floor), 555
Cordova Street, Anchorage, Alaska, between the hours of 9:00 a.m. and 3:00
p.m. on May 25, 1982. Bids that are mailed to the Director, DMEM, Pouch
7-005, Anchorage, Alaska 99510 must be received no later than May 24,
1982. Bids will also be accepted at the Division's temporary office at
the Travelers Inn in Fairbanks between 7:30 a.m. and 9 a.m. on May 26,
1982. No bids tendered after 9:00 a.m. on the day of the sale, May 26,
1982, will be accepted.
Bids will be received and processed on May 26 in the following manner:
1. 7:30 a.m. -9:00 a.m. -bids will be received in the "Rampart Room".
2. 9:00 a.m. -closing of bid submission.
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3. 9:00 a.m. -10:00 a.m. -opening of the bids by DMEM personnel. The r:
opening of bids is for the sole purpose of
publicly announcing and recording bids r-_
received. No bids will be accepted or
rejected at this time.
4. 10:00 a.m. -public reading of the bids will begin in the 11 Gold Room 11 •
D. Form for Submission of Bids
1. A separate bid must be submitted for each tract.
2. Each bid must be submitted separately in a single envelope. The
envelope should be marked "State of Alaska Competitive Oil and Gas
Lease Sale 36; not to be opened until 9:00 a.m., t-1ay 26, 1982; Tract
# .'' No other statements, information, or identification should
appear on the outside of the envelope.
The following items must be contained in each envelope:
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a. An executed bid form DMEM-8 (5/82) or an exact copy of that [ ·
form. All bidders should state their name, company (if .
applicable), address, and telephone number on the bid form.
b. Bid Deposit: Check or money order made payable to the l-
11 Department of Revenue, State of Alaska.11 Bid deposits must -·
be in u.s. dollars and must be tendered in cash or by money r·
order, cashier's check or certified check in the total amount
of 20% of the total cash bonus being offered for the tract. l __
No bid for less than a full tract will be considered.
3. Pursuant to 11 AAC 82.430, joint bids must disclose, and the bid form
must be signed by or on behalf of, each person who has any working
interest in the bid or who will receive any working interest in any
lease issued in this sale by virtue of any agreement or understanding,
oral or written. This requirement does not mean that persons who are
interested in a bid only as stockholders in a corporation must sign
the bid and lease form and does not mean that the designated
information must be furnished as to those persons. Joint bids must
state the percentage of interest of each bidaer and must designate one
person who is authorized to receive notices on behalf of all the
bidders.
E. Method of Handling Bid Deposits
1. Bid deposits will be safeguarded against theft, misappropriation and
loss. Acceptance of a bid deposit by the state does not constitute
and shall not be construed as acceptance of any bid on behalf of the
state.
2. A bidder submitting a bid which is not the apparent high bid may pick
up the bid deposit from 2 to 4 p.m., May 26, 1982, at the Travelers
Inn in Fairbanks. Bid deposits also will be returned from l to 3
p.m., May 27, 1982, and from 8:30a.m. to 3 p.m., May 28, 1982, in
Room 31, Third Floor, 555 Cordova Street, Anchorage.
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3. A bidder whose bid deposit for an apparent high bid is tendered by
cashier's check or certified check drawn on a bank outside Fairbanks,
Alaska, must wire transfer funds 'in the amount of such bid deposit (if
more than $50,000) on May 27, 1982, no later than noon E.S.T. (7 a.m.
A.S.T.), to the credit of the State of Alaska Investment Account, Bank
of America, NT&SA, San Francisco, C~lifornia, to the attention of:
Elizabeth Stephens, Securities Clearance Department, #3298. It is not
necessary that separate wire transfers be made if more than one bid
deposit is being transferred to the account; however, each apparent
high bidder making a wire transfer to this account must Telex the
following information to Bank of America (Telex No. 9-34-0534) with a
copy to the Alaska Department of Revenue, Treasury Division (Telex No.
099-45-333): the amount of each bid deposit comprising the wire
transfer, the tract number to which each bid deposit applies, the
originating bank of the wire transfer, and the name(s) of the oidder•s
partner(s), if any, on whose behalf a bid deposit is being wire
transferred. Upon notification of receipt of a wire transfer, th:~
cashier's check(s) and certified check(s) for the bid deposit(s)
corresponding to that wire transfer will be returned from J. p.m. to 3
p.m. May 27, 1982, and from 8:30 a.m. to 3 p.rn. May 28, 1982 in Room
31 (3rd Floor), 555 Cordova Street, Anchorage, Alaska.
4. If a bid deposit for an apparent high bid is tendered in cash, by
money order, or is a certified or cashier's check drawn on a
Fairbanks, Alaska bank, the bidder will not be required to wire
transfer federal funds for that bid deposit. Such checks will be
presented May 26, 1982, for payment in federal funds at the banks upon
which they are drawn.
5. Upon rejection by the State of Alaska of any apparent high bid, the
amount of the bid deposit for that bid will be returned by wire
transfer to a bank designated by the bidder. A bidder who is unable
to pick up a bid deposit in the manner described in E(2) and E(3)
above may submit with the bid written instructions for return of the
bid deposit.
6. Upon acceptance of a bid by the Commissioner of Natural Resources, the
successful bidder will be notified by certified mail of the lease
award and will be sent two copies of the lease for signature. Within
30 days of the date that the bidder receives notification of the lease
award, the bidder must: 1) sign both copies of the lease; 2) return
them to the Division of Minerals and Energy Management for execution;
3) pay the balance of the cash bonus and accrued interest; and 4) pay
for the first year annual rental. Interest of 13.399% per annum
(which is the market interest rate for 90-day U.S. Treasury bills
prevailing during the week of March 29 -April 2nd) will be charged on
the balance of the cash bonus accruing from the date of the successful
bidder's receipt of the notification of the lease award to the date of
payment. The successful bidder owes interest from the day that he
receives the bid acceptance letter until the day before the money is
paid. Interest should be paid on the cash bonus only and not on the
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first year of rental. Payment of the balance of the cash bonus,
accrued interest and rental must be accomplished in the following
manner:
The successful bidder will wire transfer federal funds in the
amount of the balance of the cash bonus and accrued interest, and
annual rental for the first year to the State of Alaska
Investment Account at the Bank of America, NT & SA, San Francisco,
California, to the attention of Elizabeth Stephens, Securities
Clearance Department, #3298. The wire transfer should specify on
whose behalf and on what tracts the balance, interest, and rental
is being paid. If possible, bidders should use only one wire
transfer. Interest calculations should be based on a 360-day year
times the actual number of days that interest is owed.
In addition, the succes,sful bidder must simultaneously send the
following information by telex to the State of Alaska, Department
of Revenue, Treasury Division, attention of : Peter Bushre at
Telex #099-45333: The amount of rental, interest, and balance of
cash bonus being paid per tract; the name(s) of the bidder(s) on
whose behalf the funds are being wire transferred; and the
originating bank of the wire transfer.
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Terms of Sale 36
AS 38.05.035(a)(l4) and the departmental delegation of authority give the
Director, Division of Minerals and Energy Management (DMEM), the authority to
impose conditions or limitations, in addition to those imposed by law, to
ensure that a disposal is in the State's best interest. Lease stipulations
will be enforced throughout the term of the lease. "Plans of Operations and .
Other Terms of Sale" lists those measures that will be imposed through Plans
of Operations and other permits as needed to mitigate the social and
environmental effects of lease-related activities.
LEASE STIPULATIONS
1. Spill Prevention Control and Countermeasure (SPCC) Plan:
A Spill Prevention, Control and Countermeasure Plan must be submitted to
the Department of Environmental Conservation for approval prior to onshore
drilling operations and construction of onshore oil and gas storage
facilities (with a capacity of greater than 660 gallons), transfer, and
transportation facilities. In addition to addressing the prevention,
detection and cleanup of oil, the SPCC plan for drilling operations should
include, but not be limited to, methods for controlling blowouts, location
of spill clean-up equipment, identification and location of a suitable
alternative drilling rig, and the time required to obtain, mobilize,
rig-up, and commence drilling of a relief well, if needed.
2. Discovery of historic or archeologic objects:
In the event any site, or structure, or object of historic or archeologic
significance is discovered during the conduct of any operations on the
leased area, the lessee must report immediately such findings to the
Director, DME~1, and make every reasonable effort to preserve and protect
such site, structure, or object from damage until the Director, after
consultation with the State Historic Preservation Officer, has given
directions as to its preservation.
3. Seasonal Drilling Stipulation:
Offshore exploratory wells are subject to seasonal drilling restrictions
which will be announced prior to approval of drilling on Sale 36 tracts.
Present restrict.ions limit exploratory drilling and testing and other
downhole exploratory activities for wells outside the barrier islands to
the period November 1 through March 31. On and inside the barrier
islands, these activities may continue to May 15 if the lessee
demonstrates the ability to operate safely and ice conditions justify.
These restrictions were applied to leases issued as a result of the 1979
Joint Federal/State Beaufort Sea Sale. These restrictions are currently
being re-evaluated by the Commissioner of Natural Resources, who will
decide whether they are to be eliminated, modified or retain .d, The
re-evaluation will consider the latest biological information, technology,
economics and public comment. The decision made by the Commissioner with
regard to the 1979 Joint Federal/State Beaufort Sea lease sale area will
be applied to the offshore tracts offered in Sale 36 for the 1982-1983
drilling season. For subsequent drilling seasons, the seasonal drilling
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restriction may be eliminated, modified or retained based on the latest
biological information, technology, economics and public comment. Salient
points to be used for determlning whether surface locations are inside or
outside the barrier islands are listed under terms of sale, page 16, item
number 40.
PLANS OF OPERATIONS AND OTHER TERMS OF SALE
Lessees must submit a detailed plan of operations to the Division of Minerals
and Energy Management for approval prior to conducting any exploratory or
development operations. The lessee shall, concurrently with its submission to
DMEM, submit an informational copy of its plan of operations to the North
Slope Borough. The following conditions and restrictions will be imposed as a
condition of the approval of plans of operations:
1. Road and pipeline crossings must be aligned perpendicular or near
perpendicular to watercourses. Permanent facilities will be
prohibited within 500 feet (122 m) of the Canning River, including
the Staines River branch. Other facilities will be prohibited within
100 feet (30 m) of all other streams unless the Director, Division of
Minerals and Energy Management, determines that such a requirement is
not feasible or prudent.
2. Measures will be required to minimize the impact of industrial
development on key wetlands, waterfowl and shorebirds. Key wetlands
include Deep Arctophila ponds and lakes (Class IV), Basin-complex
wetlands (Class VI) and Coastal wetlands (Class VIII). Measures will
include restricting certain facility siting to the least
environmentally sensitive portions of these wetlands. Specific
measures include the requirements that: ·
a. Lessees identify on a map or aerial photograph the largest
surface area within which it is anticipated that a facility is
to be sited~ or an activity is to occur. The map or photograph
must accompany the plan of operations submitted to OMEM. DMEM
and the Department of Fish and Game will identify the least
environmentally sensitive area(s) within the industry-identified
area of interest. The industry identified surface area must be
large enough to contain the proposed facility and to accomodate
planned expansion.
b. Drill pads, roads, pipelines and other facilities must be sited
outside of productive Class IV, VI and VIII wetlands, unless the
Director, DMEM, after consultation with the Department of Fish
and Game, determines that there are no feasible alternatives.
c. Where facilites must be sited within Class IV, VI or VIII
wetlands, such facilities will be sited, designed and
constructed in a manner that will maintain natural hydrological
patterns and prevent oil contamination.
d. Draining or dewatering Class IV, VI and VIII wetlands is
prohibited.
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3. Impermeable lining and diking will be required for sewage ponds and
onshore oil storage facilities (with a storage capacity greater than
660 gallons). Maximum sized buffer zones of up to 1,500 feet will be
required to separate oil storage facilities (with a capacity greater
than 660 gallons) and sewage ponds from freshwater supplies, streams,
lakes, Class IV, VI and VIII wetlands and marine areas unless the
Director, DMEM, determines that such a requirement is not feasible or
prudent. Sumps and reserve pits must be impermeable and otherwise
fully contained through diking or other means.
4. All lease activities and structures must be designed to maintain
normal water flow or drainage patterns and to allow free movement and
safe passage to fish and mammals, both onshore and offshore, unless
the Director, DMEM, after consultation with the Department of Fish
and Game, determines that such a design is not feasible or prudent.
5. Exploration activities must be supported only by ice roads, winter
trails, existing road systems, and air service. On-tundra travel may
be permitted if the Director, Division of Land and Water Management
and the Director, DMEM, determine that travel can be accomplished
without disturbing the vegetative mat or an emergency condition
exists.
6. Facilities and surface transportation routes must avoid sensitive
fish and wildlife habitat and must be consolidated to the extent
feasible and prudent.
7. No restriction of public access to, or use of, the leased area will
be permitted as a consequence of oil and gas activities except in the
immediate vicinity of drill sites, buildings and other related
structures. Such areas where access is proposed to be restricted
must be identified in the plan of operations. No lease facilities or
operations may be located where they would block public access to or
along navigable and public waters as defined in AS 38.05.365(22) and
(23). If lease facilities are proposed to be located in the vicinity
of these public waters, an easement will be reserved under AS
38.05.127 and 11 AAC 53.330 to ensure the right of public access.
8. The lessee must include in any exploration and/or development plans a
proposed environmental training program for all personnel involved in
exploration or development activities (including personnel of the
lessee's contractors and subcontractors) for review and approval by
the Director, DMEM. The program must be designed to inform each
person working on the project of specific types of environmental,
social, and cultural concerns which relate to the individual's job.
The program must be formulated and implemented by qualified
instructors experienced in each pertinent field of study and must
employ effective methods to insure that personnel understand and use
techniques necessary to preserve archeological, geological, and
biological resources. The program must also be designed to increase
the sensitivity and understanding of personnel to community values,
customs, and lifestyles in areas in which such personnel will be
operating.
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The lessee must also submit for review and approval a continuing
technical environmental briefing program for supervisory and
managerial personnel of the lessee and its agents, contractors, and
subcontractors.
9. The proposed activities under a plan of operations must not diminish
the use and enjoyment of a Native allotment.
10. Solid waste disposal on natural or artificial islands and in marine
waters, rivers, streams, natural lakes and Class IV, VI and VIII
wetlands is prohibited. Before the lessees dispose of solid waste in
other areas, the disposal must be approved by the Commissioner,
Department of Environmental Conservation.
11. An Oil Discharge Contingency Plan will be required for offshore
operations under AS 46.04.030 and 18-"AAC 75.
12. Discharge of produced water, drilling muds, and cuttings:
a. Disposal of produced water to freshwater bodies is prohibited.
Disposal of produced waters in upland areas, including wetlands,
will be by subsurface disposal techniques, except that the
Commissioner of the Department of Environmental Conservation may
permit alternate disposal methods if he determines that
subsurface disposal techniques are not feasible or prudent.
Disposal of produced waters to Class IV, VI and VIII wetlands is
prohibited.
b. Discharge of produced waters into marine waters of less than 10
meters in depth is prohibited. The Commissioner of the
Department of Environmental Conservation may approve discharge
in tracts where water depth is greater than 10 meters based on a
case-by-case review of local circulation, depth, suspended
material, and biological sensitivity factors.
c. Discharge of drilling muds and cuttings to lakes, streams,
rivers, and Class IV, VI and VIII wetlands is prohibited.
Offshore disposals in areas other than indicated above must be
free of hydrocarbon contamination and will be subject to
case-by-case approval by the Department of Environmental
Conservation. Uplands disposals of contaminated muds and
cuttings may be made into sumps and reserve pits which are
impermeable and otherwise fully contained through diking or
other means.
13. Exploration facilities, with the exception of drill pads, will be
temporary and must not be constructed of gravel. However, use of
existing abandoned gravel structures may be permitted on an
individual basis by the Director, DMEM, after consultation with the
Director of the Division of Land and Water Management and the
Department of Fish and Game. Approval for use of abandoned
structures will depend on the extent and method of restoration needed
to return these structures to a usable condition.
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14. In meeting gravel needs for exploration, development 1 and production,
gravel from nearby abandoned drill pads must be used first unless the
Director, Division of Land and Water Management determines, after
consultation with the Director, DMEM, and the Department of Fish and
Game, that the reuse of such sources is not feasible and prudent.
15. Gravel mining sites required for exploration activities must not be
located within the annual floodplains (from vegetation line to
vegetation line) of watercourses, unless the Director, Division of
Land and Water Management determines, after consultation with the
Department of Fish and Game, that a floodplain source will cause the
least adverse environmental impact. Mining site development and
rehabilitation within floodplains must follow the procedures outlined
i_n Gravel Removal Guidelines For Arctic and Subarctic Floodplains,
1980, U.S. Fish and Wildlife Service-Woodward Clyde Consultants.
16. Borrow extraction from barrier islands is prohibited. Borrow
extraction from lagoons and nearshore areas is prohibited unless the
Director, Division of Land and Water Management finds, in
consultation with the Department of Fish and Game, that, on the basis
of scientific evidence, borrow extraction in these areas will not
adversely affect the environment or that no alternative feasible or
prudent sources exist.
17. Gravel mining sites required for development activites will be
restricted to the minimum number of upland or approved offshore sites
needed to develop the field efficiently and with minimal
environmental damage. · Where feasible, upland gravel sites will be
designed and constructed to function as reservoirs for winter water
supplies. Gravel mining will not be allowed from annual floodplains
(from vegetation line to vegetation line) during development and
production activities, unless the Director, Division of Land and
Water Management, after consultation with the Department of Fish and
Game, determines that there is no other.feasible and prudent
alternative.
18. Pipelines will be located so as to facilitate the containment and
clean up of spilled hydrocarbons. Where feasible, pipelines will be
located on the upslope side of roadways and construction pads unless
it can be demonstrated that an alternative site is an acceptable
environmental alternative.
19.
20.
All garbage and refuse will be incinerated. Residue and nonburnables
will be disposed of at an approved upland site. No new solid fill
disposal sites, except possibly for the disposal of drilling muds and
cuttings, will be app~oved during the exploratory phase.
Except for those on approved drill sites, stationary fuel storage
facilities shall not be placed, nor vehicle refueling occur, within
the annual floodplain (vegetation line to vegetation line) of a
fish-bearing stream. Exceptions may be allowed during the permitting
process under AS 16.06.870 for the refueling of slow-moving
construction equipment (such as graders, tractor pulled scrapers and
front end loaders) within floodplains.
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21. . Prior to the construction or placement of any onshore structure,
road, or facility resulting from exploration, development, or
production activities, the lessee must conduct an inventory of
archeological and historical sites within the area affected by a
proposed activity. Such inventory must consider literature provided
by the North Slope Borough and local residents, documentation of oral
history regarding historic and prehistoric uses of such sites,
evidence of consultation with the Alaska Heritage Resources Survey
and the National Register of Historic Places, and site surveys. The
inventory must also include a detailed analysis of the potential
effects estimated to result from the proposed activity. The
inventory must be submitted to the Director, DMEM, for distribution
to the Director of the Division of Parks and the Mayor of North Slope
Borough for purposes of review and comment. In the event that an
archeological or historical site or area may be adversely affected by
an activity, the Director, DMEM, after consultation with the Director
of the Division of Parks and the North Slope Borough, will direct the
lessee as to what course of action will be necessary to mitigate the
adverse effect.
22. Upon abandonment of drilling sites, roads, buildings, airstrips or
other facilities, such facilities will be removed and the site
rehabilitated, unless the Director, DMEM determines, after
consultation with the departments of Fish and Game and Environmental
Conservation, that such removal and rehabilitation is not in the
state's interest.
23. The following measures will be imposed to protect the Canning River,
including the Staines River branch:
a. Alteration of river banks is prohibited.
b. Except forapproved stream crossings, equipment must not be
operated within willow stands (Salix spp.).
c. The operation of equipment in open water areas that appear in
winter (from freezeup until spring breakup) will be prohibited.
d. Bridges must be used as watercourse crossings whenever
feasible. Culverts may be used only when bridges are shown not
to be feasible or prudent. The siting, design, and construction
of both bridges and culverts must be approved by the Department
of Fish and Game prior to the placement of either of these
structures.
e. Removal of freshwater or snow cover from the river will be
prohibited from freeze up until spring breakup.
f. Water intake pipes utilized for summer water removal from the
river must be surrounded by a screened enclosure to prevent fish
entrainment and impingement. Pipes and screening must be
designed and constructed so that the maximum water velocity at
the surface of the screen enclosure is no greater than 0.1 foot
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per second. Screen mesh size shall not exceed 0.04 inch unless
another size has been approved by the Department of Fish and
Game.
g. To protect fish and other aquatic fauna, high explosives must
not be detonated within, beneath, or in close proximity to
fish-bearing waters unless prior drilling indicates· that the
waterbody, including its substrate, is solidly frozen. The
minimum acceptable offset from fish-bearing waters for various
size charges is:
1 pound charge
2 pound charge
5 pound charge
10 pound charge
25 pound charge
100 pound charge
500 pound charge
1,000 pound charge
50 feet
75 feet
125 feet
150 feet
250 feet
500 feet
1200 feet
1600 feet
24. The lessee will be responsible for ensuring that an adequate supply
of water is available for winter use through development of such
means as storage reservoirs and snow melting. Water appropriations
shall be authorized pursuant to AS 46.15.
25. The following measures will be required to minimize impacts on the
Central Arctic Caribou Herd:
a. Exploratory.arilling operations may be restricted or prohibited
on tracts C-36-011 and C-36-012 between May 15 and June 25 to
protect caribou calving areas. Development and production
activities, with the exception of drilling, maintenance and
operation of production wells, may be restricted or prohibited
on tracts C-36-011 and C-36-012 between May 15 and June 25,
except that such activities will be allowed on a year-round
basis in any core area of intense activity. In order to assist
the Director, Division of Minerals and Energy Management, in
determining the validity of restrictions, the lessee may be
required to conduct caribou ~onitoring studies in consultation
with the Department of Fish and Game.
b. Pipelines must be constructed to allow safe passage of caribou
and moose. Adequate elevation, ramping, or burial of pipelines
will be required in areas identified by the Department of Fish
and Game as important caribou movement zones.
26. ~outes of travel must avoid preferred polar bear denning habitat
unless human safety dictates otherwise. Polar bears are known to den
predominately within 25 miles of the coastline in aeeply drifted
areas (6 ft. or greater) adjacent to the cutbanks of drainages. The
use of explosives will be prohibited within 1/4 mile of such cutbanks
identified by the Department of Fish and Game.
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27. Offshore geGfA!ys.ical surveys will be restricted as necessary during
the spring to comply with the provisions of the Marine Mammal
Protection Act.
28. Offshore geophysical surveys will be restricted as necessary during
the fall to comply with the provisions of the Endangered Species Act
as they relate to tt1e bowhead whale. In determining these
restrictions, the Director DMEM will, at a minimum, consult with the
1--iort.h S.lope So rough, the Alaska Eskimo Whaling Commission and
affected permittees.
29. In conducting offshore geophysical surveys, neither lessees nor their
agents will use high explosives in open water areas.
30. ··he fol.lowir:; jJi'DVisions will govern aircraft operations in and near
U;e s<,.le arec,_.
a. F:.om May l5 tru·ough September 30, aircraft must fly at altitudes
of greater than 1,500 feet (457 m) or at a horizontal distance
oP one mile around barrier island and lagoon areasr river
Geltas, and wetlands within one mile of the Beaufort Sea
:;:Jastl~ltle (excluding take-offs and landings).
;J. :rum ~~a;.~ 15 through June 20, aircarft overflights within 30
mi.J.es (~~4 km) of the coast between the Sagavanirktok and Canning
RJvers must avoid caribou by an altitude of at least 1,500 feet
(/J,57 m) or a horizontal distance of one mile (1.6 km) (excluding
take-~f~s and landings).
c. Human safety will take precedence over aircraft restrictions.
31. Drilling platforms or structures in tracts or portions of tracts
located beyond the barrier islands in water depths in excess of 13
meters will be prohibited until such time as a test platform or
struccu:re of the same type to be drilled from has been in existence
in the area at a depth in excess of l3 meters for a period of two
winter seasons. An independent engineering firm must certify the
test sc..ructu:;:e Defore drilling operations are approved. Certified
structures of the same type built on existing Alaska Beaufort Sea
leases will meet the test structure requirements for Sale 36.
32. Conti1-:uc..'s fill causeways will be prohibited. Noncontinuous fill
U}i..;::;eways rne~y be permitted when the Director, DMEM, determines that a
causeway is necessary for field development and that no other
feasiLle and prudent alternative exists.
35. Surface use will be restricted, as necessary, to prevent unreasonable
conflJcts witn local subsistence harvests.
34. Oil and gas transportation pipelines will be encouraged if the
Direct:Jr 1 OMEiV., cetermines that the laying of such pipelines is
technically feasible and environmentally preferable. Pipelines,
incluci, ;~; nov. ar:d gathering lines, must be designed and constructed
to provide aaequate protection from water currents, storm and ice
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scouring, subfreezing conditions, and other hazards as determined on
a case-by-case basis. Following the installation of a pipeline of
sufficient capacity, no crude oil will be transported by surface
vessel from offshore production sites, except in an emergency. The
Director, DMEM, will evaluate the emergency and determine an
appropriate response to the condition. If the use of a pipeline is
not feasible and preferable and surface transportation must be
employed, all vessels used for carrying hydrocarbons to shore will
conform with all standards established for such vessels, pursuant to
the Ports and Waterways Safety Act of 1972 (46 u.s.c. 39l(a)).
35. Bidders are advised that the North Slope Borough (NSB) Assembly has
adopted an interim zoning ordinance under Title 29 of the Alaska
Statutes. The interim zoning ordinance requires NSB approval for
certain activities necessary for exploration and development of the
lease. The state may not in all instances accept this assertion of
jurisdiction.
36. During the conduct of all activities related to this lease, the
lessee will be subject to the provisions of all valid coastal zone
plans and ordinances. DMEM will require, as a condition for approval
of lease operations, such modification or stipulations as may be
necessary to ensure consistency with the Coastal Management Act, and
with sound planning and management of coastal zone resources.
37. Plans of operations for lease activities and specific permit
applications which are subject to approval by the u.s. Corps of
Engineers or which require a Certificate of Reasonable Assurance from
the Department of Environmental Conservation must be submitted
simultaneously for state agency review and approval, at least 60 days
prior to the proposed conduct of such activities.
38. If only the subsurface estate is owned by the state, or if the
surface is owned by the state but subject to third party interests,
the lessee must not enter upon such land until the lessee makes a
good faith effort to agree with the surface interest holder on
settlement of damages that may be caused by lease activities. If an
agreement cannot be reached, Director, DMEM, has the authority to
approve the activity, provided adequate provisions have been made
with the state to pay for any damages the surface interest holder may
suffer.
39. Many of the environmental concerns associated with the offshore
tracts within the area of the Joint Federal-State Beaufort Sea Sale
(5ale 30) apply to the offshore tracts in the Sale 36 area.
Consequently, in the enforcement of Stipulation No. 3 and Terms of
Sale Nos. 8, 27, 28 and 34 of Sale 36, the Director, DMEM, will
continue to receive recommendations from a biological task force
composed of designated representatives of the following state
agencies: Department of Fish and Game, Department of Environmental
Conservation, and Department of Natural Resources. In addition,
representatives of interested federal agencies, including the Bureau
of Land Management, U.S. Fish and Wildlife Service, Minerals
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Management Service, the National Marine Fisheries Service, and the
Environmental Protection Agency will be afforded the opportunity to
continue their participation in these consultations.
40. For the purpose of administering stipulation No. 3, the following
salient points will be used for determining surface locations which
are located inside or outside the barrier islands:
STAT ION NAtvlE
LATITIDE LONGITUDE (ZONE 6 U. T .M.)
70° lO I 05 • QQII 145° 53' 34.00"
N=7,784,820.74 E=541,923.40 16045-30
70° 10 1 57.50" ·145° 57' 20.00"
N=7,786,404.93 E=539.518.73 16045-29
70° 11' 15.00" 145° 58' 47.50"
N=7,786,931.40 E=538l590.07 16045-28
70° 11' 34.00" 146° 00' 45.50"
N=7,787,499.50 E=537,340.70 16045-27
70° 11' 47.49994" 146° 02' 29.49957"
N=7,787,900.210 E=536, 241.660 16045-26
70° 12' 13.99980" 146° 08' 18.0002011
N=7,788,666.370 E=532,569.860 16045-23
70° 13' 55.49976" 146° 23' 07.50024"
N=7,79l,697.380 E=523,199.030 16045-14
70° 29' 50.99976" 147° 57' 33.00038"
N=7,821,463.120 E=464,261.260 16061-56
70° 28' 17.60000" 148° 14' 29.70006"
N=7;818,760.640 E=453,680.400 16061-49
70° 28' 59.79984" 148° 18' 12.39981"
~=7,820,116.030 E=451,400.890 16061-46
70° 29' 02.99984" 148° 18' 36.00025"
N=7,820,220.400
I
E=451,158.630 16061-45
70° 29' 10.76890" 148° 21' 08.02495"
N=7,820,495.510 E=449,589.760 l6061-3(N)
I
70° 29' 10.92193" 148° 21' 24.14700"
N=7,820,503.970 E=449,422.940 16061-2(N)
70° 29' 10.6016511 148° 21' 44.31031"
N=7,820,498.720 E=449,213.950 16061-l(N)
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700 29' 09.10775"
N=7,820,457.850
148° 22' 07.52560"
E=448,972.540 16061-3(5)
70° 25' 42.60001"
N=7,814,33l.l20
148° 39' 29.79993 11
E=438,006.820 16061-7
The line connecting the salient points listed above will be utilized for
defining "inside" and "outside" the barrier islands. This line is not
intended to have any other legal effect.
41. Lessees will be eligible for exploration incentive credits for
exploration wells as provided in 11 AAC 83.800, 11 AAC 83.805, 1l AP:C
83.815, and 11 AAC 83.820 as those regulations exist on the effective
date of the lease. Credits will be earned at a rate of $750 per foot
drilled for the first exploratory well per tract, provided that
credits cannot exceed 40% of the total exploratory well costs. The
credits must be earned and used within 10 years of the effective date
of the lease.
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May 12, 1982
REGARDING:
MINERALS AND ENERGY MANAGEMENT
STATE OF ALASKA
2ND SUPPLEMENTAL NOTICE
OIL & GAS LEASE SALE 36
JAYS. HAMMOND, GOVERNOR
555 CORDOVA STREET
POUCH 7-005
ANCHORAGE, ALASKA 99510
(907) 276-2653
SEASONAL DRILLING STIPULATION, EXPLORATION INCENTIVE CREDITS AND
LOCAL HIRE REQUIREMENT
Bidders are advised of the following supplemental information for Sale 36
concerning changes in the original seasonal drilling stipulation no. 3,
clarification of term no. 41 which deals with exploration incentive credits,
and the addition of a new term of sale (term no. 42) dealing with local hire.
Stipulation 3 (Seasonal Drilling Stipulation)
The following stipulation replaces stipulation no. 3 in the final notice of
sale under AS 38.05.345(a)(4) for Sale 36, dated April 7, 1982:
This stipulation will be periodically reevaluated on the basis of
experience and new information.
A principle purpose of this stipulation is to insure that the migration
route of the bowhead whale will be oil free in the fall.
This stipulation assumes compliance with otherwise applicable laws and
regulations, including a Plan of Operations approved by the Department of
Natural Resources (DNR) and an Oil Discharge Contingency Plan approved by
the Department of Environmental Con$ervation (DEC).
The restrictions set out below apply only to exploratory drilling. As a
matter of policy, the State does not intend to impose seasonal drilling
restrictions during development or production stages; however, seasonal
restrictions may be imposed in the development and production stages
where they are necessary to satisfy requirements of the federal
Endangered Species Act, and other applicable state and federal laws and
regulations.
The seasonal drilling restriction does not apply to exploratory
operations on Flaxman Island and on any other islands subsequently
identified by the Commissioner of Natural Resources, in consultation with
the Commissioners of Environmental Conservation and Fish and Game, as
analogous to upland areas because of their size and configuration.
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Logistical, construction, and other activities related to exploratory
drilling may be restricted outside the barrier islands during the fall
whale migration.
A whale study and monitoring program, developed in consultation with the
National Marine Fisheries Service, will be required in an effort to
measure the impact of noise and other disturbances on bowhead whale
behavior and on the migration. If adverse impacts are shown, the
activities which have caused them will be suspended until the whales
leave the area.
This stipulation assumes that adequate funding and trained personnel will
be available for monitoring and enforcement of applicable restrictions.
Tier 1 is effective immediately. Tier 2 will be available on a
case-by-case basis for each proposed well.
TIER 1
A. On and inside the barrier islands
1. Exploratory drilling and other downhole activities above a
predetermined threshold depth* will be allowed year-round.
2. Exploratory drilling and other downhole activities below a
predetermined threshold depth will be allowed from November 1 to May
15, except at the mouths of major rivers, where exploratory drilling
and other downhole activities below a predetermined threshold depth
must cease by April 30 unless the Commissioner of Natural Resources,
in consultation with the Commissioners of Fish and Game and
Environmental Conservation, determines that ice conditions justify an
extension to May 15. Exploratory drilling and other downhole
activities below a predetermined threshold depth will be allowed
during the open water period except during the fall bowhead whale
migration.
3. Testing will be allowed year-ro~nd provided that casing has been set
through the zones to be tested and DNR and DEC find compliance with
applicable laws and regulations.
'* The threshold depth as used in this stipulation is a point above which
major accumulations of hydrocarbons are not likely. This depth will be
determined on a case-by-case basis by the Division of Minerals and Energy
Management after consultation with the Alaska Oil and Gas Conservation
Commission and, when appropriate, the Minerals Management Service.
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B. Outside the barrier islands
1. Exploratory drilling and other downhole activities above a
predetermined threshold depth will be allowed year-round except
during the fall bowhead whale migration.
2. Exploratory drilling and other downhole activities below a
predetermined threshold depth will be allowed from November 1 to May
15.
3. Testing will be allowed year-round except during the fall bowhead
whale migration, provided that casing has been set through the zones
to be tested and DNR and DEC find compliance with applicable laws and
regulations.
-TIER 2
All exploratory drilling and other downhole activities will be allowed
areawide year-round except outside the barrier islands during the fall
bowhead whale migration. Whale monitoring will be required to determine
when the whales are actually migrating through or near the area.
This modification of the drilling restriction will be approved on a
case-by-case basis for the benefit of lessees who demonstrate compliance
with applicable laws and·regulations, including the theoretical and
physical capability to detect, contain, clean up and dispose of spilled
oil in broken ice conditions.
The State (DEC) believes that lessees do not currently possess adequate
capability to clean up oil in broken ice. Therefore, as a matter of
policy, the State will not approve exploratory drilling and other downhole
activities, except as described in Tier 1, during broken ice conditions
unless and until the lessee can demonstr'ate the capability to clean up oil
in broken ice.
Term 41 (Exploration Incentive Credits)
Term of sale no. 41 is amended by adding:
For purposes of administering 11 AAC 83.820(2)(A) and 11 AAC 83.820(2)(8),
the following interpretations will apply:
a. The Reindeer Island statigraphic test completed April 11~ 1979,
will not be considered a well drilled for oil and gas.
b. Upon request of the lessee, the Commissoner will determine prior
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separate exploration target. l .
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Term 42 (Local Hire Requirement)
The following is added to the list of terms for Sale 36 contained in the final
notice of sale:
(
The lessee is encouraged to hire Alaska residents to perform work
done by or for it within the State of Alaska in conection with this
lease to the extent that residents are available, willing and
qualified. The lessee must submit to the Director, DMEM, a program
detailing the affirmative steps it will take to recruit and hire
Alaska residents and the statistical indicators it will use to
document the program's success. The lessee will submit these
statistics annually to the Director, DMEM.
MINERALS AND ENERGY MANAGEMENT
June'24, 1982
-NOTICE-
JAYS. HAMMOND, GOVERNOR
555 CORDOVA STREET
POUCH 7-005
ANCHORAGE, ALASKA 99510
(907) 276-2653
COMPETITIVE OIL AND GAS LEASE SALE 37
(Middle Tanana Basin and Copper River Basin)
The Department of Natural Resources, Division of Minerals and Energy
Management (DMEM) gives formal notice under AS 38.05.345(a)(4) of its
intention to offer lands for competitive oil and gas lease. Sale 37 includes
about 860,000 acres of land within two areas: the Middle Tanana Basin,
including about 632,000 acres in the Nenana area; and the Copper River Basin,
including about 228,000 acres west of Glennallen in the Lake Louise area.
The sale will be conducted by the Department of Natural Resources under the
authority of Alaska Statute 38.05.180. Bidders awarded leases at this sale
will acquire the right to explore for, develop and produce the oil and gas
that may be discovered within the leased area. In order to bid at the sale
bidders must prequalify prior to the sale date. Potential bidders should
consult DMEM for prequalification procedures. Under 11 AAC 82.445, a bid will
not be considered unless supported by the bid deposit and the information
required, unless any omission is determined by the Commissioner to be
immaterial or due to excusable inadvertence and the omission is corrected
within one week after receipt of a notice of deficiency.
Sale 37 is scheduled to be held on August 24, 1982 at the Travelers Inn, 620
Noble, Fairbanks, Alaska. Bids will be received and processed on August 24 in
the following manner:
1. 8:00 -9:00 a.m. -bids will be received in the "Gold Room".
2. 9:00 a.m. -closing of bid submission.
3. 9:00 -10:30 a.m. -bids will be opened.
4. 10:30 a.m. - a public reading of the bids will begin in the "Gold
Room".
Bids.also will be accepted from 9 a.m. to 3 p.m. on
(3rd floor), 555 Cordova Street, Anchorage, Alaska.
mail must be sent to: Director, DMEM, Pouch 7-005,
and must be received by August 23, 1982.
August 23, 1982 in Room 31
Bids that are sent by
Anchorage, Alaska 99510,
Any lease issued as a result of this sale will be executed on Form No.
DMEM-1-82 (NET PROFIT SHARE) which was revised April 7, 1982.
The bidding method will be cash bonus bidding with a fixed royalty of 12.5%
and a fixed net profit share of 30%.
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All tracts will have an initial primary term of 7 years.
Lessees will be eligible for exploration incentive credits for exploration
wells as provided in 11 AAC 83.800, 11 AAC 83.805, 11 AAC 83.815, and 11 AAC
83.820 as those regulations exist on the effective date of the lease. Credits
will be earned at a rate of $250 per foot drilled for the first exploratory
well per tract, provided that credits cannot exceed 30% of the total
exploratory well costs. The credits must be earned and used within 7 years of
the effective date of the lease. Bidders are advised that the Commissioner
will in all instances approve the assignment of credits earned in Sale 37.
Annual rental will be $1.00 per acre for the first year, $1.50 per acre for
the second year, $2.00 per acre for the third year, $2.50 per acre for the
fourth year, and $3.00 per acre for the fifth and following years.
Any bidder who obtains a lease from the State of Alaska as a result of this
sale will be responsible for the construction of access roads and capital
improvements as may be required by the appropriate platting authority. All
operations on leased lands will be subject to prior approval by the state as
required by the lease and leasing regulations. Surface entry will be
restricted only as necessary to protect the holders of surface interests as
shown on the departmental status plats or as necessary to protect identified
surface resource values.
The Department of Natural Resources has determined that all water bodies
within the sale area are public or navigable. Easements, if necessary to
ensure public access, will be reserved during the review of individual lease
plans of operations. Prior to the commencement of lease operations, an oil
and gas lease bond for a minimum amount of $10,000 per operation is required.
In the alternative, a statewide oil and gas lease bond of $500,000 for
operations conducted on more than one lease may be filed. These bonding
provisions do not affect the Commissioner's authority to require additional
unusual risk bonds as may be necessary. In addition, the Alaska Oil and Gas
Conservation Commission (AOGCC) requires a bond of $100,000 for a single well
or a $200,000 bond to cover wells statewide before drilling operations will be
permitted by AOGCC.
The state reserves the right to delete or contract proposed tracts at any time
up to and including the day of the sale. Tract maps are available at DMEM.
Communities near the Tanana tracts include the first class city of Nenana, the
second class city of Anderson, the villages of Minto, Manley, Tanana, and the
Clear military reservation. Access to the area is provided via the Parks
Highway, the Alaska Railroad, and several "winter" roads.
Eureka and Glennallen are near the Copper River portion of the sale area.
Road access to the area is available from the Glenn Highway and the Lake
Louise Road.
AS 38.05.035(a)(l4) and the departmental delegation of authority give the
Director, Division of Minerals and Energy Management, the authority to impose
conditions or limitations, in addition to those imposed by law, to ensure that
a disposal is in the state's best interest. To meet this requirement, the
Director has developed environmental and social terms and conditions for
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tracts leased in Sale 37. Lease stipulations will be enforced throughout the
term of the lease. Measures will also be imposed through approval of plans of
operations and other permits as needed to mitigate undesirable social and
environmental effects of lease related activities.
The stipulations and terms describe standards that must be met by the
operators with regard to water quality and appropriation, gravel extraction,
oil spill prevention and cleanup, construction of roads, pipelines and other
lease related structures and facilities, public access, disposal of waste,
drilling muds and cuttings and produced waters, timing and routing of
exploration and development activities, rehabilitation of abandoned sites, and
additional permits and approvals. These stipulations ahd terms are necessary
to protect the unique biological, archeological, and social aspects of the
sale area.
In support of the lease sale, the Director of the Division of Minerals and
Energy Management has prepared a final written finding under
AS 38.05.035(a)(l4) which sets forth the facts and applicable law upon which
she has determined that the proposed action will best serve the interests of
the state. The Director's written finding and decision will be available to
the public within one week at the Division of Minerals and Energy Management,
555 Cordova Street in Anchorage or by writing DMEM at Pouch 7-005, Anchorage,
Alaska 99510. Additional information on the proposed sale is available to
prospective bidders and members of the public at DMEM.
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UEI~\.RTMENT 014 ~ATIJRAL Rt:SOIJRf~f:S
June 24, 1982
MINERALS AND ENERGY MANAGEMENT
Sale 37
Information to Bidders
A. Acceptance and Rejection of Bids
JAYS. HAMMOND, GOVERNOR
555 CORDOVA STREET
POUCH 7-005
ANCHORAGE, ALASKA 99510
(907) 276-2653
Phone: (907)276-2653
The state hereby expressly reserves the right to reject any bid on any
tract. No bid for any tract will be accepted and no lease for any tract
will be awarded to any bidder unless the following conditions have been
met:
1. The bidder has complied with this notice and applicable state
regulations and statutes unless the Commissioner determines that an
omission was immaterial or due to excusable inadvertence and if the
omission is corrected within one week after receipt of a notice ·of
deficiency.
2. The bid is the highest valid cash bonus bid.
3. The amount of the bid has been determined to be adequate by the
Commissioner of Natural Resources.
4. No bid containing or accompanied by any condition, qualification, or
material alteration will be considered.
B. Pre-Qualification of Bidders
In order to submit bids for this sale, bidders must be qualified to bid
prior to the sale date of August 24, 1982. Qualification procedures are
as follows:
1. Individuals -An individual bidder must have a Statement of
Qualifications on file at DMEM certifying that he or she is at least
18 years old and a citizen of the United States or is eligible for and
has filed for citizenship, or is an alien person entitled to a similar
lease by virtue of a treaty between the United States and the nation
of which the alien person is a citizen. The statement must include
the bidder's name, address, and telephone number and must be signed
and dated. If an agent is signing the bid form on behalf cf an
individual, a notarized power-of-attorney document evidencing the
authority of the agent to act on behalf of the individual must be on
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file at DMEM. If a guardian, trustee, or legal representative of an
individual is signing on behalf of that individual, a certified copy
of the court order authorizing him to act in that capacity ?nd to
fulfill the individual's obligations arising under any lease issued to
the individual must be on file at DMEM. A signed statement as to the
citizenship and age of the guardian, trustee, or legal representative
and the individual must also be submitted to DMEM.
2. Corporations -Corporations must have the following documents on file
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at DMEM prior to the lease sale: f
a. Copy of 1982 Certificate of Compiiance.
b. The current address and phone humber of the corporation.
c. A list of current officers of the corporation that are
authorized to sign a bid on behalf of the corporation.
d. A notarized power-of-attorney authorizing any agent who is
not a current officer but Who has been designated by the
corporation to sign a bid on behalf of the corporation.
A Certificate of Compliance can be obtained by sending 60 cents to
State of Alaska, Department of Commerce and Economic Development,
Corporation Section, Pouch D, Juneau, Alaska 99811 and requesting the
certificate. The Certificate of Compliance provides written proof
that the corporation has paid all taxes, complied with all applicable
laws, and is thus qualified to do business ih ~he state. If
information previously filed by corporations that have previously
qualified to do business in Alaska is still current, this information
may be incorporated together with a statement as to any material
changes or amendments. However, a 1982 Certificate of Compliance is
required for this sale.
3. Corporations That Have Not Previously Qualified To Do Business in
Alaska - A corporation that has not previously qualified to do
business in Alaska must submit the following documents to DMEM:
a. If the corporation is a foreign corporation, it must submit a
copy of its Certificate of Authority. If the corporation is
a domestic corporation, it must submit a copy of its
Certificate of Incorporation. A foreign corporation is one
that has been incorporated outside the State of Al~ska. A
domestic corporation is one that has been incorporated within
the State of Alaska.
b. The current address and phone number of the corporation.
c. A list of current officers of the corporation that are
authorized to sign a bid on behalf of the corporation.
d. A notarized power-of-attorney authorizing any agent who is
not a current officer but who has been designated by the
corporation to sign a bid on behalf of the corporation.
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In order to receive a Certificate of Authority, foreign corporations
must submit a packet of completed forms entitled "instructions for
qualifying a foreign corporation to do business in the State of
Alaska" to the Department of Commerce and Economic Development,
Corporation Section, Pouch D, Juneau, Alaska 99811. In order to
receive a Certificate of Incorporation, domestic Corporations must
submit Articles of Incorporation to the Department of Commerce and
Economic Development. These forms can be obtained by writing or
telephoning DMEM, Pouch 7-005, Anchorage, Alaska, 99510 (276-2653).
Upon proper application, the Department of Commerce and Economic
Development will issue a Certificate of Authority or Certificate of
Incorporation. Please allow two to three weeks for the processing of
these Certificates.
4. Partnerships or Other Unincorporated Associations - A partnership or
unincorporated association must submit the following documents to DMEM
prior to the lease sale:
a. A statement describing the business relationships between
members or partners.
b. A statement of qualifications for each member stating that
each member is at least 18 years of age and a citizen of the
United States, or is eligible for and has filed for
citizenship, or is an alien person entitled to a similar
lease by virtue of a treaty between the United States and the
nation of which the alien person is a citizen.
c. If an agent is signing the bid form on behalf of the
partnership or association, a notarized power-of-attorney
defining the agent's authority to sign the bid on behalf of
the partnership or association.
C. Bid Submission
All bids will be accepted by the Director of the Division of Minerals and
Energy Management or her authorized agent in Room 31 (3rd Floor), 555
Cordova Street, Anchorage, Alaska, between the hours of 9 a.m. and 3 p.m.
on August 23, 1982. Bids that are mailed to the Director, DMEM Pouch
7-005, Anchorage, Alaska 99510 must be received no later than August 23,
1982. Bids will also be accepted at the Division's temporary office at
the Travelers Inn in Fairbanks between 8 a.m. and 9 a.m. on August 24,
1982. No bids tendered after 9 a.m. on the day of the sale, August 24,
1982, will be accepted. ·
Bids will be received and processed on August 24 in the following manner:
1. 8:00 a.m. -9:00 a.m. -bids will be received in the "Gold Room".
2. 9:00 a.m. -closing of bid submission.
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3. 9:00 a.m. -10:30 a.m. -opening of the bids by DMEM personnel. The
opening of bids is for the sole purpose of
publicly announcing and recording bids
received. No bids will be accepted or
rejected at this time.
4. 10:30 a.m. -public reading of the bids will begin in the "Gold Room".
D. Form for Submission of Bids
1. A separate bid must be submitted for each tract.
2. Each bid must be submitted separately in a single envelope. The
envelope should be marked "State of Alaska Competitive Oil and Gas
Lease Sale 37; not to be opened until 9 a.m., August 24, 1982; Tract
II ." No other statements, information, or identification should
appear on the outside of the envelope.
The following items must be contained in each envelope:
a. An executed bid form DMEM-9(8/82) or an exact copy of that
form. All bidders should state their name, company (if
applicable), address, and telephone number on the bid form.
b. Bid Deposit: Check or money order made payable to the
11 Department of Revenue, State of Alaska." Bid deposits must
be in U.S. dollars and must be tendered in cash or by money
order, cashier's check or·certified check in the total amount
of 20% of the total cash bonus being offered for the tract.
No bid for less than a full tract will be considered.
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3. Pursuant to 11 AAC 82.430, joint bids must disclose, and the bid form l-
must be signed by or on behalf of, each person who has any working
interest in the bid or who will receive any working interest in any f -
lease issued in this sale by virtue of any agreement or understanding, l _
oral or written. This requirement does not mean that persons who are
interested in a bid only as stockholders in a corporation must sign
the bid and lease form and does not mean that the designated
information must be furnished as to those persons. Joint bids must
state the percentage of interest of each bidder and must designate one
person who is authorized to receive notices on behalf of all the
bidders.
E. Method of Handling Bid Deposits
1. Bid deposits will be safeguarded against theft, misappropriation and
loss. Acceptance of a bid deposit by the state does not constitute
and shall not be construed as acceptance of any bid on behalf of the
state.
2. A bidder submitting a bid which is not the apparent high bid may pick I •
up the bid deposit from 1:30 to 2:30p.m., August 24, 1982, at the l_
Travelers Inn in Fairbanks. Bid deposits also will be returned from 1
to 3 p.m. on August 25, 1982 in Room 31, Third Floor, 555 Cordova
Street, Anchorage. I .
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3. A bidder whose bid deposit for an apparent high bid is tendered by
cashier's check or certified check drawn on a bank other than the
Alaska National Bank of the North in Fairbanks, must wire transfer
funds in the amount of such bid deposit (if more than $50,000) on
August 25, 1982, no later than noon E.S.T. (7 a.m. A.S.T), to the
credit of the State of Alaska Investment Account, Bank of America,
N.T.& S.A., San Francisco, California, to the attention of: Elizabeth
Stephens, Securities Clearance Department, #3298. It is not necessary
that separate wire transfers be made if more than one bid deposit is
being transferred to the account; however, each apparent high bidder
making a wire tranfer to this account must Telex the following
information to Bank of America (Telex No. 9-34-0534) with a copy to
the Alaska Department of Revenue, Treasury Division (Telex No.
099-45-333): the amount of each bid deposit comprising the wire
transfer, the tract number to which each bid deposit applies, the
originating bank of the wire transfer, and the name(s) of the bidder's
partner(s), if any, on whose behalf a bid deposit is being wire
transferred. Upon notification of receipt of a wire transfer, the
cashier's check(s) and certified check(s) for the bid deposit(s)
corresponding to that wire transfer will be returned from 1 p.m. to 3
p.m., August 25, 1982, and from 8:30a.m. to 3 p.m., August 26, 1982
in Room 31 (3rd Floor), 555 Cordova Street, Anchorage, Alaska.
4. If a bid deposit for an apparent high bid is tendered in cash, by
money order, or is a certified or cashier's check drawn on the Alaska
National Bank of the North in Fairbanks, the bidder will not be
required to wire transfer federal funds for that bid deposit. Such
checks will be presented August 24, 1982, for payment in federal funds
at the Alaska National Bank of the North in Fairbanks.
5. Upon rejection by the State of Alaska of any apparent high bid, the
amount of the bid deposit for that bid will be returned by wire
transfer to a bank designated by the bidder. A bidder who is unable
to pick up a bid deposit in the manner described in E(2) and E(3)
above may submit with the bid written instructions for return of the
bid deposit.
6. Upon acceptance of a bid by the Commissioner of Natural Resources, the
successful bidder will be notified ·by certified mail of the lease
award and will be sent two copies of the lease for signature. Within
30 days of the date that the bidder receives notification of the lease
award, the bidder must: 1) sign both copies of the lease; 2) return
them to the Division of Minerals and Energy Management for execution;
3) pay the balance of the cash bonus and accrued interest; and 4) pay
for the first year annual rental. Interest of 12.248% per annum
(which is the market interest rate for 90-day U.S. Treasury bills
prevailing during the week of June 14 -18) will be charged on the
balance of the cash bonus accruing from the date of the successful
bidder's receipt of the notification of the lease award to the date of
payment. The successful bidder owes interest from the day that he
receives the bid acceptance letter until the day before the money is
paid. Interest should be paid on the cash bonus only and not on the
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first year of rental. Payment of the balance of the c&sh bonu$,
accrued interest and rental shall be accomplished in the fo.Uowing
manner:
The successful bidder will wire tran$fer federal funds in the
amount of the balance of the cash bpnus and accrued interest, and
annual rental for the first year to the State of Alaska +nvestment
Account at the Bank of America, NT & SA, San Francisco,
California, to the attention qf Elizabeth Stephens, Securities
Clearance Department, #3298. The wire transfer should specify on
whose beha+f and on what tracts the balance, interest, and rental
is being paid. If possible, bidders should use on+Y one wire
transfer. Interest calculations should be based on a 360-day year
times the actual numper of days that interest is owed.
In addition, the successful bidder must simultaneously $end the
following information by telex to the State of Alaska, Department
of Revenue, Treasury Division, attention of: Peter Bushre at
Telex #099-45333: The amount of rental, intere$t, and balance of
cash bonus being paid per tract; the name(s) of the bidder(s) on
whose behalf the funds are being wire transferred; and the
originating bank of the wire transfer.
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MITIGATING MEASURES
AS 38.05.035(a)(l4) and the departmental delegation of authority give the
Director, Division of Minerals and Energy Management, hereafter the Director,
the authority to impose conditions or limitations, in addition to those
imposed by law, to ensure that a disposal is in the state's best interest.
The following stipulations and terms of sale have been developed considering
the Social, Economic, and Environmental Analysis for Sale 37, the Preliminary
Analysis of the Director Regarding Oil and Gas Lease Sale 37, interagency
discussion, and public comment. Lease stipulations will be enforced
throughout the lease term. Measures listed under "Plans of operations and
other terms of sale" will be imposed through Plans of Operations and other
permits as needed to mitigate the social and environmental effects of
lease-related activities.
Lease Stipulations
1. Spill Prevention, Control, and Countermeasure (SPCC) Plan:
A Spill Prevention, Control, and Countermeasure Plan must be approved by
the Department of Environmental Conservaton prior to drilling operations
and construction of facilities for oil and gas storage (of greater than
660 gallons capacity), transfer, and transportation. The SPCC Plan must
delineate how the lessee will prevent, detect, clean-up, and control
blow-outs and other accidental releases of oil. The Plan must also
describe the location of spill clean-up equipment, identify suitable
alternative drilling rigs and their location, and specify the time
required to commmence and complete drilling of a relief well.
2. Discovery of historic or archeologic objects:
If the lessee discovers any site, structure, or object of historic or
archeologic significance during conduct of operations on the leased area,
the lessee must immediately report such findings to the Director and make
every reasonable effort to preserve such site, structure or object until
the Director, after consultation with the State Historic Preservation
Officer, makes provisions for its protection.
3. Slide Mountain Flats Moose Wintering Area:
The Department of Fish and Game must approve siting, design, and timing of
gravel road construction and existing trail improvement within Tracts
179-190 and 205-210. Lessees may be required to restrict public access to
gravel roads and improved trails if the Department of Fish and Game
determines that such restrictions are necessary.
Plans of Operations and Other Terms of Sale
Bidders are advised that if the state owns the surface of the lease area, if
the lease reserves a net profit share to the state, or if a surface owner
other than the state so requests, the lessee must submit a detailed plan of
operations to the Division of Minerals and Energy Management prior to
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commencement of any exploratory or developmental operations. Approval of the
lessee's plan of operations will be conditioned upon their adherence to the
following restrictions:
1. Except for road and pipeline crossings which will be perpendicular to
watercourses, facilities will be prohibited within 500 feet (152 m) of
all riverbanks, streambanks, and lakeshores, within one~quarter mile (0.4
km) of the Toklat, Tanana, Kantishna, Bearpaw, Nenana, Teklanika, and
Nelchina Rivers, Totchaket Slough, Tolsana Creek, Mendeltna Creek, Twin
Lakes and Linder Lakes, unless the Director determines, after
consultation with the Department of Fish and Game, that such facilities
placement will not disturb critical wildlife habitats and that ·
alternative sites are not feasible or prudent.
2. Sewage ponds and oil storage facilities of more than 660 gallon capacity
must be impermeably lined and diked and must be separated from freshwater
supplies, streams, rivers, lakes, and wetlands by 1500 feet unless the
Director determines that such separation is not feasible or prudent.
Sump and reserve pits will be rendered impermeable and otherwise fully
contained through diking or other means.
3. All activities and structures must be designed to maintain normal water
flow and drainage patterns and to allow unrestricted movement and safe
passage of fish and mammals unless the Director determines, after
consultation with the Department of Fish and Game, that such design is
not feasible or prudent. Facilities must be consolidated to the extent
feasible and prudent.
4. Exploration facilities, except for drill pads, will be temporary and not
constructed of gravel. Exploration activities must be supported by
winter roads and trails, air service, and existing roads, except for
local roads connecting air strips or gravel mining sites with exploratory
drill pads. Permanent roads will not be constructed during exploration
unless the Director, Division of Land and Water Management, determines
that such construction is in the state's best interest and serves a
multipurpose state objective for use of other resources. In making this
decision, the Director, Division of Land and Water Management, will
consult the Directors of the Divisions of Minerals and Energy ~anagement,
Forestry, and Agriculture, the Department of Environmental Conservation,
and the Department of Fish and Game. When allowed, permanent roads must
be designed and constructed to the satisfaction of Director, Division of
Land and Water Management, in consultation with the agencies listed above.
5~ Surface entry into wetlands will be restricted to winter when sufficient
ground frost and snow are present to prevent damage to soils and
vegetation unless the Director determines, after consultation with the
Division of Land and Water Management, that surface entry at other times
will not damage soils or vegetation, and, after consultation with the
Department of Fish and Game, that surface entry at other times will not
disturb wildlife during critical periods.
6. No restriction of public access to and use of the lease area will be
permitted as a consequence of the lessee's activities except as provided
in Stipulation 3 and except in the immediate vicinity of drill sites,
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7.
8.
9.
10.
buildings, and other related structures. The location of restricted
areas must be identified in the plan of operations. Lease facilities and
operations must not block public access to or along navigable or public
waters as defined in AS 38.05.365(22) and (23). If facilities are
proposed in the vicinity of navigable or public waters, an easement will
be reserved under AS 38.05.127 and 11 AAC 53.330.
The lessee is required to conduct an environmental training program for
all personnel involved in exploration and development of the lease sale
area, including the personnel of the lessee's contractors and
subcontractors. The lessee's personnel must be informed of the
environmental, social, and cultural concerns specific to the sale area
and of the techniques neGessary to preserve archeological, geological,
and biological resources. The program must be formulated and implemented
by instructors experienced in each field, and a plan describing the
program must be submitted to the Director.
Surface entry, fixed-wing aircraft flights below 500 vertical feet, and
helicopter flights below 1500 vertical feet will be prohibited within
one-quarter mile of Trumpeter Swan nests between 1 May and 10 September.
Powerlines, roads, pipelines, and other facilities will be prohibited
within one-quarter mile of Trumpeter Swan nests. In the Tanana sale
area, concentrations of nesting Trumpeter Swans are found in Tracts
10-12, 20-23, and 81-84. In the Copper River sale area, Trumpeter Swans
nest in Tracts 157-174 and 179-184. The Department of Fish and Game will
make maps identifying documented Trumpeter Swan nest site locations
available to the Director and lessees within 60 days of the date a
request for approval of a plans of operations is received.
Peregrine Falcons have historically nested on the banks of the Tanana
River near Nenana. If Peregrine Falcons re-use these nest sites, lessees
of Tracts 13-19 could be required to modify their plans of operations.
If the lessee discovers previously unreported active or inactive
Peregrine Falcon nest sites, the lessee must immediately report the nest
locations to the Director. Mitigating measures, including seasonal
restriction of surface entry and aircraft overflights and prohibition of
most permanent facilities construction within two miles, will be required
to comply with state and federal Endangered and Protected Species Acts.
If the lessee discovers previously unreported active or inactive Bald
Eagle nest sites, the lessee must immediately report the nest locations
to the Director. Permanent facilities may be prohibited within
one-quarter mile (0.4 km) and will be prohibited within 500 feet of Bald
Eagle nests, whether currently active or inactive. Surface entry within
500 feet of all active Bald Eagle nests will be prohibited between 1
April and 31 August. Temporary activities within 500 feet of Bald Eagle
nest sites may be allowed between 1 September and 31 March if they will
not alter Bald Eagle habitat. The Department of Fish and Game will make
maps identifying documented Bald Eagle nest site locations available to
the Director and lessees within 60 days of the date a request for
approval of a plans of operations is received.
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ll. Gravel Removal: [ .
a. Gravel from any nearby abandoned drill pads and existing material
sites must be exploited before other sources during exploration and r··
development unless the Director, Division of Land and Water
Management~ after consultation with the Director and the Department
of Fish and Game 7 determines that use of such sources is not feasible
or prudent.
b. Gravel removal from active floodplains of rivers and streams will be
prohibited during exploration and development unless the Director,
Division of Land and Water Management, after consultation with the
Department of Fish and Game, finds that use of existing
state-approved material sites is not feasible or prudent. If gravel
removal from an active floodplain is the preferred alternative, the
site must be developed and rehabilitated according to the procedures
described in Gravel Removal Guidelines Manual for Arctic and
Subarctic Floodplains (1980) by Woodward-Clyde Consultants,
Anchorage. This manual is U.S. Fish and Wildlife Service -Uffice of
Biological Services Publication 80-09 and is available from the U.S.
Fish and Wildlife Service, lOll E. Tudor, Anchorage, Alaska 99503.
c. The number of gravel mining sites approved will be the minimum needed
for efficient field development with minimal environmental damage.
Where feasible, upland gravel sites should be constructed to function
as winter water reservoirs also .
d. Gravel removal from eskers during exploration and development will be
prohibited unless the Director, Division of Land and Water
Management, determines, after consultation with the Department of
Fish and Game, that important wi1dli fe habitat will not be lost and
there are not other feasible or prudent gravel sources.
12. Extensive forest clearing by bulldozer or other means solely for seismic
exploration must be approved by the Director, after consultation with the
Division of Land and Water Management and the Department of Fish and Game.
13. Plans for solid waste disposal must be approved by the Commissioner,
Department of Environmental Conservation. Refuse must be incinerated and
the residue, along with other nonburnable refuse, disposed of at an
approved upland site. While awaiting incineration, refuse must be stored
in a manner that will not attract or trap mammals or birds. No new solid
fill disposal sites will be approved during exploration except for the
disposal of drilling muds and cuttings.
14. Upon abandonment, all facilities constructed by the lessee must be
removed and the site rehabilitated unless the Director determines, after
consultation with the Department of Environmental Conservation and
Department of Fish and Game, that such removal and rehabilitaUon is not
in the state's best interest.
15. Discharge of produced water, drilling muds, and cuttings:
a. Discharge of produced waters into freshwater bodies is prohibited.
In upland areas, including wetlands, disposal of produced waters must
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be by subsurface techniques. The Commissioner, Department of
Environmental Conservation, may approve use of alternative disposal
methods if the lessee can demonstrate that subsurface disposal is not
feasible or prudent.
b. Discharge of drilling muds and cuttings into freshwater bodies,
including wetlands, is prohibited, and plans for their disposal must
be approved by the Department of Environmental Conservation. Mud
Sumps and reserve pits must be rendered impermeable and otherwise
fully contained through diking or other means.
16. Fish-bearing Stream Protection:
a. Riverbank alterations and equipment operation within riparian habitat
must be approved by the Department of Fish and Game.
b. The location, design, and construction of all road and pir,eHne
crossings of fish-bearing streams must be approved by the Department
of Fish and Game. Bridges, rather than culverts, will be the
preferred method of watercrossing. Culverts may be used if they will
not block fish passage; bottomless arch culverts will be preferred
over either round or elliptical cUlverts, which must be buried
one-fifth of the culvert's diameter into the stream's thaw leg.
c. In winter, from the time of ice formation on streams until breakup·,
the following activities will be prohibited in fish-bearing streams
unless approved by the Department of Fish and Game:
(1) equipment operation in open water areas and where under-ice
water is present.
(2) removal of water or snow cover.
(3) compaction of snow cover.
d. Intake pipes for summer water removal must be surrounded by a
screened enclosure. Maximum water velocity at the surface of this
enclosure must not exceed 0.1 foot per second; screen mesh size must
not exceed 0.04 inch, unless approved by the Department of Fish and
Game.
Unless drilling immediately prior to the proposed explosions shows
that the stream and its substrate are solidly frozen, the minimum
distance between fish-bearing streams and charge location will be:
Charge (lbs)
1
2
5
10
25
100
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Distance from stream (ft.)
50
75
125
150
250
500
Stationary fuel storage facilites will be prohibited within the
active floodplain of a fish-bearing stream. Slow moving
equipment may be refueled within active floodplains with the
approval of the Department of Fish and Game.
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Lessees are advised that anadromous streams in the lease
sale area include, but may not be limited to:
(1) Middle Tanana Basin -Tanana, Kantishna, Toklat,
Bearpaw, and Nenana Rivers, Seventeen Mile and Lost
Sloughs, and Clear Creek.
(2) Copper River Basin -Mendeltna and Tolsona Creeks.
17. The lessee will be responsible for maintaining an adequate winter water
supply through use of storage reservoirs, water hauling, snow melting or
wells. Removal of water or snow cover from fish-bearing streams during
winter must be approved by the Department of Fish and Game (see 16 C
above). Winter water removal from natural lakes and fish-bearing streams
must be approved by the Division of Land and Water Management.
18. Surface use will be restricted, as necessary, to prevent unreasonable
conflicts with local subsistence harvests.
19. The proposed activities under a plan of operations must not diminish the
use and enjoyment of lands encompassed within a native allotment. Before
entering a pending or approved native allotment, lessees must get prior
approval from the Bureau of Indian Affairs and comply with applicable
federal law. For information on pending native allotments in the
Fairbanks area, lessees may contact the Tanana Chiefs Conference, Inc.,
Doyon Building, 201 First Avenue, Fairbanks, Alaska 99701.
20. If only the subsurface rights are owned by the state, or if the surface is
owned by the state but subject to third party interests, the lessee must
not enter upon such land until a good faith effort has been made to agree
with the surface interest holder on settlement of any damages caused by
the lessee. If agreement cannot be reached, the Director may approve the
lessee 1 s activities provided the lessee makes provisions under AS
38.05.130 to pay for any damages to the surface interest holder.
21. Pipelines must be buried, elevated or ramped to allow passage of caribou
and moose.
22.
23.
Pipelines will be located to facilitate the containment and clean up of
spilled hydrocarbons. Where feasible, pipelines will be located on the
upslope side of roads and construction pads unless it can be demonstrated
that an alternative site is an acceptable environmental alternative.
Lessees will conduct an archeological and historical site inventory areas
affected by their exploration, development, and production activities.
Before facilities construction begins, this inventory must be submitted to
the Director for distribution to the Director, Division of Parks. The
inventory must:
a. identify historical and archeological sites within areas to
be affected by lessee activities.
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b. describe their current condition based on site visits.
c. document_their historic and prehistoric use.
d. discuss the potential effects of lessee activities on these sites.
Lessees must consult the Alaska Heritage Resources Survey and the
National Register of Historic Places; oral accounts of local residents
must also be considered. If an identified site could be adversely
affected by lessee activities, the Director, after consultation with the
Director, Division of Parks, will determine what measures must be used to
mitigate such effects, before construction begins.
24. Tracts 27-29, 33-38, 41-55, 57, 58, 60-62, 64-71, 92-94, 98, 99, 102 and
103 are in an area proposed by the state for agricultural disposal, and
some restrictions on surface entry and facilities siting on these tracts
may be required. Plans of Operations involving activities on these
tracts will be reviewed by the Division of Agriculture. Whenever
feasible and prudent, drill pads and other oil and gas facilities will
not be located on Class II or III soils, as defined by the Division of
Agriculture.
25. In approving water appropriations and freshwater wells within the Toklat
River drainage, the Director, Division of Land and Water Management, will
consult with the Department of Fish and Game.
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June 24, 1982
MINERALS AND ENERGY MANAGEMENT
-NOTICE-
JAYS. HAMMOND, GOVERNOR
555 CORDOVA STREET
POUCH 7-005
ANCHORAGE, ALASKA 99510
(907) 276-2653
COMPETITIVE OIL AND GAS LEASE SALE 37A
(Chakok River)
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The Department of Natural Resources, Division of Minerals and Energy
t•!anagement (DMEM) gives formal notice under AS 38.05.345(a) (4) of its j
intention to offer lands for competitive oil and gas lease. Sale 37A includes .
about 1875 acres of land on the Kenai Peninsula.
The sale will be conducted by the Department of Natural Resources under the
authority of Alaska Statute 38.05.180. Bidders awarded leases at this sale
will acquire the right to explore for, deveiop and produce the oil and gas
that may be discovered within the leased area. In order to bid at the sale
bidders must prequalify prior to the sale date. Potential bidders should
consult DMEM for prequalification procedures. Under 11 AAC 82.445, a bid will
not be considered unless supported by the bid deposit and the information
required, unless any omission is determined by the Commissioner to be
immaterial or due to excusable inadvertence and the omission is corrected
within one week after receipt of a notice of deficiency.
Sale 37A is scheduled to be held in conjunction with Sale 37 on August 24,
1982 at the Travelers Inn, 620 Noble, Fairbanks, Alaska. Bids will be
received and processed on August 24 in the following manner:
l. 8:00a.m. -9:00 a.m. -bids will be received in the "Gold Room".
2. 9:00 a.m. -closing of bid submission.
3. 9:00 a.m. -10:30 a.m. -bids will be opened.
4. 10:30 a.m. - a public reading of the bids will begin in the "Gold
Room".
Bids also will be accepted from 9 a.m. to 3 p.m. on August 23, 1982 in Room 31
(3rd floor), 555 Cordova Street, Anchorage, Alaska •. Bids that are sent by
mail must be sent to: Director, DMEM, Pouch 7-005, Anchorage, Alaska 99510,
and must be received by August 23, 1982.
Any lease issued as a result of this sale will be executed on Form No.
DMEM-2-82 (ROYALTY) which was revised April 7, 1982. This form is identical
to form DMEM-1-82 (NET PROFIT SHARE) except that paragraph 38 (SHAR~ OF NET
PROFIT) has been eliminated. ·
The bidding method will be cash bonus bidding with a fixed royalty of 43%.
All tracts will have an initial primary term of 7 years.
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Annual rental will be $1.00 per acre for the first year, $1.50 per acre for
the second year, $2.00 per acre for the third year, $2.50 per acre for the
fourth year, and $3.00 per acre for the fifth and following years.
Any bidder who obtains a lease from the State of Alaska as a result of this
sale will be responsible for the construction of access roads and capital
improvements as may be required by the appropriate platting authority. All
operations on leased lands will be subject to prior approval by the state as
required by the lease and leasing regulations. Surface entry will be
restricted only as necessary to protect the holders of surface interests as
shown on the departmental status plats or as necessary to protect identified
surface resource values.
The Department of Natural Resources has determined that all water bodies
within the sale area are public or navigable. Easements, if necessary to
ensure public access, will be reserved during the review of individual lease
plans of operations. Prior to the commencement of lease operations, an oil
and gas lease bond for a minimum amount of $10,000 per operation is required.
In the alternative, a statewide oil and gas lease bond of $500,000 for
operations conducted on more than one lease may be filed. These bonding
provisions do not affect the Commissioner's authority to require additional
unusual risk bonds as may be necessary. In addition, the Alaska Oil and Gas
Conservation Commission (AOGCC) requires a bond of $100,000 for a single well
or a $200,000 bond to cover wells statewide before drilling operations will be
permitted by AOGCC.
The state reserves the right to delete or contract proposed tracts at any time
up to and including t~e day of the sale. Tract maps are available at DMEM.
The proposed sale area is within the Kenai Peninsula Borough. Communities in
the vicinity of the proposed sale include Anchor Point and Homer.
The Chakok River sale is being offered as "exempt" acreage under the terms of
AS 38.05.180(d)(l). This provision in the state oil and gas leasing statute
allows the Commissioner of the Department of Natural Resources to issue oil
and gas leases in an area that has not been included in the five-year leasing
program if "the land to be leased was previously subject to a valid state or
federal oil and gas lease". This entire tract was previously subject to state
oil and gas lease ADL #53914, which was issued in June, 1971 and expired in
May, 1981.
AS 38.05.035(a)(l4) and the departmental delegation of authority give the
Director, Division of Minerals and Energy Management, the authority to impose
conditions or limitations, in addition to those imposed by law, to ensure that
a disposal is in the state's best interest. To meet this requirement, the
Director has developed environmental and social terms and conditions for
tracts leased in Sale 37A. Lease stipulations will be enforced throughout the
term of the lease. Measures will also be imposed through approval of plans of
operations and other permits as needed to mitigate undesirable social and
environmental effects of lease related activities.
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The stipulations and terms describe standards that must be met by the
operators with regard to water quality and appropriation, gravel extraction,
oil spill prevention and cleanup, construction of roads, pipelines and other
lease related structures and facilities, public access, disposal of waste,
drilling muds and cuttings and produced waters, timing and routing of
exploration and development activities, rehabilitation of abandoned sites, and
additional permits and approvals. These stipulations and terms are necessary
to protect the unique biological, archeological, and social aspects of the
sale area.
In support of the lease sale, the Director of the Division of Minerals and
Energy Management has prepared a final written finding under
AS 38.05.035(a)(l4) which sets forth the facts and applicable law upon which
she has determined that the proposed action will best serve the interests of
the state. The Director's written finding and decision will be available
within two weeks at the Division of Minerals and Energy Management, 555
Cordova Street in Anchorage or by writing D~M at Pouch 7-005, Anchorage,
Alaska 99510. Additional information on the proposed sale is available to
prospective bidders and members of the public at DMEM.
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June 24, 1982
MINERALS AND ENERGY MANAGEMENT
Sale 37A
Information to Bidders
A. Acceptance and Rejection of Bids
JAYS. HAMMOND, GOVERNOR
555 CORDOVA STREET
POUCH 7-005
ANCHORAGE, ALASKA 99510
(907) 276-2653
Phone: (907)276-2653
The state hereby expressly reserves the right to reject any bid on any
tract. No bid for any tract will be accepted and no lease for any tract
will be awarded to any bidder unless the following conditions have been
met:
1. The bidder has complied with this notice and applicable state
regulations and statutes unless the Commissioner determines that an
omission was immaterial or due to excusable inadvertence and if .the
omission is corrected within one week after receipt of a notice of
deficiency.
2. The bid is the highest valid cash bonus bid.
3. The amount of the bid has been determined to be adequate by the
Commissioner of Natural Resources.
4. No bid containing or accompanied by any condition, qualification, or
material alteration will be considered.
B. Pre-Qualification of Bidders
In order to submit bids for this sale, bidders must be qualified to bid
prior to the sale date of August 24, 1982. Qualification procedures are
as follows:
1. Individuals -An individual bidder must have a Statement of
Qualifications on file at DMEM certifying that he or she is at least
18 years old and a citizen of the United States or is eligible for and
has filed for citizenship, or is an alien person entitled to a similar
lease by virtue of a treaty between the United States and the nation
of which the alien person is·a citizen. The statement must include
the bidder's name, address, and telephone number and must be signed
and dated. If an agent is signing the bid form on behalf of an
individual, a notarized power-of-attorney document evidencing the
authority of the agent to act on behalf of the individual must be on
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file at DMEM. If a guardian, trustee, or legal representative of an
individual is signing on behalf of that individual, a certified copy
of the court order authorizing him to act in that capacity and to
fulfill the individual's obligations arising under any lease issued to
the individual must be on file at DMEM. A signed statement as to the
citizenship and age of the guardian, trustee, or legal representative
and the individual must also be submitted to DMEM.
2. Corporations -Corporations must have the following documents on file
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at DMEM prior to the lease sale: f
a. Copy of 1982 Certificate of Compliance.
b. The current address and phone number of the corporation.
c. A list of current officers of the corporation that are
authorized to sign a bid on behalf of the corporation.
d. A notarized power-of-attorney authorizing any agent who is
not a current officer but who has been designated by the
corporation to sign a bid on behalf of the corporation.
A Certificate of Compliance can be obtained by sending 60 cents to
State of Alaska, Department of Commerce and Economic Development,
Corporation Section, Pouch D, Juneau, Alaska 99811 and requesting the
certificate. The Certificate of Compliance provides written proof
that the corporation has paid all taxes, complied with all applicable
laws, and is thus qualified to do business in the state. If
information previously filed by corporations that have previously
qualified to do business in Alaska is still current, this information
may be incorporated together with a statement as to any material
changes or amendments. However, a 1982 Certificate of Compliance is
required for this sale.
3. Corporations That Have Not Previously Qualified To Do Business in
Alaska - A corporation that has not previously qualified to do
business in Alaska must submit the following documents to DMEM:
a. If the corporation is a foreign corporation, it must submit a
copy of its Certificate of Authority. If the corporation is
a domestic corporation, it must submit a copy of its
Certificate of Incorporation. A foreign corporation is one
that has been incorporated outside the State of Alaska. A
domestic corporation is one that has been incorporated within
the State of Alaska.
b. The current address and phone number of the corporation.
c. A list of current officers of the corporation that are
authorized to sign a bid on behalf of the corporation.
d. A notarized power-of-attorney authorizing any agent! who is
not a current officer but who has been designated by the
corporation to sign a bid on behalf of the corporation.
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In order to receive a Certificate of Authority, foreign corporations
must submit a packet of completed forms entitled "Instructions for
qualifying a foreign corporation to do business in the State of
Alaska" to the Department of Commerce and Economic Development,
Corporation Section, Pouch D, Juneau, Alaska 99811. In order to
receive a Certificate of Incorporation, domestic corporations must
submit Articles of Incorporation to the Department of Commerce and
Economic Development. These forms can be obtained by writing or
telephoning DMEM, Pouch 7-005, Anchorage, Alaska, 99510 (276-2653).
Upon proper application, the Department of Commerce and Economic
Development will issue a Certificate of Authority or Certificate of
Incorporation. Please allow two to three weeks for the processing of
these Certificates.
4. Partnerships or Other Unincorporated Associations - A partnership or
unincorporated association must submit the following documents to DMEM
prior to the lease sale:
a. A statement describing the business relationships between
members or partners.
b. A statement of qualifications for each member stating that
each member is at least 18 years of age and a citizen of the
United States, or is eligible for and has filed for
citizenship, or is an alien person entitled to a similar
lease by virtue of a treaty between the United States and
the nation of which the alien person is a citizen.
c. If an agent is signing the bid form on behalf of the
partnership or association, a notarized power-of-attorney
defining the agent's authority· to sign the bid on behalf of
the partnership or association.
C. Bid Submission
All bids will be accepted by the Director of the Division of Minerals and
Energy Management or her authorized agent in Room 31 (3rd Floor), 555
Cordova Street, Anchorage, Alaska, between the hours of 9:00 a.m. and 3:00
p.m. on May 25, 1982. Bids that are mailed to the Director, DMEM, Pouch
7-005, Anchorage, Alaska 99510 must be received no later than May 24,
1982. Bids will also be accepted at the Division's temporary office at
the Travelers Inn in Fairbanks between 7:30 a.m. and 9 a.m. on May 26,
1982. No bids tendered after 9:00 a.m. on the day of the sale, May 26,
1982, will be accepted.
Bids will be received and processed on May 26 in the following manner:
1. 7:30 a.m. -9:00 a.m. -bids will be received in the "Rampart Room".
2. 9:00 a.m. -closing of bid submission.
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3. 9:00 a.m. -10:00 a.m. -opening of the bids by OMEM personnel. The f -
opening of bids is for the sole purpose of 1
publicly announcing and recording bids
received. No bids will be accepted or I -
rejected at this time.
4. 10:00 a.m. -public reading of the bids will begin in the "Gold Room".
D. Form for Submission of Bids
1. A separate bid must be submitted for each tract.
2. Each bid must be submitted separately in a single envelope. The
envelope should be marked "State of Alaska Competitive Oil and Gas ·
Lease Sale 36; not to be opened until 9:00a.m., May 26, 1982; Tract
# ." No other statements, information, or identification should
appear on the outside of the envelope.
The following items must be contained in each envelope:
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a. An executed bid form DMEM-8 (5/82) or an exact copy of that f _
form. All bidders should state their name, company (if
applicable), address, and telephone number on the bid form. 1..
b. Bid Deposit: Check or money order made payable to the f .-.
"Department of Revenue, State of Alaska." Bid deposits must l_
be in U.S. dollars and must be tendered in cash or by money
order, cashier's check or certified check· in the total amount [--
of 20% of the total cash bonus being offered for the tract. _
No bid for less than a full tract will be considered.
3. Pursuant to ll AAC 82.430, joint bids must disclose, and the bid form
must be signed by or on behalf of, each person who has any working
interest in the bid or who will receive any working interest in any
lease issued in this sale by virtue of any agreement or understanding,
oral or written. This requirement does not mean that persons who are
interested in a bid only as stockholders in a corporation must sign
the bid and lease form and does not mean that the designated
information must be furnished as to those persons. Joint oids must
state the percentage of interest of each bidder and must designate one
person who is authorized to receive notices on behalf of all the
bidders.
E. Method of Handling Bid Deposits
1. Bid deposits will be safeguarded against theft, misappropriation and
loss. Acceptance of a bid deposit by the state does not constitute
and shall not be construed as acceptance of any bid on behalf of the
state.
2. A bidder submitting a bid which is not the apparent high bid may pick
up the bid deposit from 2 to 4 p.m., May 26, 1982, at the Travelers
Inn in Fairbanks. Bid deposits also will be returned from 1 to 3
p.m., May 27, 1982, and from 8:30a.m. to 3 p.m., May 28, 1982, in
Room 31, Third Floor, 555 Cordova Street, Anchorage.
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3. A bidder whose bid deposit for an apparent high bid is tendered by
cashier's check or certified check drawn on a bank other than the
Alaska National Bank of the North in Fairbanks, must wire transfer
funds in the amount of such bid deposit (if more than $50,000) on
August 25, 1982, no later than noon E.S.T. (7 a.m. A.S.T), to the
credit of the State of Alaska Investment Account, Bank of America,
N. T .& S.A., San Francisco, California, to the attention of: Elizabeth
Stephens, Securities Clearance Department, #3298. It is not necessary
that separate wire transfers be made if more than one bid deposit is
being transferred to the account; however, each apparent high bidder
making a wire tranfer to this account must Telex the following
information to Bank of America (Telex No. 9-34-0534) with a copy to
the Alaska Department of Revenue, Treasury Division (Telex No.
099-45-333): the amount of each bid deposit comprising the wire
transfer, the tract number to which each bid deposit applies, the
originating bank· of the wire transfer, and the name(s) of the bidder's
partner(s), if any, on whose behalf a bid deposit is being wire
transferred. Upon notification of receipt of a wire transfer, the
cashier's check(s) and certified check(s) for the bid deposit(s)
corresponding to that wire transfer will be returned from 1 p.m. to 3
p.m., August 25, 1982, and from 8:30a.m. to 3 p.m., August 26, 1982
in Room 31 (3rd Floor), 555 Cordova Street, Anchorage, Alaska.
4. If a bid deposit for an apparent high bid is tendered in cash, by
money order, or is a certified or cashier's check drawn on the Alaska
National Bank of the North in Fairbanks, the bidder will not be
required to wire transfer federal funds for that bid deposit. Such
checks will be presented August 24, 1982, for payment in federal funds
at the Alaska National Bank of the North in Fairbanks.
5. Upon rejection by the State of Alaska of any apparent high bid, the
amount of the bid deposit for that bid will be returned by wire
transfer to a bank designated by the bidder. A bidder who is unable
to pick up a bid deposit in the manner described in E(2) and E(3)
above may submit with the bid written instructions for return of the
bid deposit.
6. Upon acceptance of a bid by the Commissioner of Natural Resources, the
successful bidder will be notified by certified mail'of the lease
award and will be sent two copies of the lease for signature. Within
30 days of the date that the bidder receives notification of the lease
award, the bidder must: 1) sign both copies of the lease; 2) return
them to the Division of Minerals and Energy Management for execution;
3) pay the balance of the cash bonus and accrued interest; and 4) pay
for the first year annual rental. Interest of 12.248% per annum
(which is the market interest rate for 90-day U.S. Treasury bills
prevailing during the week of June 14 -18) will be charged on the
balance of the cash bonus accruing from the date of the successful
bidder's receipt of the notification of the lease award to the date of
payment. The successful bidder owes interest from the day that he
receives the bid acceptance letter until the day before the money is
paid. Interest should be paid on the cash bonus only and not on the
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first year of rental. Payment of the balance of the cash bonus,
accrued interest and rental shall be accomplished in the following
manner:
The successful bidder will wire transfer federal funds in the
amount of the balance of the cash bonus and accrued interest, and
annual rental for the first year to the State of Alaska Investment
Account at the Bank of America, NT & SA, San Francisco,
California, to the attention of Elizabeth Stephens, Securities
Clearance Department, #3298. The wire transfer should specify on
whose behalf and on what tracts the balance, interest, and rental
is being paid. If possible, bidders should use only one wire
transfer. Interest calculations should be based on a 360-day year
times the actual number of days that interest is owed.
In addition, the successful bidder must simultaneously send the
following information by telex to the State of Alaska, Department
of Revenue, Treasury Division, attention of: Peter Bushre at
Telex #099-45333: The amount of rental, interest, and balance of
cash bonus being paid per tract; the name(s) of the bidder(s) on
whose behalf the funds are being wire transferred; and the
originating bank of the wire transfer.
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MINERALS AND ENERGY MANAGEMEIVT
July 26, 1982
STATE OF ALASKA
2nd SUPPLEMENTAL NOTICE
OIL AND GAS LEASE.SALES 37 AND 37A
JAYS. HAMMOND, GOVERNOR
555 CORDOVA STREET
POUCH 7-005
ANCHORAGE, ALASKA 99510
(907) 276-2653
Bidders are advised that the Department of Natural Resources has adopted
revisions to its oil and gas leasing regulations and lease forms.
(a) Regulations. Hevisions have been made to the following sections: 11
AAC 83.158, Plan of Operations; 11 AAC 83.202, Payment Due State; 11 AAC
83.219, Development Costs; 11 AAC 83.224, Valuation of Oil or Gas; 11 AAC
83.240, Direct Operating Costs; 11 AAC 83.243, Direct Charges; 11 AAC 83.244,
Pricing of Materials and Supplies; 11 AAC 83.245, Reporting and Payment
Requirements; 11 AAC 83.247, Redetermination; 11 AAC 83.295, Definitions; 11
AAC 83.306, Application for Unit Approval; 11 AAC 83.336, Effective Date and
Term of Unit Agreement; 11 AAC 83.346, Unit Plan of Operations; 11 AAC 83.361,
Certification of Well Test Results; 11 AAC 83.366, Unit Operating Agreement;
11 AAC 83.373, Severance; 11 AAC 83.800, Exploration Incentive Credits.
The amended regulations were filed with the Lieutenant Governor in Juneau on
July 16, 1982 and will be effective on August 15, 1982. These revisions will
apply to all leases issued as a result of Competitive Oil and Gas Lease Sales
37 nnd 37A, which are scheduled for August 24, 1982.
(h) Lease forms. f\ny lease issued as a result of Sale 37 will lJe executed
un Form No. DMLM-J-UL' (NI:.. T PHUFlT SHARE), which was revised July L3, lYU2.
This form is identical to the prior lease form (DMEM-l-82 NET PROFIT SHAI~E),
except that: l) Parayraph 9, Plan of Operations, has ·been revised to conform
with the changes to 11 AAC 83.158; and 2) Paragraph 15, Unitization, has been
revised to conform with the changes to 11 AAC 83.373.
Any lease issued as a result of Sale 37A will be executed on Form No.
DMEM-4-82 (ROYALTY), which was revised July 23, 1982. This form is identical
to form DMEM-l-82 (NET PROFIT SHARE) except that: 1) Paragraph 9, Plan of
Operations, has been revised to conform with the changes to 11 AAC 83.158; 2)
Paragraph 15, Unitization, has been revised to conform with the changes to 11
AAC 83.373; and 3) Paragraph 38, Share of Net Profit, has been eliminated.
Copies of the revised regulations and revised lease form language are
available at the Division of Minerals and En~rgy Mqnqgement,
555 Cordova, Pouch 7-005, Anchorage 99510 or qy telephoning DMEM at
(907) 276-2653, extension 4247.
This 2nd Supplemental Notice contains all information included in the first
Supplemental Notice dated July 23, 1982 and published in Alaska newspapers.
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MINERALS AND ENERGY MANAGEMENT
August 25, 1982
-NOTICE-
JAYS. HAMMOND, GOVERNOR
555 CORDOVA STREET
POUCH 7-005
ANCHORAGE, ALASKA 99510
(907) 276-2653
COMPETITIVE OIL AND GAS LEASE SALE 34
PRUDHOE BAY UPLANDS
The Department of Natural Resources, Division of Minerals and Energy
Management (DMEM), gives formal notice under AS 38.05.345(a)(4) of its
~ntention to offer lands for competitive oil and gas lease. Sale 34 includes
9bout 1,231,517 acres of land on the North Slope.
~he sale will be conducted by the Department of Natural Resources unde.r the
quthority of Alaska Statute 38.05.180. Bidders awarded leases at this sale
will acquire the right to explore for, develop and produce the oil and gas
that may be discovered within the leased area. In order to bid at the sale
bidders must prequalify prior to the sale date. Potential bidders should
consult DMEM for prequalification procedures. Under 11 AAC 82.445, a bid will
n'ot be considered unless supported by the bid deposit and the information
required, unless any omission is determined by the Commissioner to be
immaterial or due to excusable inadvertence and the omission is corrected
within one week after receipt of a notice of deficiency.
Sale 34 is scheduled to be held on September 28, 1982 at the Captain Cook
Hotel, 5th Avenue and "K" Street in Anchorage. Bids will be received and
processed on September 28 in the following manner:
l. 8:00 a.m. - 9 :DO a.m. -bids will be received in the "Discovery Room."
2. 9:00 a.m. -closing of bid acceptance.
3. 9:00 a.m. -10:30 a.m. -bids will be opened.
4. 10:30 a.m. - a public reading of the bids will begin in the
"Discovery Room."
Bids also will be accepted from 9:00 a.m. to 4:00 p.m. on September 27 in Room
31 (3rd floor), 555 Cordova Street, Anchorage, Alaska. Bids that are sent by
mail must be sent to: Director, DMEM, Pouch 7-005, Anchorage, Alaska 99510,
apd must be received by September 27, 1982.
Any lease issued as a result of this sale will be executed on Form No.
DMEM-3-82 (NET PROFIT SHARE) which was revised July 23, 1982.
The bidding method will be cash bonus bidding. Tracts 001-014 will have a
fixed royalty of 16 2/3% and a fixed net profit share of 40%. Tracts 015-261
will have a fixed royalty of 12 1/2% and a fixed net profit share of 30%.
MINERALS AND ENERGY MANAGEMEtVT
STATE CF ALASKA
3rd SUPPLEMENTAL NOTICE
OIL & GAS LEASE SALE 37
REGARDING: EXPLORATION INCENTIVE CREDITS
JAYS. HAMMONO, GOVERNOR
555 CORDOVA STREET
POUCH 7-005
ANCHORAGE. ALASKA 99510
(907) 276-2653
August 18, 1982
Bidders are advised that exploration incentive credits approved for the
drilling of exploratory wells in Oil and Gas Lease Sale 37 will be applicable
to "oil and gas royalty payable in-value and rental payments payable to the
state or taxes payable under AS 43.55" due the state from development in any
area of the state and are not limited to payments due the state as a result of
development within the Sale 37 area only.
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All tracts will have an initial primary term of 10 years.
Lessees will be eligible for exploration incentive credits for exploration
wells as provided in 11 AAC 83.800, 11 AAC 83.805, 11 AAC 83.815, and 11 AAC
83.820 as those regulations exist on the effective date of the lease. on
tracts 001-014, credits will be earned at a rate of $500 per foot drilled, for
the first exploratory well per tract, provided that credits cannot exceed 40%
of the total exploratory well cost. On tracts 015-261, credits will be earned
at a rate of $375 per foot drilled, for the first exploratory well per tract,
provided that credits cannot exceed 30% of the total exploratory well cost.
The credits must be earned and used within 10 years of the effective date of
the lease. Exploration incentive credits approved for the drilling of
exploratory wells on tracts leased in Sale 34 will be applicable to "oil and
gas royalty payable in-value and rental payments payable to the state or taxes
payable under AS 43.55" due the state from development in any area of the
state and are not limited to payments due the state as a result of development
within the Sale 34 area only.
Annual rental will be $1.00 per .acre for the first year, $1.50 per acre for
the second year, $2.00 per acre for the third year, $2.50 per acre for the
fourth year, and $3.00 per acre for the fifth and following years.
Any bidder who obtains a lease from the State ofAlaska as a result of this
sale will be responsible for the construction of access roads and capital ·
improvements as may be required by the appropriate platting authority. All
operations on leased lands will be subject to prior approval by the state as
required by the lease and leasing regulations. Surface entry will be
restricted only as necessary to protect the holders of surface interests as
shown on the departmental status plats or as necessary to prot~ct identified
surface resource values.
The Department of Natural Resources has determined that all water bodies
within the sale area are public or navigable. Easements, if necessary to
ensure public access, will be reserved during the review of individual lease
plans of operations. Prior to the commencement of lease operations, an oil
and gas lease bond for a minimum amount of $10,000 per operation is required.
In the alternative, a statewide oil and gas lease bond of $500,000 for
operations conducted on more than one lease may be filed. These bonding
provisions do not affect the Commissioner's authority to require additional
unusual risk bonds as may be necessary. In addition, the Alaska Oil and Gas
Conservation Commission (AOGCC) requires a bond of $100,000 for a single well
or a $200,000 bond to cover wells statewide before drilling operations will be
permitted by AOGCC.
The state is currently awaiting title to tracts 229, 230, and 231. If title
is received prior to September 28, 1982, the state will offer these tracts in
Sale 34. However, this acreage may be withdrawn before the sale should title
be rejected or challenged. The state will publish a supplemental notice in
Alaska newspapers if time permits advising bidders of any tract withdrawals.
The state reserves the right to delete or contract proposed tracts at any time
up to and including the day of the sale. Tract maps are available at DMEM.
The proposed sale area is within the North Slope Borough. Communities in the
vicinity of the proposed sale include Kaktovik and Nuiqsut.
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The sale area is bounded on the west by the Trans-Alaska Pipeline and on the
east by the Arctic National Wildlife Refuge (ANWR). The west boundary of the
Arctic National Wildlife Refuge is described as the mean high water mark of
the extreme west bank of the Canning River. The boundary of ANWR has not been
established for certain portions of the refuge; parcels affected are tracts
34-28, 34-29, 34-38, 34-39, 34-108, 34-109, 34-122, 34-123, 34-139, 34-154,
34-155, and 34-156. The boundary location used for these tracts is based on
the U.S. Geological Survey 1:63,360 scale topographic maps (1955) and verified
by 1981 aerial photography.
AS 38.05.035(a)(l4) and the departmental delegation of authority give the
Director, Division of Minerals and Energy Management, the authority to impose
conditions or limitations, in addition to those imposed by law, to ensure that
a disposal best serves the interests of the state. To meet this requirement,
the Director has developed environmental and social terms and conditions for
tracts leased in Sale 34. Lease stipulations will be enforced throughout the
term of the lease. Measures also will be imposed through approval of plans of
operations and other permits as needed to mitigate social and environmental
effects of lease related activities.
The stipulations and terms describe standards that must be met by the
operators with regard to water quality and appropriation, gravel extraction,
oil spill prevention and cleanup, construction of roads, pipelines and other
lease related structures and facilities, public access, disposal of waste,
drilling muds and cuttings and produced waters, timing and routing of
exploration and development activities, rehabilitation of abandoned sites, and
additional permits and approvals. These stipulations and terms are necessary
to protect the unique biological, archeological, and social aspects of the
sale area.
In support of the lease sale, the Director of the Division of Minerals and
Energy.Management has prepared a final written finding under AS
38.05.035(a)(l4) which sets forth the facts and applicable law upon which she
has determined that the proposed action will best serve the interests of the
state. The Director's written finding and decision will be available on
September 3, 1982 at the Division of Minerals and Energy Management, 555
Cordova Street in Anchorage or by writing DMEM at Pouch 7-005, Anchorage,
Alaska 99510. Additional information on the proposed sale is available to
prospective bidders and members of the public at DMEM.
~~ KaYBOwn
Dire or
Division of Minerals and Energy Management
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August 25, 1982
MINERALS AND ENERGY MANAGEMEfVT
Sale 34
Information to Bidders
A. Acceptance and Rejection of Bids
JAYS. HAMMOND, GOVERNOR
555 CORDOVA STREET
POUCH 7-005
ANCHORAGE, ALASKA 99510
(907) 276-2653
Phone: (907)276-2653
The state hereby expressly reserves the right to reject any bid on any
tract. No bid for any tract will be accepted and no lease for any tract
will be awarded to any bidder unless the following conditions have been
met:
1. The bidder has complied with this notice and applicable state
regulations and statutes.
2. The bid is the highest valid cash bonus bid.
3. The amount of the bid has been determined to be adequate by the
Commissioner of Natural Resources.
4. No bid containing or accompanied by any condition, qualification, or
material alteration will be considered.
B. Pre-Qualification of Bidders
In order to submit bids for this sale, bidders must be qualified to bid
prior to the sale date of September 28, 1982. Qualification procedures
are as follows:
1. Individuals -An individual bidder must have a Statement of
Qualifications on file at DMEM certifying that he or she is at least
18 years old and a citizen of the United States or is eligible for and
has filed for citizenship, or is an alien person entitled to a similar
lease by virtue of a treaty between the United States and the nation
of which the alien person is a citizen. The statement must include
the bidder's name, address, and telephone number and must be signed
and dated. If an agent is signing the bid form on behalf of an
individual, a notarized power-of-attorney document evidencing the
authority of the agent to act on behalf of the individual must be on
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file at DMEM. If a guardian, trustee, or legal representative of an
individual is signing on behalf of that individual, a certified copy
of the court order authorizing him to act in that capacity and to
fulfill the individual's obligations arising under any lease issued to
the individual must be on file at DMEM. A signed statement as to the
citizenship and age of the guardian, trustee, or legal representative
and the individual must also be submitted to DMEM.
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2. Corporations-Corporations must have the following documents on file [~
at DMEM prior to the lease sale:
a. Copy of 1982 Certificate of Compliance.
b. The current address and phone number of the corporation.
c. A list of current officers of the corporation that are f
authorized to sign a bid on behalf of the corporation. ·
d. A notarized power-of-attorney authorizing any agent who is f ·
not a current officer but who has been designated by the
corporation to sign a bid on behalf of the corporation.
AStcetrtifficAa
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ompllt·ancet cafnCbe obtainedd bEy sen~ing0 60
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centstto { _
a e o as a, epar men o ommerce an conom1c eve opmen ,
Corporation Section, Pouch D, Juneau, Alaska 99811 and requesting the
certificate. The Certificate of Compliance provides written proof f
that the corporation has paid all taxes, complied with all applicable l_
laws, and is thus qualified to do business in the state. If
information previously filed by corporations that have previously r-
qualified to do business in Alaska is still current, this information t_
may be incorporated together with a statement as to any material
changes or amendments. However, a 1982 Certificate of Compliance is f-.
required for this sale. 1
3. Corporations That Have Not Previously Qualified To Do Business in
Alaska - A corporation that has not previously qualified to do
business in Alaska must submit the following documents to DMEM:
a. If the corporation is a foreign corporation, it must submit a
copy of its Certificate of Authority. If the corporation is
a domestic corporation, it must submit a copy of its
Certificate of Incorporation. A foreign corporation is one
that has been incorporated outside the State of Alaska. A
domestic corporation is one that has been incorporated within
the State of Alaska.
b. The current address and phone number of the corporation.
c. A list of current officers of the corporation that are
authorized to sign a bid on behalf of the corporation.
d. A notarized power-of-attorney authorizing any agent who is
not a current officer but who has been designated by the
corporation to sign a bid on behalf of the corporation.
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In order to receive a Certificate of Authority, foreign corporations
must submit a packet of completed forms entitled "instructions for
qualifying a foreign corporation to do business in the State of
Alaska" to the Department of Commerce and Economic Development,
Corporation Section, Pouch D, Juneau, Alaska 99811. In order to
receive a Certificate of Incorporation, domestic Corporations must
submit Articles of Incorporation to the Department of Commerce and
Economic Development. These forms can be obtained by writing or
telephoning DMEM, Pouch 7-005, Anchorage, Alaska, 99510 (276-2653).
Upon proper application, the Department of Commerce and Economic
Development will issue a Certificate of Authority or Certificate of
Incorporation. Please allow two to three weeks for the processing of
these Certificates.
4. Partnerships or Other Unincorporated Associations - A partnership or
unincorporated association must submit the following documents to DMEM
prior to the lease sale:
a. A statement describing the business relationships between
members or partners.
b. A statement of qualifications for each member stating that
each member is at least 18 years of age and a citizen of the
United States, or is eligible for and has filed for
citizenship, or is an alien person entitled to a similar
lease by virtue of a treaty between the United States and the
nation of which the alien person is a citizen. ·
c. If an agent is signing the bid form on behalf of the
partnership or association, a notarized power-of-attorney
defining the agent's authority to sign the bid on behalf of
the partnership or association.
C. Bid Submission
All bids will be accepted by the Director of the Division of Minerals and
Energy Management or her authorized agent in Room 31 (3rd Floor), 555
Cordova Street, Anchorage, Alaska, between the hours of 9:00 a.m. and 4:00
p.m. on September 27, 1982. Bids that are mailed to the Director, DMEM
Pouch 7-005, Anchorage, Alaska 99510 must be received no later than
September 27, 1982. Bids will also be accepted at the Division's
temporary office at the Captain Cook Hotel, 5th Avenue and "K" Street in
Anchorage between 8:00 a.m. and 9:00 a.m. on September 28, 1982. No bids
tendered after 9:00 a~m. on the day of the sale, September 28, will be
accepted.
Bids will be received and processed on September 28, 1982 in the following
manner:
1. 8:00 a.m. -9:00 a.m. -bids will be received in the "Discovery Room."
2. 9:00 a.m. -closing of bid acceptance.
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3. 9:00 a.m. -10:30 a.m. -opening of the bids by DMEM personnel. The
opening of bids is for the sole purpose of publicly announcing and
recording bids received. No bids will be accepted or rejected at this
time.
4. 10:30 a.m. -public reading of the bids will begin in the "Discovery
Room."
D. Form for Submission of Bids
1. A separate bid must be submitted for each tract.
2. Each bid must be submitted separately in a single envelope. The
envelope should be marked "State of Alaska Competitive Oil and Gas
Lease Sale 34; not to be opened until 9 a.m., September 28, 1982;
Tract # " No other statements, information, or identification
should appear on the outside of the envelope.
The following items must be contained in each envelope:
a. An executed bid form DMEM-10(9/82) or an exact copy of that
form. All bidders should state their name, company (if
applicable), address, and telephone number on the bid form.
b. Bid Deposit: Check or money order made payable to the
"Department of Revenue, State of Alaska." Bid deposits must
be in U.S. dollars and must be tendered in cash or by money
order, cashier's check or certified check in the total amount
of 20% of the total cash bonus being offered for the tract.
No bid for less than a full tract will be considered.
3 •. Pursuant to 11 AAC 82.430, joint bids must disclose, and the bid form
must be signed by or on behalf of, each person who has any working
interest in the bid or who will receive any working interest in any
lease issued in this sale by virtue of any agreement or understanding,
oral or written. This requirement does not mean that persons who are
interested in a bid only as stockholders in a corporation must sign
the bid and lease form and does not mean that the designated
information must be furnished as to those persons. Joint bids must
state the percentage of interest of each bidder and must designate one
person who is authorized to receive notices on behalf of all the
bidders.
E. Method of Handling Bid Deposits
1. Bid deposits will be safeguarded against theft, misappropriation and
loss. Acceptance of a bid deposit by the state does not constitute
and shall not be construed as acceptance of any bid on behalf of the
state.
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2. A bidder submitting a bid which is not the apparent high bid may pick
up the bid deposit from 2:30 to 4:00 p.m., September 28, 1982, in Room
31 (3rd Floor), 555 Cordova Street, Anchorage, Alaska. Bid deposits
also will be returned from 1 to 3 p.m. on September 29, 1982 in Room
31, Third Floor, 555 Cordova Street, Anchorage, Alaska.
3. A bidder whose bid deposit for an apparent high bid is tendered by
cashier's check or certified check drawn on a bank other than the
Alaska National Bank of the North must wire transfer funds in the
amount of such bid deposit on September 29, 1982, no later than noon
E.S.T. (7 a.m. A.S.T.), to the credit of the State of Alaska
Investment Account, Bank of America, N.T. & S.A., San Francisco,
california, to the attention of Elizabeth Stephens, Securities
Clearance Department, #3298. It is not necessary that separate wire
transfers be made if more than one bid deposit is being transferred to
the account. Each apparent high bidder making a wire transfer to this
account must Telex the following information to Bank of America (Telex
No. 9-34-0534) with a copy to the Alaska Department of Revenue,
Treasury Division (Telex No. 099-45-333): the amount of each bid
deposit comprising the wire transfer, the tract number to which each
bid deposit applies, the originating bank of the wire transfer, and
the name(s) of the bidder's partner(s), if any, on whose behalf a bid
deposit is being wire transferred. Upon notification of receipt of a
wire transfer, the cashier's check(s) and certified check(s) for the
bid deposit(s) corresponding to that wire transfer will be returned
from 1 p.m. to 3 p.m., September 29, 1982, in Room 31 (3rd Floor), 555
Cordova Street, Anchorage, Alaska and from 8:30a.m. to 3 p.m.,·
September 30, 1982 in Room 31 (3rd Floor), 555 Cordova Street,
Anchorage, Alaska.
4. If a bid deposit for an apparent high bid is tendered in cash, by
money order, or is a certified or cashier's check drawn on the Alaska
National Bank of the North, the bidder will not be required to wire
transfer federal funds for that bid deposit. SUch checks will be
presented September 28, 1982, for payment in federal funds at the
Alaska National Bank of the North.
5. Upon rejection by the State of Alaska of any apparent high bid, the
amount of the bid deposit for that bid will be returned by wire
transfer to a bank designated by the bidder. A bidder who is unable
to pick up a bid deposit in the manner described in E(2) and E(3)
above may submit with the bid written instructions for return of the
bid deposit.
6. Upon acceptance of a bid by the Commissioner of Natural Resources, the
successful bidder will be notified by certified mail of the lease
award and will be sent two copies of the lease for signature. Within
30 days of the date that the bidder receives notification of the lease
award, the bidder must: 1) sign both copies of the lease; 2) return
them to the Division of Minerals and Energy Management for execution;
3) pay the balance of the cash bonus and accrued interest; and 4) pay
annual rental for the first year. Interest of 8.616% per annum (which
is the market interest rate for 90-day U.S. Treasury bills prevailing
during the week of August 16-20, 1982) will be charged on the balance
of the cash bonus accruing from the date of the successful bidder's
receipt of the notification of the lease award to the date of
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payment. The successful bidder owes interest from the day the bid
acceptance letter is received until the day before the money is paid.
Interest should be paid on the cash bonus only and not on the
first year of rental. Payment of the balance of the cash bonus,
accrued interest and rental shall be accomplished in the following
manner:
The successful bidder will wire transfer federal funds in the
amount of the balance of the cash bonus and accrued interest, and
annual rental for the first year to the State of Alaska Investment
Account, Bank of America, N.T. & S.A., San Francisco, California,
to the attention of Elizabeth Stephens, Securities Clearance
Department, #3298. The wire transfer should specify on whose
behalf and on what tracts the balance, interest, and rental is
being paid. If possible, bidders should use only one wire
transfer. Interest calculations should be based on a 360-day year
times the actual number nf days that interest is owed.
In addition, the successful bidder must simultaneously send the
following information by telex to the Alaska Department of
Revenue, Treasury Division (Telex No. 099-45-333): the amount of
rental, interest, and balance of cash bonus being paid per tract;
the name(s) of the bidder(s) on whose behalf the funds are being
wire transferred; and the originating bank of the wire transfer.
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MITIGATING MEASURES
AS 38.05.035(a)(l4) and the departmental delegation of authority give the
Director, Division of Minerals and Energy Management (DMEM), the authority to
impose conditions or limitations, in addition to those imposed by law, to
ensure that a disposal is in the state's best interest. Lease stipulations
will be enforced throughout the term of the lease. Measures listed under
"Plans of Operations and Other Terms of Sale" will be imposed through Plans of
Operations and other permits to mitigate the social and environmental effects
of lease activities. These measures have been developed considering the
Social, Economic, and Environmental Analysis for Lease Sale 34, public
comment, and the measures imposed in prior north slope lease sales.
Lease Stipulations
1. Spill Prevention Control and Countermeasure (SPCC) Plan:
A Spill Prevention, Control and Countermeasure Plan must be submitted to
the Department of Environmental Conservation for approval prior to
onshore drilling operations and construction of onshore oil and gas
storage facilities (with a capacity of greater than 660 gallons),
transfer, and transportation facilities. In addition to addressing the
prevention, detection and cleanup of oil, the SPCC plan for drilling
operations should include, but not be limited to, methods for ·
controlling blowouts, location of spill clean-up equipment,
identification and location of a suitable alternative drilling rig, and
the time required to obtain equipment, mobilize, rig-up, and commence
drilling of a relief well, if needed.
2. Discovery of historic or archeologic objects:
In the event any site, or structure, or object of historic or
archeologic significance is discovered during the conduct of any
operations on the leased area, the lessee must report immediately such
findings to the Director, DMEM, and make every reasonable effort to
preserve and protect such site, structure, or object from damage until
the Director, after consultation with the State Historic Preservation
Officer, has given directions as to its preservation.
Plans of Operations and Other Terms of Sale
Lessees must submit a detailed plan of operations to the Division of Minerals
and Energy Management for approval prior to conducting any exploratory or
development operations. The lessee shall concurrently submit an informational
copy of its plan of operations to the North Slope Borough. The following
restrictions will be imposed as a condition of the approval of plans of
operations:
1. Road and pipeline crossings must be aligned perpendicular or near
perpendicular to watercourses. Permanent facilities will be
prohibited within 500 feet (152 m) of the Sagavanirktok,
Kadleroshilik, Shaviovik, Kavik, Staines, and Canning rivers.
Facilities will be prohibited within 100 feet (30 m) of all other
streams and fish-bearing lakes unless the Director, Division of
Minerals and Energy Management, after consultation with the
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Department of Fish and Game, determines that such facilities
placement will not disturb critical wildlife habitats or that such a
requirement is not feasible or prudent. The Department of Fish and
Game will identify potential fish-bearing lakes within 30 days of the
date a request for approval of a plans of operations is received.
The Department of Fish and Game will confirm the presence or absence
of fish at the earliest opportunity when ice conditions permit. If
fish are not present in lakes, the 100 foot setback provision can be
waived.
2. Measures will be required to minimize the impact of industrial
development on key wetlands, waterfowl and shorebirds. Key wetlands
include deep pendent grass ponds and lakes (Class IV) and basin -
complex wetlands (Class VI). Measures will include restricting
certain facility siting to the least environmentally sensitive
portions of these wetlands. Specific measures include the
requirements that:
a. Lessees identify on a map or aerial photograph the largest
surface area within which it is anticipated that a facility is
to be sited, or an activity is to occur. The map or photograph
must accompany the plan of operations submitted to DMEM. DMEM
and the Department of Fish and Game will identify the least
environmentally sensitive area(s) within the industry-identified
area of interest. The industry-identified surface area must be
large enough to contain the proposed facility and to accomodate
planned expansion.
b. Drill pads, roads, pipelines and other facilities must be sited
outside of productive Class IV and VI wetlands, unless the
Director, DMEM, after consultation with the Department of Fish
and Game, determines that there are no feasible alternatives.
c. Where. facili tes must be sited within Class IV and VI wetlands,
such facilities will be sited, designed and constructed in a
manner that will maintain natural hydrological patterns and
prevent oil contamination.
d. Draining or dewatering Class IV and VI wetlands is prohibited.
3. Impermeable lining and diking will be required for sewage ponds and
onshore oil storage facilities (with a storage capacity greater than
660 gallons). Buffer zones of up to 1,500 feet will be required to
separate oil storage facilities (with a capacity greater than 660
gallons) and sewage ponds from freshwater supplies, streams, lakes,
and Class IV and VI wetlands unless the Director, DMEM, after
consultation with the Department of Environmental Conservation,
determines that such a requirement is not feasible or prudent. Sumps
and reserve pits must be impermeable and otherwise fully contained
through diking or other means.
4. All lease activities and structures must be designed to maintain
normal water flow or drainage patterns and to allow free movement and
safe passage to fish and mammals, unless the Director, DMEM, after
consultation with the Department of Fish and Game, determines that
such a design is not feasible or prudent.
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5. Exploration activities must be supported only by winter roads and
trails, existing road systems, and air service. On-tundra travel may
be permitted if the Director, Division of Land and Water Management
and the Director, DMEM, determine that travel can be accomplished
without disturbing the vegetative mat or an emergency condition
exists.
6. Facilities and surface transportation routes must be consolidated to
the extent feasible and prudent.
7. No restriction of public access to, or use of, the leased area will
be permitted as a consequence of oil and gas activities except in the
immediate vicinity of drill sites, buildings and other related
structures. Such areas where access is to be restricted must be
identified in the plan of operations. No lease facilities or
operations may be located where they would block public access to or
along navigable and public waters as defined in AS 38.05.365(22) and
(23). If lease facilities are proposed to be located in the vicinity
of these public waters, an easement will be reserved under
AS 38.05.127 and 11 AAC 53.330 to ensure the right of public access.
8. The lessee must include in any exploration and/or development plans a
proposed environmental training program for all personnel involved in
exploration or development activities (including personnel of the
lessee's contractors and subcontractors) for review and approval by
the Director, DMEM. The program must be designed to inform each
person working on the project of specific types of environmentai,
social, and cultural concerns which relate to the individual's job.
The program must be formulated and implemented by qualified
instructors experienced in each pertinent field of study and must
employ effective methods to ensure that personnel understand and use
techniques necessary to preserve archeological, geological, and
biological resources. The program must also be designed to increase
the sensitivity and understanding of personnel to community values,
customs, and lifestyles in areas in which such personnel will be
operating.
The lessee must also submit for .review and approval a continuing
technical environmental briefing program for supervisory and
managerial personnel of the lessee and its agents, contractors, and
subcontractors.
9. The lessee is encouraged to hire Alaska residents to perform work
done by and for it within the State of Alaska in connection with this
lease to the extent that residents are available, willing and
qualified. The lessee must submit to the Director, DMEM, a program
detailing the affirmative steps it will take to recruit and hire
Alaska residents and the statistical indicators it will use to
document the program's success. The lessee will submit these
statistics annually to the Director, DMEM.
10. Solid waste disposal into rivers, streams, natural lakes and Class IV
and VI wetlands is prohibited. Before the lessees dispose of solid
waste in other areas, the disposal must be approved through permits
by the Commissioner, Department of Environmental Conservation.
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11. Discharge of produced water, drilling muds, and cuttings:
a. Disposal of produced water to freshwater bodies, including Class
IV and VI wetlands, is prohibited. Disposal of produced waters
in upland areas, including Class IV and'VI wetlands, will be by
subsurface disposal techniques, except that the Commissioner of
the Department of Environmental Conservation may permit
alternate disposal methods if he determines that subsurface
disposal techniques are not feasible or prudent.
b. Discharge of drilling muds and cuttings to lakes, streams,
rivers, and Class IV and VI wetlands is prohibited. Uplands
disposals of contaminated muds and cuttings may be made into
approved sumps and reserve pits which are impermeable and
otherwise fully contained through diking or other means.
12. Exploration facilities, with the exception of drill pads, will be
temporary and must not be constructed of gravel. However, use of
existing abandoned gravel structures may be permitted on an
individual basis by the Director, DMEM, after consultation with the
Director of the Division of Land and Water Management and the
Department of Fish and Game. Approval for use of abandoned
structures will depend on the extent and method of restoration needed
to return these structures to a usable condition.
13. In meeting gravel needs for exploration, development, and production,
gravel from nearby abandoned drill pads and existing material sites
must be used first unless the Director, Division of Land and Water
Management, after consultation with the Director, DMEM, and the
Department of Fish and Game, determines that the reuse of such
sources is not feasible and prudent.
14. Gravel mining sites required for exploration activities must not be
located within the active floodplains (from vegetation line to
vegetation line) of watercourses, unless the Director, Division of
Land and Water Management, after consultation with the Department of
Fish and Game, determines that a floodplain source will cause the
least adverse environmental impact. Mining site development and
rehabilitation within floodplains must follow the procedures outlined
in Gravel Removal Guidelines For Arctic and Subarctic Floodplains,
1980, U.S. Fish and Wildlife Service-Woodward Clyde Consultants.
Under AS 16, Department of Fish and Game approval is required if the
mining site is located within an anadromous stream or could block
fish passage.
15. Borrow extraction from barrier islands is prohibited. Borrow
extraction from lagoons and nearshore areas is prohibited unless the
Director, Division of Land and Water Management finds, in
consultation with the Department of Fish and Game, that, on the basis
of scientific evidence, borrow extraction in these areas will not
adversely affect the environment or that no alternative feasible or
prudent sources exist.
16. Gravel mining sites required for development activites will be
restricted to the minimum number of upland or approved offshore sites
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needed to develop the field efficiently and with minimal
environmental damage. Where feasible, upland gravel sites will be
designed and constructed to function as reservoirs for winter water
supplies. Gravel mining will not be allowed from active floodplains
(from vegetation line to vegetation line) during development and
production activities, unless the Director, Division of Land and
Water Management, after consultation with the Department of Fish and
Game, determines that there is no other feasible and prudent
alternative.
17. Pipelines will be located so as to facilitate the containment and
clean up of spilled hydrocarbons. Where feasible, pipelines will be
located on the upslope side of roadways and construction pads unless
the Director, Division of Land and Water Management, determines that
an alternative site is an acceptable environmental alternative.
18. All garbage and refuse will be incinerated. Residue and nonburnables
will be disposed of at an approved upland site. No new solid fill
disposal sites, except possibly for the disposal of drilling muds and
cuttings, will be approved during the exploratory phase.
19. Except for those on approved exploratory drill sites, stationary fuel
storage facilities shall not be placed, nor vehicle refueling· occur,
within the active floodplain (vegetation line to vegetation line) of
a fish-bearing stream. Exceptions may be allowed during the
permitting process under AS 16.06.870 for the refueling of
slow-moving construction equipment (such as graders, tractor puiled
scrapers and front end loaders) within floodplains.
20. Prior to the constr~ction or placement of any onshore structure,
road, or facility resulting from exploration, development, or
production activities, the lessee must conduct an inventory of
archeological and historical sites within the area affected by a
proposed activity. Such inventory must consider literature provided
by the North Slope Borough and local residents, documentation of oral
history regarding historic and prehistoric uses of such sites,
evidence of consultation with the Alaska Heritage Resources Survey
and the National Register of Historic Places, and site surveys. The
inventory must also include a detailed analysis of the potential
effects estimated to result from the proposed activity. The
inventory must be submitted to the Director, DMEM, for distribution
to the Director of the Division of Parks and the Mayor of North Slope
Borough for purposes of review and comment. In the event that an
archeological or historical site or area may be adversely affected by
an activity, the Director, DMEM, after consultation with the Director
of the Division of Parks and the North Slope Borough, will direct the
lessee as to what course of action will be necessary to mitigate the
adverse effect.
21. Upon abandonment of drilling sites, roads, buildings, airstrips or
other facilities, such facilities will be removed and the site
rehabilitated, unless the Director, DMEM, after consultation with the
departments of Fish and Game and Environmental Conservation,
determines that such removal and rehabilitation is not in the state's
interest.
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22. The following measures will be imposed to protect anadromous streams:
a. Alteration of river banks is prohibited.
b. Except for approved stream crossings, equipment must not be
operated within willow stands (Salix spp.).
c. The operation of equipment in open water areas that appear in
winter (from freezeup until spring breakup) will be prohibited.
d. Bridges must be used as watercourse crossings whenever
feasible. Culverts may be used only when bridges are shown not
to be feasible or prudent. The siting, design, and construction
of both bridges and culverts must be approved by the Department
of Fish and Game prior to the placement of either of these
structures.
e. Removal of freshwater or snow cover from fish bearing rivers,
streams, and natural lakes will be prohibited from freeze up
until spring breakup.
f. Water intake pipes utilized for summer water removal from the
river must be surrounded by a screened enclosure to prevent fish
entrainment and impingement. Pipes and screening must be
designed and constructed so that the maximum water velocity at
the surface of the screen enclosure is no greater than 0.1 foot
per second. Screen mesh size shall not exceed 0.04 inch unless
another size has been approved by the Department of Fish and
Game.
g. To protect fish and other aquatic fauna, high explosives must
not be detonated within, beneath, or in close proximity to
fish-bearing waters unless prior drilling indicates that the
waterbody, including its substrate, is solidly frozen. The
minimum acceptable offset from fish-bearing waters for various
size charges is:
1 pound charge
2 pound charge
5 pound charge
10 pound charge
25 pound charge
100 pound charge
500 pound charge
1,000 pound charge
50 feet
75 feet
125 feet
150 feet
250 feet
500 feet
1200 feet
1600 feet
Lessees are advised that documented anadromous rivers in and
adjacent to the lease sale area include: the Sagavanirktok,
Shaviovik, Kavik, and Canning rivers.
23. The lessee will be responsible for ensuring that an adequate supply
of water is available for winter use through development of such
means as storage reservoirs and snow melting. Water appropriations
shall be authorized pursuant to AS 46.15.
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24. The following measures will be required to minimize impacts on the
Central Arctic Caribou Herd.
a. Exploratory drilling operations may be restricted or prohibited
on Tracts 1-14, and on other tracts as necess~ry, between May 15
and June 25 to protect caribou calving areas. Drilling,
maintenance and operation of production wells will be allowed
year-round throughout the sale area. On tracts 1-14, and on
other tracts as necessary, the movement of equipment and
personnel may be restricted between May 15 and June 25 to
minimize conflicts with caribou calving in these areas. All
authorized movement of equipment and personnel must be on
established roads and must be consolidated and scheduled to
reduce disturbance to caribou. The necessity and conditions for
limiting equipment and personnel movement will be identified on
a case-by-case basis during review of plans of operations by the
Director, Division of Minerals and Energy Management, in
consultation with Alaska Department of Fish and Game. In order
to assist the Director, Division of Minerals and Energy
Management, in determining the validity of these seasonal
restrictions, the lessee may be required to conduct caribou
monitoring studies in consultation with the Department of Fish
and Game.
b. Pipelines must be constructed to allow safe passage of caribou
and moose. Adequate elevation, ramping, or burial of pipe~ines
will be required in areas identified by the Department of Fish
and Game as important caribou movement zones.
25. Routes of travel must avoid preferred polar bear denning habitat
unless human safety dictates otherwise. Polar bears are known to den
predominately within 25 miles of the coastline in deeply drifted
areas (6 ft. or greater) adjacent to the cutbanks of drainages. The
use of explosives will be prohibited within 1/4 mile of such cutbanks
identified by the Department of Fish and Game. Tracts within 25
miles of the coast affected by this term are Tracts l-67 in their
entirety and parts of Tracts 28, 30, 31, 34, 35, 68, 69, 70, 71, 74,
and 75. The Department of Fish and Game will make maps identifying
documented high pensity polar bear denning habitat available to the
Director and lessees within 60 days of the date a request for
approval of a plans of operations is recieved.
26. Peregrine Falcons nest on river bluffs within the lease sale area in
Tracts 131 and 162. Although Peregrine Falcon nests have not been
identified in other parts of the sale area, other tracts contain
river bluff habitat where nests may yet be discovered. Lessees are
advised that disturbing a Peregrine Falcon nest violates federal
law. If the lessee discovers previously unreported active Peregrine
Falcon nest sites, the lessee must immediately report the nest
locations to the Director. To comply with state and federal
endangered species acts, the following restrictions will apply in the
vicinity of active Peregrine Falcon nest sites, except as approved by
the Department of Fish and Game, after consultation with the U.S.
Fish and Wildlife Service. All known nest sites will be considered
active between April 15 and June 1. Nest sites not having a
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Peregrine Falcon present by June 1 will be considered inactive, and
oil and gas activities near inactive nests will not be subject to
these restrictions. Activities at existing development sites within
two miles of newly established nests will not be subject to these
restrictions.
a. Within one mile (1.6 km).--Between April 15 and August 31,
surface entry will be prohibited and aircraft overflights must
avoid nest sites by an altitude of 1500 feet (457 m) above nest
level. Facilities, including but not limited to roads,
pipelines, disposal sites, gravel mines, storage facilities, and
camps will be prohibited. This term applies to parts of Tracts
130, 131, 159, and 162. If new nests are found, this term could
apply to other tracts.
b. Within two miles (3.2 km).--Noisy activities, including blasting
and gravel washing, will be prohibited between April 15 and
August 31. Airfields, construction camps, disposal sites,
compressor stations, and other permanent facilities that occupy
large areas, are noisy, or require sustained human occupancy
will be prohibited. This term will currently affect parts of
Tracts 129, 130, 131, 132, 159, 163, and 166, and all of Tract
162. If new nests are found, this term could apply to other
tracts.
c. Within 15 miles (24 km).--Except for limited non-aerial
applications of approved non-persistent insecticides, pesticide
use will be prohibited. This term will currently affect all of
Tracts 38-43, 46-47, 82, 108-171, 174-176, 191-194, 199, 211,
214, and 230, and parts of 172, 173, 180, 195, 198, 199, 212,
213, 229, 44, 45, 81 and 83. If new nests are found, this term
could apply to other tracts.
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27. The following provisions will govern aircraft operations in and near I.
the sale area.
a. From May 15 through September 30, aircraft must fly at
altitudes of greater than 1,500 feet (457 m) or at a lateral
distance of one mile around barrier island and lagoon areas,
river deltas, and wetlands within one mile of the Beaufort Sea
coastline (excluding take-offs and landings).
b. From May 15 through June 20, aircraft overflights within 30 I ·
miles (24 km) of the coast between the Sagavanirktok and l
Canning Rivers must avoid caribou by an altitude of at least
1,500 feet (457 m) or a lateral distance of one mile (1.6 km)
(excluding take-offs and landings). [
c. Human safety will take precedence over aircraft restrictions.
28. Surface usbe willfbl: rtest~lt.chte1d, as nec:ssary, to prevent [:
unreasona le con lC s wl ocal subslstence harvests.
29. Bidders are advised that the North Slope Borough (NSB) Assembly has· [ •
adopted an interim zoning ordinance under Title 29 of the Alaska .
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statutes. The interim zoning ordinance requires NSB approval for
certain activities necessary for exploration and development of the
lease. The state may not in all instances accept this assertion of
jurisdiction.
30. During the conduct of all activities related to this lease, the
lessee will be subject to the provisions of all valid coastal zone
plans and ordinances. DMEM will require, as a condition for
approval of lease operations, such modification or stipulations as
may be necessary to ensure consistency with the Coastal Management
Act, and with sound planning and management of coastal zone
resources.
31. Plans of operations for lease activities and specific permit
applications which are subject to approval by the U.S. Corps of
Engineers or which require a Certificate of Reasonable Assurance
from the Department of Environmental Conservation must be submitted
simultaneously for state agency review and approval, 'at least 60
days prior to the proposed conduct of such activities.
32. If only the subsurface estate is owned by the state, or if the
surface is owned by the state but subject to third party interests,
including any native allotments, the lessee must not enter upon such
land until the lessee makes a good faith effort to agree with the
surface interest holder on settlement of damages that may be caused
by lease activities. If an agreement cannot be reached, Direct9r,
DMEM, has the authority to approve the activity, provided adequate
provisions have been made with the state to pay for any damages the
surface interest holder may suffer.
33. Active channels of the Sagavanirktok River are closed to gravel
extraction from the mouth to the Township 8N-9N line.
34. The proposed activities under a plan of operations must not
unreasonably diminish the use and enjoyment of lands encompassed
within a native allotment. Before entering a pending or approved
native allotment, lessees must contact the Bureau of Indian Affairs
and the Bureau of Land Management and obtain approval to enter, if
required. Lessees must also comply with applicable federal law on
native allotments.
35. The Trans-Alaska Pipeline is located on state right-of-way lease
#63574 which includes portions of Tracts 258 and 261. Lessees must
contact the Division of Land and Water Management, Right-of-way
Surveillance Section, Project Administration office, before entering
upon or crossing the pipeline right-of-way. Drilling is prohibited
within 300 feet of the right-of-way centerline.
36. Lessees will be eligible for exploration incentive credits for
exploration wells as provided in 11 AAC 83.800, 11 AAC 83.805,
11 AAC 83.815, and 11 AAC 83.820 as those regulations exist on the
effective date of the lease. On tracts 001-014 credits will be
earned at a rate of $500 per foot drilled for the first exploratory
well per tract, provided that credits cannot exceed 40% of the total
exploratory well cost. On tracts 015-261, credits will be earned
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at a rate of $375 per foot drilled for the first exploratory well
per tract, provided that credits cannot exceed 30% of the total
exploratory well cost. The credits must be earned and used within
10 years of the effective date of the lease. Credits approved for
the drilling of exploratory wells on tracts in leased Oil and Gas
Lease Sale 34 will be applicable to "oil and gas royalty payable
in-value and rental payments payable to the state or taxes payable
under AS 43.55" due the state from development in any area of the
state and are not limited to payments due the state as a result of
development within the Sale 34 area only.
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September 1, 1982
MINERALS AND ENERGY MANAGEMENT
STATE OF ALASKA
SUPPLEMENTAL NOTICE
OIL AND GAS LEASE SALE 34
(PRUDHOE BAY UPLANDS)
lAYS. HAMMOND, GOVERNOR
555 CORDOVA STREET
POUCH 7..()()5
ANCHORAGE, ALASKA 99510
(907) 276-2653 .
Pursuant to 11 AAC 82.410, the Commissioner of the Department of Natural
Resources has established a minimum bid of One Dollar ($1.00) per acre for Oil
and Gas Lease sale 34. Prescribing a minimum bid does not prevent the
rejection of bids as provided in 11 AAC 82,.450.
STANDARD MITIGATING MEASURES FOR SEISMIC EXPLORATION APPENDIX C
Revised: July 1982
ALASKA DEPARTMENT OF NATURAL RESOURCES
Reference: Seismic Stipulations -Open Water Operations
Under 11 AAC 96.040, the following stipulations are attached to and made a
part of the terms and conditions of the miscellaneous land use permit:
1) The Permittee shall notify and obtain approval from the Division of
Minerals and Energy Management at least 15 days in advance of any
activities which significantly deviate from the approved plan. Any action
taken by the permittee or his agent which increases the overall scope of
the project or which negates, alters, or minimizes the implied intent of
any stipulation contained in this permit will be considered a significant
deviation from the approved plan. Notification must include the date and
the specific nature of the proposed operation, the reasons why the
operation is different, and a map showing the locaiton of the operation.
Significant deviations from the approved plan are permitted without prior
notice to protect human safety or living resources; however, any such
•emergency deviation• must be repdrted to the Director, Division of
Minerals and Energy Management within 48 hours.
2) The permittee shall provide the Department of Natural Resources with the
name of a contact person who shall be familiar with the daily location and
operating status of the seismic crew(s). The contact person shall provide
this information to the Department of Natural Resources when requested by
an authorized representative of the Department.
3) This permit authorizes the use of non-explosive energy sources only. The
use of solid or liquid explosives is prohibited.
4) All operations must be conducted in a manner that will assure minimum
conflict with other users of the area.
5) In areas of commercial fishing, seis~ic work must be scheduled during
peroids and times when interference with fishing operations will be
avoided or minimized. Further information may be obtained by contacting
the Area Biologist, Division of Commercial Fisheries, Alaska Department of
Fish and Game. The permittee shall make a good-faith attempt to contact
the local fisherman•s organization if any, processors, and fishery agents
before conducting the seismic operation.
6) Alaska law specifically prohibits the intentional or reckless damaging of
commercial fishing gear. AS 16.10.55 states:
A person who willfully or with reckless disregard of the
consequences of his activity, interferes with or damages the
commercial fishing gear of another person, upon conviction, is
guilty of a misdemeanor. For the purposes of this section
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11 interference" means the physical disturbance of gear which results
in economic loss or loss of fishing time, and 11 reckless disregard of ,--
the consequences .. means a lack of consideration for the consequences _
of one's acts in a manner that is reasonably likely to damage the
property of another. r --
This authorization in no way excludes the permittee from the provisions
of AS 16. 10.55.
7) During the fishing season, operation will be
in areas where commercial fishing operations
concentration of fixed and unattended gear.
areas, an observer knowledgeable about local
board the vessel.
limited to daylight hours
are known'to use a
When operating in these
gear locations will be on
8) The seismic vessel must be outfitted with suitable transmitting and
receiving equipment for ship-to-ship and ship-to-shore communication.
The Division of Minerals and Energy Management shall be advised of the
operator's radio call letters, frequencies, type of equipment, and
vessel identification.
9) All buoys and other markers used in connection with seismic work must be
properly flagged and lighted in accordance with the navigational rules
of the U.S. Corp. of Engineers and the U.S. Coast Guard.
10) Fuel spills must be reported and cleaned up per 18 AAC 75.080. The
telephone number to report spills is Zenith 9300.
ll) Sorbent material in sufficient quantity to handle operational spills
·must be on hand at all times for use in the event of oil or fuel is
spilled.
12) All solid wastes and wastewater must be retained on board and disposed
of at an appropriate shore based facility or treated on-board the vessel
through an approved U.S. Coast Guard sanitation system for disposal
over-board.
13) Drinking water must meet Alaska drinking water standards. Minimum
treatment will consist of filtration to remove 10 micron sized particles
and disinfection.
14) The provisions of the Federal and State Endangered Species Acts and the
Federal Marine Mammal Protection Act must be adhered to at all times.
The Endangered Species Acts provide that there will be no activity
permitted that jeopardizes the continued existence of an endangered
species or results in the destruction or adverse modification of habitat
of such species. Endangered species known to occur in Alaska include
peregrine falcon, Aleutian canada goose, short-tailed albatross, Eskimo
curlew, and humback, fin, grey, blue and bowhead whales. The applicant
is advised to contact the Anchorage U.S. Fish and Wildlife Service,
Endangered Species Office (276-3800) for additional information on
endangered species. The Marine Mammal Protection Act provides that
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there will be no intentional disturbance, harassment, catching, or
killing of marine mammals. However, a 1981 amendment to the Marine
Mammal Protection Act authorizes the Secretary, Department of Interior
or the Secretary, Department of Commerce, under certain conditions, to
allow U.S. citizens to take small numbers of marine mammals from
non-depleted stock incidentally, but not intentionally, in specified
areas. The Alaska Department of Natural Resources recommends that this
authorization be obtained by the permittee before conducting any
operations in or near coastal areas. The Department of Interior, U.S.
Fish and Wildlife Service (USFWS) has jurisdiction over sea otter, polar
bear and walrus. The Department of Commerce, National Marine Fisheries
Service (NMFS) has jurisdiction over all other Alaskan marine mammals
including seals, sea lions, whales and propoise. For further
information, the applicant is urged to contact the Anchorage offices of
USFWS (276-3800) and NMFS (271-5006).
15) Open water seismic operations in the Beaufort Sea will be suspended
September 1, in waters east of Prudhoe Bay and September 15, in waters
west of Prudhoe Bay. These suspension dates are considered necessary in
order to provide required protection to the bowhead whale during the
fall migration. Suspensions may be imposed at an earlier date, if the
bowhead whale reaches the project area before the September dates.
Extensions of operations beyond the September dates will be considered
on a case-by-case basis if the Director, Division of Minerals and Energy
Management, in consultation with the National Marine Fisheries Service,
determines that a suitable whale monitoring program is being conducted
and that whales have not yet reached the area permitted for geophysical
op~rations. If bad weather or operational delays cause the whale
monitoring program to be suspended for an extended period of time, the
seismic vessel wil1 cease operations until the whale monitoring program
has resumed.
16) All aircraft associated with the seismic program must maintain a minimum
altitude of 1500 feet above ground level and one mile horizontal
distance from all shoreline cliffs, bluffs, and rocky outcrops
(excluding take offs and landings). Operations at lower altitudes may
be allowed upon approval of the Department of Natural Resources after
consultation with the Department of fish and Game. Human safety will
take precedence over aircraft restrictions.
17) The Department of Natura 1 Resources may require that an authorized
representative of the department be on-site during any operations
conducted under this permit.
18) A copy of the permit and stipulations must be posted in a prominent
location on the seismic vessel.
19) A completion report shall be submitted within fifteen (15) days
following termination of permit activities. This report must contain
the following information:
a) Dates when work was actually performed and the number of line miles
actually surveyed.
b) A U.S.G.S. topographic map or navigational chart upon which the
exact location of all shot lines have been plotted.
c) A description of the work performed.
d) A description of the methods of disposal of liquid and solid wastes.
20) If the placement of navigational aids or other on-shore work is required
within the boundaries of a designated State Game Refuge, State Critical
Habitat Area or State Game Sanctuary, the permittee shall obtain prior
approval from the Alaska Department of Fish and Game. For approval to
conduct these operations, the permittee should contact the Anchorage
Habitat Division office (344-0541). In addition, any work in National
Wildlife Refuges, National Parks, National Monuments and National
Wilderness Areas requires the authorization of the appropriate federal
surface manager. The permittee is urged to contact the Anchorage
offices of the U.S. Fish and Wildlife Service (276-3800), the National
Park Service (271-4366) or the National Forest Service if (279-5541)
proposed on-shore operations require a special permit from these
agencies.
21) The Director, Division of Minerals and Energy Management has the right
at any time to amend or modify any provisions of this permit.
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Revised: November 1982
ALASKA DEPARTMENT OF NATURAL RESOURCES
Reference: Seismic Stipulations -Winter Season Operations·
Under 11 AAC 96.040 the following stipulations are attached to and made a part
of the terms and conditions of the miscellaneous land use permit:
1) The Permittee shall notify and obtain approval from the Division of
Minerals and Energy Management at least 15 days in advance of any
activities which significantly deviate from the approved plan. Any action
taken by the permittee or his agent which increases the overall scope of
the project or which negates, alters, or minimizes the implied intent of
any stipulation contained in this permit will be considered a significant
deviation from the approved plan. Notification must include the date and
the specific nature of the proposed operation, the reasons why the
operation is different, and a map showing the location of the operation.
Significant deviations from the approved plan are permitted without prior
notice to protect human safety or living resources; however, any such
•emergency deviation• must be reported to the Director, Division of
Minerals and Energy Management within 48 hours.
2) The permittee shall provide the Alaska Department of Natural Resources
with th~ name of a contact person who shall be familiar with the daily
location and operating status of the seismic crew(s). The contact person
shall provide this information to the Department of Natural .Resources when
requested by an authorized representative of the Department.
3) No holes may be drilled in excess of 150ft below the land surface unless
specifically permitted. All drilled holes must be backfilled with sand,
gravel, drilling mud, or cuttings.
4) Should any hydrocarbons (excluding coal) be encountered during the
drilling of shot holes, all operations must be discontinued; and the
Alaska Oil and Gas Conservation Commtssion notified, (907)279-1433.
5) If flowing or artesian ~ater is encountered during the drilling of shot
holes, the district office of the Division of Land and Water Management
shall be contacted. The hole must be plugged to the satisfaction of the
Director, Division of Land and Water Management.
6) The use of ground contact vehicles for off-road travel must be limited to
those areas which have adequate ground frost and snow cover to prevent
damage to the ground surface.
7) After 15 April, the use of ground contact vehicles in wetlands and other
areas of weak soil conditions (eg., North Slope tundra) will be subject to
termination within seventy-two (72) hours of written notification from the
Director of the Division of Minerals and Energy Management.
8) Support vehicles must be operated in a manner such that the vegetative
mat of the tundra is not disturbed. Blading or removal of tundra is
strictly prohibited, except as approved by the Director of the Division
of Land and Water Management or his designee. Filling of low spots and
smoothing by the use of snow and ice is allowed.
9) In forested areas, clearing of vegetation will be minimized. Existing
roads, trails, and natural clearings must be used wherever possible.
10) On the North Slope, movement of equipment through willow (Salix) stands
must be avoided wherever possible.
11) Equipment, other than vessels, must not enter open water areas of a
watercourse during winter. Ice or snow bridges constructed at stream
crossings must not contain extraneous material (i.e., soil, rock, wood,
or vegetation) and must be removed or breeched before spring breakup.
Alterations of the banks of a watercourse are prohibited.
12) Prior to crossing or working in any stream, river, or lake specified as
being important for the migration, spawning, or rearing of anadromous
fish, the applicant shall obtain an Alaska Department of Fish and Game
Habitat Protection Permit pursuant to AS 16.05.870. Any structure (eg.
culverts, dams) placed in any stream containing fish requires an ADF&G
Habitat Protection Permit under A.S. 16.05.840. Operations conducted
within lands designated as State Game Refuges, State Critical Habitat
Areas, and State Game Sanctuaries also require permits from ADF&G. For
information regarding these areas and their permitting requirements the
applicant should contract the Habitat Division,
"Alaska Department of Fish and Game at 452-1531 (Fairbanks/North Slope and
Interior) or 344-0541 (Anchorage/Southcentral).
13) Compaction or removal of the insulating snowcover from deep water pools
of rivers known to harbor overwintering fish must be avoided. To prevent
additional freeze down of these pools, watercourses must be crossed at
shallow riffle areas from point bar to point bar wherever possible.
14) Stationary fuel storage facilities must not be placed within the annual
floodplain of a watercourse or closer than 100ft to a waterbody. All
storage facilities must be placed within an impermeable barrier providing
110 percent capacity of the enclosed fuel storage containers.
15) All fuel drums must be marked with the contractor•s name and dated.
16) Refueling of vehicles must not occur on an annual flood plain of a
watercourse.
17) Fuel spills must be reported and cleaned up per 18 AAC 75.080. The
telephone number to report spills is Zenith 9300.
18) Sorbent material in sufficient quantity to handle operational spills must
be on hand at all times for use in the event of oil or fuel spill.
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19) Unless specifically permitted, the use of explosives is prohibited. If
authorization has been obtained, the following minimum conditions will
apply:
a) To protect fish and other aquatic fauna, explosives must not be
detonated within, beneath, or in close proximity to fish-bearing
waters unless the waterbody, including its substrate, is solidly
frozen. The minimum acceptable offset from unfrozen fish-bearing
waters for various size explosive charges is:
1-2 pound charge
5 pound charge
10 pound charge
25 pound charge
100 pound charge
80 feet
120 feet
170 feet
270 -feet
530 feet
Note: Minimum offsets are based upon the use of explosives with
detonation delays of 8 milliseconds or gre~er occurring between
each charge such that no explosion or combination of explosions will
produce an instantaneous pressure in fish bearing waters which
exceeds 2 psi.
b) All vehicles used to carry explosives must be clearly marked with
the word "EXPLOSIVES".
c) All shot wire must be removed from the area.
20) Trails and campsites must be kept clean. All solid wastes including
incinerator residue must be backhauled to a solid waste disposal site
approved by the Alaska Department of Environmental Conservation.
21) All wastewater must be disposed of in a manner acceptable to the Alaska
Department of Environmental Conservation. Acceptable methods of
disposal include the following:
a) Treatment of the entire wastewater stream through a sewage treatment
plant capable of producing an effluent which meets secondary
treatment standards (30 mg/1 Barr, 30 mg/1 S.S., and 200 coliform per
100 milliliters). Secondary treated effluent may be discharged to
the surface of the land or water of the state subject to a
wastewater permit issued by the Department of Environmental
Conservation.
b) The wastestream may be split into blackwater and greywater with the
blackwater (sewage) being incinerated in electric or propane
incinerating toilets, and the greywater {laundry, shower, and
kitchen effluent) being filtered and disinfected prior to
discharge. The plans for such a greywater system must be reviewed
and approved by the Department of Environmental Conservation.
22) Drinking water must meet Alaska drinking water standards. Minimum
l~ treatment must consist of filtration to remove 10 micron sized particles
and disinfection.
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23) Permittees shall abide by the prov1s1ons of Alaska's wildlife feeding
regulation, 5 AAC 81.218. This regulation provides that it is unlawful
to deliberately feed bears, wolves, foxes or wolverines or to
deliberately leave human food or garbage in such a manner that it
attracts such animals.
24) The provisions of the Federal and State Endangered Species Acts and the
Federal Marine Mammal Protection Act must be adhered to at all times.
The Endangered Species Acts provide that there will be no activity
permitted that jeopardizes the continued existence of an endangered
species or results in the destruction or adverse modification of habitat
of such species. Endangered species known to occur in Alaska include
peregrine falcon, Aleutian canada goose, short-tailed albatross, Eskimo
curlew, and humback, fin, grey, blue and bowhead whales. The applicant
is advised to contact the Anchorage U.S. Fish and Wildlife Service,
Endangered Species Office (276-3800) for additional information on
endangered species. The Marine ~ammal Protection Act provides that there
will be no intentional disturbance, harassment, catching, or killing of
marine mammals. However, a 1981 amendment to the Marine Mammal
Protection Act authorizes the Secretary, Department of Interior or the
Secretary, Department of Commerce, under certain conditions, to allow
U.S. citizens to take small numbers of marine mammals from non-depleted
stock incidentally, but not intentionally, in specified areas. The
Alaska Department of Natural Resources recommends that this authorization
be obtained by the permittee before conducting any operations in or near
'coastal areas. The Department of Interior, U.S. Fish and Wildlife
Service {USFWS) has jurisdiction over sea otter, polar bear and walrus.
The Department of Commerce, National Marine Fisheries Service {NMFS) has
jurisdiction over all other Alaskan marine mammals including seals, sea
lions, whales and propoise. For further information, the applicant is
urged to contact the Anchorage offices of USFWS {276-3800) and NMFS
{271-5006).
25) On the North Slope, operators shall not disrupt denning polar bears.
Polar bears are known to den predominately within 25 miles of the
coastline in deeply drifted areas {6ft or greater) adjacent to the
cutbank of drainages coastlines or natural islands. Routes of travel
must be selected to avoid suspected denning habitat areas.
26) To avoid disturbing wildlife, aircraft must maintain a minimum altitude
of 1500 feet above ground level except during take-offs and landings.
Operations at lower altitudes may be allowed upon approval of the
Department of Natural Resources after consultation with the Department of
Fish and Game. Human safety will take precedence over aircraft
restrictions.
27) The permittee shall make a good-faith attempt to coordinate survey
activities in the vicinity of trap-lines with the owners, if they are
known. Care must be taken to avoid disturbance to trap lines within the
survey area.
28) The Department of Natural Resources may require that an authorized
representative of the Department be on-site during any operations
conducted under this permit. ·
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29) A copy of the permit and stipulations must be posted in a prominent
location in the operator's camp.
30) The placing of campsites or storage areas and the stockpiling of material
on surface ice of lakes, ponds, or rivers is prohibited.
31) A completion report must be submitted within fifteen (15) days after
termination of permit activities. This report must contain the following
information:
a) Dates when work was actually performed and the number of line miles
actually surveyed.
b) A U.S.G.S. topographic map showing the actual location of all camps,
shot lines and routes of travel.
c) A list of vehicles used for any off-road travel associated with the
permittees activities.
d) A statement of cleanup activities.
e) A report of the time spent in each campsite.
f) A description of the methods of disposal of garbage and other camp
debris.
32) The Director, Division of Minerals and Energy Management has the right at
any time to amend or modify any provisions of this permit.
33) The permit authorizes access across and exploration activity upon lands
owned by the State of Alaska. If only the sub-surface rights are owned
by the State, the permittee shall not enter upon such land until a
good~faith attempt has been made to agree with the surface owner or
lessee on settlement of damages that may be caused by this activity. If
an agreement can not be reached, the Director of the Division of Minerals
and Energy Management has the authority to approve the activity, provided
adequate provisions have been made with the State to pay for any damages
the surface owner may suffer.
34) The seismic exploration activities granted under this permit must not
diminish the use and enjoyment of lands encompassed within a native
allotment. Before entering a pending or approved native allotment, the
permittee shall contact the Bureau of Indian Affairs and Bureau of Land
Management and comply with applicable federal law.
1601Z
COMMENTS RECEIVED ON PROPOSED 1987 LEASE SALES APPENDIX D
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AMOCO
~·,.,
W. R. Francis
Division Landman
October 1, 1982
State of Alaska
Department of Natural Resources
555 Cordova Street
Pouch 7-005
Anchorage, Alaska 99510
Re: Call for Comments
Prudhoe Bay Uplands (Sale 51)
Beaufort Sea (Sale 52)
Icy Cape (Sale 53)
Gentlemen:
Amoco Production Company
Denver Region
Amoco Building
1670 Broadway
Denver. Colorado 80202
Far West Division
303 -830-4040
This is in response to your letter of August 25, 1982, requesting
comments on the sales.
Please be advised that Amoco concurs with the selection of these
areas for consideration of inclusion to your Five-Year Leasing
Program. While these lands are Frontier Areas, inclusion into
your Program will allow industry to further evaluate the areas
for oil and gas potential.
We appreciate the opportunity to make these lead comments and
also the diligency in which your office pursues the Five-Year
Leasing Program.
-t.A;__/
W. R.
WRF:kf
ARCO Alaska, Inc.
ARCO Exploration -Alaska Operations
Post Office Box 360
Anchorage, Alaska 99510
Telephone 907 265 6515
G. T. Wilkinson
ExecutivE: V!ce President
RECEIVED
OCT 0 81982
October 7, 1982 DIV. OF MINERALS & EN:ORU .... ,Jd_,.
ANCHORAGE, ALA~KA
Mrs. Kay Brown, Director
Division of Minerals & Energy Management
Department of Natural Resources
State of Alaska
Pouch 7-005
Anchorage, Alaska 99510
Dear Mrs. Brown:
We have reviewed the August 25, 1982 mailing by
the Department pertaining to the "State of Alaska
Oil and Gas Lease Sales for 1987" and have the
following comment for your consideration.
Prudhoe Bay Uplands (Sale 51) will, in essence, be
a re-offering sale of expired leases. We feel,
therefore, that all available expired leases, both
onshore and in the sale BF area, should be in-
cluded. Also, if the sixteen leases that had
either a five or seven year drilling commitment
are to expire on February 1, 1985 or February 1,
1987, these also should be included in the pro-
posed Sale 51.
We would like to encourage the State to include
some offshore tracts for the Icy Cape (Sale 53)
area. We feel this would be appropriate since
technology will likely develop for the nearshore
area before deeper OCS tracts can be explored.
Primary term for all
areas should be ten
incentive credits, if
coming years, should
areas.
lease sales
(10) years.
they prove
be used in
in these sale
Exploration
useful in the
these remote
We thank you for this opportunity to comment on
this State 1987 lease sale plan.
Yours very truly,
:pg
ARCO Alaska. Inc. is a Subsidiary ol AtlanticRichfieldCompany
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Chevron -J. J. Anders
Chevron U.S.A. Inc.
2120 Diamond Boulevard, Concord, California
Mail Address: P.O. Box 8000, Concord, CA 94524
Manager, Alaska Division
Land Department. Western Region
Ms. Kay Brown, Director
October 7, 1982
ADDITIONS TO THE STATE'S 5-YEAR
OIL & GAS.LEASI"NG PROGRAM-1987
Division of Minerals and Energy Management
Department of Natural Resources
RECEIVED
OCT 0 71982
State of Alaska
Pouch 7-005
Anchorage, Alaska 99510
DIY. OF MINERALS & ENERGY rv\GMT.
ANCHORAGE, ALASKA
Dear Ms. Brown:
Chevron is generally supportive of the three proposed additions to the State's
Five-year Program for 1987. We are particularly pleased· to see the Beaufort
Sea (Sale 52) and Icy Cape (Sale 53) under consideration. Chevron may be
interested in participating in Sale 52 and Sale 53, provided the Department
offers these areas using cash bonus as the bid variable and with the royalty set
at twelve and one half percent (12i%). .
Thank you for the opportunity to respond to your Call for Comment of August
25, 1982.
q~·q:~~ ~~.CU
J. J. Anders
:TC:sj
E'f(ON CO~JlPANY U.S.A.
POST OFFICE BOX 4279 ·HOUSTON, TEXAS 77001
EXPLORATION DEPARTMENT
ALA.SKA/PACIFIC DIVISION
E: [I 2JTOUT
1,1i;NAGER
Ms. Kay Brown, Director
Department of Minerals and
555 Cordova Street
Pouch 7-005
Anchorage, Alaska 99510
Dear Ms. Brown:
Energy Management
September 28, 1982
Comments on Proposed
Oil and Gas Lease Sales
51 , 52, and 53
Exxon Company, U.S.A. is pleased to respond to your Call for Comments on the
proposed addition of the above captioned lease sales to the State of Alas~a Five-
Year Leasing Program. We continue to support the concept and objectives of the
state Five-Year Oil and Gas Leasing Program. This program allows companies to
plan for the most efficient and effective use of resources in preparing for lease
sales. Such schedule dependability assures the state of having the maximum
number of participants in each sale. '
Exxon encourages and supports the addition of the following proposed lease sale
areas to the state's Five-Year Leasing Program: Prudhoe Bay Uplands (Sale 51),
Beaufort Sea (Sale 52), and ley Cape (53). We recommend, as we have in previous
comments, that you coordinate state lease sales with lease sales in adjacent OCS
areas. This is particularly important· for the efficient exploration and
development of common pool resources. To achieve this efficiency in the Sale 53
area, we suggest that the state expand its offering to include offshore acreage
contiguous with the proposed federal Sale No. 85 in the Chukchi Sea. If Sale 53
is expanded to include offshore areas, a provision for pooling acreage across
state and federal boundaries will be necessary. We recommend that an agreement
regarding unitization be developed between the state and the Minerals Management
Service, similar to the one negotiated for the joint federal/state Beaufort Sea
Lease Sale in 1979.
Thank you for the opportunity to comment.
Sincerely,
DTS:wb
A DIVISION OF EXXON CORPORATION
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PHILLIPS PETROLEUM COMPANY
DENVER, COLORADO 80237
8055 EAST TUFTS AVENUE PARKWAY
Oc~ober 29, 1982
~
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The Director,
Division of Minerals and Energy Management
Pouch 7-005
Anchorage, AK. 99510
Dear Ms. Brown:
RE: Call
1987
%\
~~ ~w
-1'11 t7-f~ ~ ~~
~ for Comments ~
State of Alask:S
Oil & Gas Lease Sales
Nos. 51~ 52 and 53
Please accept our apologies for our late response to your call for comments
on the captioned areas. We realize we have missed the October 8, 1982
deadline, but provide our comments anyway in the hope they may still
be of use.
Sale #52 covers the area of most interest to us, and would be rated of
high geological merit. The area designated for State Sale #51 would
be rated of medium interest, with localized areas of higher interest
near known features. Sale #53 would be of low to medium interest, as
we feel the area may be limited to small gas prone accumulations.
More specific comments we feel we would have to reserve until more details
of proposed leasing systems are known, and until more exploratory work is
undertaken and results known. However, we would like to emphasize once
again the importance of maintaining the State sale schedule as programmed,
so that our exploration efforts can progress in a logical manner with a
degree of certainty as to timing of sales.
Thank you again for this opportunity.
Yours
MGJ:mar
cc: R. I. Swetnam
NORTH SLOPE BOROUGH
OFFICE QF THE MAYOR
P.O. B.ox 69
Barrow, Alaska 99723
Phone: 907-852-2611 Eugene Brower, Mayor
September 22,
Kay Brown, Director
Division of Minerals and Energy Management
Pouch 7-005
Anchorage, Alaska 99510
Dear Ms. Brown:
This letter is in response to your letter of August
25 asking for comments regarding the addition of the
Beaufort Sea (Sale 52) lease sale area to the State's
Five-Year Leasing Program.
The North Slope Borough is opposed to the leasing
of these state-owned submerged lands. As you know this
includes Smith Bay. This area is important ringed seal
habitat and bowhead whales have been seen in and near
the Bay. These waters are important subsistence use areas
to residents of both Barrow and Nuiqsut. The coastal
oilspill retention capability of this area is high to
very high. By virtue of the prevailing currents and winds
of the area we feel that an oilspill in this area or even
in the Sale 71 Area is quite likely to severely impact
these waters and the coastline.
With these thoughts in mind I must inform you that
the North Slope Borough does oppose the addition of this
area to the State's Five-Year Leasing Program.
EB/bns
Sin?)-y, /)
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Eugene Brower, Mayor
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JAYS. HAMMOND, GOVERNOR
DEPARTMElft OF lW&mRAL RESOIJRCES
DIVISION OF PAIIICS
R
611 WAREHOUSE DR., SUITE 210
ANCHORAGE, ALASKA 99501
!'HONE: 274-4676
1 O·J11 L.H
October 5, 1982 OCT 121982
Re: 112o-14 DIV. OF MINERALS & ENERGY MGMT
ANCHORAGE, ALASKA •
Director
Division of Minerals and Energy Management
Pouch 7-005
Anchorage, Alaska 99510
Subject: Proposed Oil & Gas Lease Sale 51, 52, 53
Dear Sir:
We have reviewed the subject proposal and would like ,to"offer the following
comments:
STATE HISTORIC PRESERVATION OFFICER
There are numerous cultural resources on the Alaska Heritage Resources Survey
in the lease sale areas and great potential for other such resources to be
found. These sites represent different phases of human occupation in the
lease areas. We request that all lease areas where ground disturbing activity
will take place, be submitted to the Office of History and Archaeology for
review and comment.
STATE PARK PLANNING
No probable or significant impact on existing, proposed or potential state
park or other public recreation values.
The proposed action is consistent with the Alaska Coastal Management Program's
recreation standard.
LAND & WATER CONSERVATION FUND GRANT PROGRAM
No comment.
Sincerely,
£-:.~Z:-7 J:.
Director
DR: elk
-MEM·ORANDUM State of Alaska
To: Kay Brown, Director
Division of Minerals and
Energy Management
DATE: September 30, 19821le"ce1lfe-J-
ocr ·
D!V, Of O {) 1982 [ --
MtiVt:~ t4JvcHo~}/ & Etv -
FILE NO:
TELEPHONE NO:
mes Sou by, ctor
Division of Policy Development
and Planning
Call For Comments For ~a~tld.rc::·\1!
State Sales 51, 52 & 53 · I SUBJECT:
The Division-of Policy Development and Planning {DPDP) does not object·to
the Department of Natura 1 Resources ' (DNR) propos a 1 to add three addi-
tional sales to the State's Five-Year Leasing Program for the year 1987e
These proposed sales have been identified by DNR as:
Prudhoe Bay Uplands {Sale 51)
Beaufort Sea {Sale 52)
Icy Cape (Sale 53)
In terms of a Major Project Review (e.g., preparation of a SEEA) for these
proposed sales, DPDP recommends the fo'Jlowing levels of analy~es:
Prudhoe Bay Uplands Sale 51
The acreage for leasing in this sale is adjacent to the Prudhoe Bay
Uplands Sale 34 area. The Social, Economic and Environmental Analysis
{SEEA) completed in July 1982, for Sale 34 should provide sufficient in-
formation with which to evaluate the effects of this sale. Therefor·e,
it should not be necessary to prepare a SEEA for proposed Sale 51.
.Members of the Governor's Agency Advisory Committee on Leasing (AACL)
should update information contained in the Sale 34 SEEA and provide any
new information or concerns for the Sale 51 area to DNR during prepara-·
tion of their preliminary .035 finding.
Beaufort Sea Sale 62
The proposed sale area includes Smith Bay and acreage extending west to
Pitt Point in the Beaufort Sea. Although the sale area is not located
immediately adjacent to an area for which a SEEA has previously been
prepared, it does not appear to include any unique habitats or fish and
wildlife resources significantly different from other sale areas in the
nearshore Beaufort Sea. Although bowhead whales may pass through the
offshore western portion of the sale area during their fall migration,
this concern can be adequately addressed in the issues and analysis
portion of DNR's preliminary .035 finding. Therefore, information con-
tained in the SEEA's prepared for Sales 36 and 39, along with a.n update
of recent data, should be sufficient to· address most of the conerns
inherent to the Sale 52 area. It should not be necessary to prepare a
SEEA for this proposed sale.
02-00lA(Rev.l0/79)
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Icy Cape Uplands Sale 53
The proposed sale area consists of acreage onshore between Icy Cape and
Point Lay on the Chukchi Sea. In terms of State leasing activity, this
is a frontier area. A SEEA should be prepared for this proposed sale.
If you have any questions regarding our comments, contact Rod Swope
(465-3562).
cc: Kris 0 • Connor, DNR
Carol Wilson, DNR
Claudia Slater, DF&G
Doug Redburn, DEC
Paul Cunningham, DC&RA
Eric Hansen, DOR
Karen Haag, DOT/PF
John Palmes, DPDP
MEMORANDUM
ro: John W. Katz, Commissioner
Department of Natural Resources
State of Alaska
DATE: October llft e~E 1 V ED r-
OCT 2 61982
FILE NO:
TELEPHONE NO: . 465-4100 ( •
DIV. OF MINERALS & EI'\ERGY MGMT. I .
Proposed a~'Cl11:!:'4~§· ALASKA
to the State 5-Year
Leasing Program
FROM: Ronald 0. Skoo ·ssioner SUBJECT:
Department of d Game .
The Department of Fish and Game appreciates the opportunity to comment
on prospective additions to the State's 5-Year Leasing Schedule. We
have reviewed the available information on fish and wildlife resources
for the proposed Prudhoe Bay Uplands (Sale No. 51), Beaufort Sea (Sale
No.· 52), and Icy Cape (Sale No. 53) lease sale areas and would ~fke to
provide an initial Departmental analysis of critical habitats, with
associated recommendations, for your consideration. We are particularly
concerned with proposed lease tracts that infringe on valuable caribou
calving habitat located near the Canning River delta, Franklin Bluffs,
Teshekpuk Lake, and along the Kokolik River. It is our intent to
provide the Department of Minerals and Energy Management (DMEt~) with
these concerns early in the leasing process so that appropriate
decisions can be made prior to defining actual lease sale boundaries.
Specific comments on each proposed sale area follow:
Prudhoe Bay Uplands -Sale No. 51
As currently proposed, Sale No. 51 lease boundaries extend from the
Miluveach River, near the Colville River delta, east to the Staines
branch of the Canning River delta. Previously leased lands, or lands
that are scheduled to be leased in this area include the existing
Prudhoe Bay development and production area, the Kuparuk Development
Area (KDA), Sales No. 34 (Prudhoe Bay Uplands), No. 36 (Second Beaufort
Sea), No. 47 (Kuparuk Uplands), and No. 48 (Second Kuparuk Uplands).
On numerous occasions in the past, the Department of Fish and Game has
strongly advocated that North Slope lands be developed sequentially to
allow caribou the opportunity to utilize alternate habitats as primary
habitats are leased. These requests have been repeatedly dismissed so
that now, with the addition of Sale No. 51, virtually all of the Central
Arctic Caribou Herd's (CAH) calving grounds and most available alternate
habitat has been or is scheduled to be leased. Whitten et al. (1981)
documented the presence of two core calving areas for members of the
CAH; One area, located south of Milne Point, lies directly within the
Kuparuk Development Area, and is currently being subjected to increasing
levels of disturbance. Habitats south of this area are included in dual
Kuparuk Upland Sales (Sales No. 47 and No. 48) and are scheduled to be
leased in 1985 and 1986. The second core area, situated near the1 Canning
River delta, was partially leased in Sales No. 34 and No. 36, and will
be leased in its entirety if Sale No. 51 lease tracts are retained. It
02-00lA(Rev.l0/79)
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John W. Katz, Commissioner -2-October 14, 1982
·has been observed that CAH caribou will sometimes use alternate calving
grounds near Franklin Bluffs during years when adverse weather
conditions prevail, however, this area is also presently included in
proposed Sale No. 51 and lies directly adjacent to Sales No. 47 and No.
48.
It is the Department•s op1n1on that Sale No. 51 should not be included
in the State's 5-Year Leasing Program until such time as exploration is
terminated on lease tracts in Sale No. 34 and No. 36 lease areas, or it
is conclusively determined that oil and gas development does not
adversely affect caribou use of these critical areas. This
recommendation is based on previous studies in the Prudhoe Bay and
Kuparuk Development Areas, and the concern that development may result
in widespread caribou disturbance and displacement. Deferred leasing
would a 11 ow the necessary time for an eva 1 uati on process to determine
where industrial development will occur and how CAH caribou are affected
prior to any additional leasing. This could not be accomplished if all
critical habitats of the CAH are leased and in various stages of
exploration, development, or production; serious problems that then
became evident would be virtually impossible to rectify.
If D~1EM decides to. proceed with Sale No. 51 as proposed, the Department
of Fish and Game will consider recommendations that require extensive
deletion of specific tracts, or recommendations that significantly ·
restrict industry activities beyond what is currently allowed in Sale
No. 34 an.d No. 36 lease agreements.
Beaufort Sea -Sale No. 52
Coastal habitats within and adjacent to the proposed Sale No. 51 lease
area support varied and abundant concentrations of fish and wildlife
populations. The Teshekpuk Lake area is particularly importi~t for its
value to waterbird species and as a caribou calving ~rea. The large
lakes characteristic of this area attract approximately 50,000 geese
annually. About 30,000 black brant melt in the Teshekpuk Lake area,
which is approximately 20 percent of the world's black brant population.
In addition, an estimated 15,000 non-breeding Canada geese use the area,
and approximately 5,000 'tthite-fronted geese nest and molt here as well
(Dirksen, 1982). ,
Coastal wetlands north and east of Teshekpuk Lake have been identified
as a major calving area for the Teshekpuk Caribou Herd (TCH), although
calving may also occur west and south of the lake. This herd currently
numbers approximately 4,000 to 5,000 caribou, and animals occupy the
area year-round.
Another major population with significant implications for the proposed
Sale No. 52 lease area is bowhead whales. Nearshore waters from Pitt
Point to Point Barrow have been tentatively identified as critical
bowhead whale fall migration and feeding areas, with particularly high
densities observed near Cape Simpson and Deese Inlet (Braham and
John vJ. Katz, Commissioner· -3-October 14, 1982
Krogman, 1977). These data are based, however, on only two years
observations and studies currently being conducted should provide
additional insight into the importance of this area.
The nearshore waters of Smith Bay and Cape Simpson are also critical
habitat for spotted seals during the summer and are used by ringed and
bearded seals during the winter. In addition, this area is thought to
provide excellent polar bear habitat (NPR-A, 1979).
The Department has previously expressed concern regarding Federal
leasing within that portion of the National Petroleum Reserve-Alaska
(NPR-A) that surrounds Teshekpuk Lake and lies adjacent to portions of
the proposed lease area. Given the abundant fish and wildlife resources
in this area, it was our recommendation that the most appropriate
Federal action would be to prohibit leasing completely. The Bureau of
Land Management (BLM), in its draft environmental impact statement for
NPR-A, has subsequently recommended that leasing be deferred at least
until 1988. Consistent with these positions reflecting the obvious
sensitivity of the Teshekpuk Lake area, the Department believes that
extraordinary protective measures are required if Sale No. 52 is
eventually leased. Therefore, we would like to provide several general
recommendations for your consideration at this time.
1. Surface occupancy should be prohibited within one-half mile of the
coastline from all points east of the Ikpikpuk River in order to
minimize disturbance of geese and protect critical staging habitat.
2. Caribou calving grounds and high density goose molting habitat
should be protected through a prohibition of onshore support
facilities, including pipelines and roads, between the Ikpikpuk
River and the Colville River.
3. In order to minimize disturbance of caribou and waterfowl, aircraft
overflights between the mouths of the Ikpikpuk and Colville Rivers,
southward to the southern edge of Teshekpuk Lake, should be
required to maintain an altitude of 1500 feet or a horizontal
distance of one-mile between May 20 and September 30. During the
remainder of the year, aircraft should avoid caribou by an altitude
of at least 500 feet.
In addition to the recommendations proposed above, the Department may
request in the future that specific areas be deleted to protect bowhead
whales. This recommendation will be reserved, however, until adequate
data to support such a request are acquired.
Icy Cape -Sale No. 53
There is insufficient data to evaluate all potential fish and wildlife
resource conflicts in the proposed Icy Cape Sale No. 53 lease area.
However, enough information is available to identify two critical
habitats that may be significantly impacted as a result of this proposed
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John W. Katz, Commissioner -4-October 14, 1982
sale. Kasegaluk Lagoon, the first area to be considered, supports the
largest summer concentration of belukha whales in the Chukchi Sea. In
addition, it hosts the largest summer-fall concentration of spotted
seals north of Kotzebue Sound (several thousand in some years), and is
also a very important area for waterbirds.
Population estimates for belukha whales that frequent Kasegaluk Lagoon
range between 500-1500 whales, and highest concentrations occur from
late June through July (Seaman, pers. comm.). These whales are believed
to utilize warm, near-coastal waters for calving and feeding, and are
highly sensitive to water surface or airborne disturbance. Spotted
seals arrive in Kasegaluk Lagoon during early July and reach highest
densities by the end of the month. These seals will haul out on any
tidal flat, sand bar, gravel bar, or low point of land extending from
the mainland. Like belukha whales, spotted seals are extremely
sensitive to disturbance when hauled out. Principle species of
waterfowl in Kasegaluk Lagoon include black brant, oldsquaw, and king
eiders, although many other birds, including loons and common eiders,
are also present. During summer and early fall, tens of thousands of
birds will congregate in this area to n~~t, molt, or stage, with ·peak
species movements observed during September. Residents from the village
of Point Lay are highly dependent on these resources and marine harvests
are almost exclusively relegated to Kasegaluk Lagoon and adjacent ~cean
areas. If leasing occurs, strict restrictions will be necessary during
summer and fall periods to minimize disturbance of belukha whales,
spotted seals and waterfowl. ·
The second identified area of critical importance is upland habitat that
extends from the headwaters of the Utukok River, south and west to the
Kokolik River drainage. This area is identified as extremely important
calving habitat for caribou of the Western Arctic Caribou Herd (WAH).
This herd currently numbers 180,000 animals and, depending on seasonal
availability, may provide a major source of food for most Arctic and
northwestern Alaskan villages as far south as the Seward Peninsula. The
ecological importance of the identified calving area derives from the
presence of abundant tussock tundra in association with a zone of thin
snow cover and early melt. In addition, it is possible that the early
snow melt may provide a further benefit in that insect hatches are
minimized during critical parturition and post-partum stages of the
caribou life cycle. Historical evidence indicates that this same
general area has been used for calving purposes at least since the
nineteenth century (Skoog, 1968).
Caribou of the WAH are also known to be closely associated with coastal
areas such as Kasegaluk Lagoon during insect relief periods, and
wintering concentrations have frequently been observed within one mile
of the coastline (Davis, pers. comm,).
If the proposed Icy Cape Sale No. 53 lease area is added to the State•s
5-Year Leasing Program, the Department of Fish and Game requests that
DMEM delete the three identified townships located near the Kokolik
John W. Katz, Commissioner -5-October 14, 1982
River. Although these townships are not recurrent calving areas, they
alternately serve this purpose during years when the main body of
calving caribou shifts westward. By deleting these areas, displacement
and other disturbance related impacts can be avoided during the most
sensitive period of caribou occupancy.
Thank you for the opportunity to comment. If you have any questions
concerning the material presented, please contact either Lance Trasky or
Mark Kuwada at our Anchorage office (344-0541).
cc: Kay Brown, DMEM
Bruce Baker, Habitat
Scott Grundy, Habitat
Richard Bishop, Game _
Francis Van Ballenberghe, Game
Ray Cameron, Game
Carl Grauvogel, Game
Ron Regnart, Comm. Fish
George Van Wyhe, Sport Fish·
Zarro Bradley, Subsistence
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Literature Cited
1. Davis, J. Personal communication. Game Biologist. Alaska
Department of Fish and Game. Fairbanks, Alaska.
2. Dirksen, D. 1982. Memorandum dated .February 26, to Pacific Flyway
Study Committee regarding NPR-A update. 2 pp.
3. NPR-A Task Force. 1978. Ecological profile. NPR-A 105(c). Study
Rpt. No. 4. 118 pp.
4. Seaman, G.A. Personal communication. Habitat Biologist. Alaska
Department of Fish and Game. Anchorage, Alaska.
5. Skoog, R.O. 1968. Ecology of the caribou (Rangifer tarandus
granti) in Alaska. PH.D. dissertation. University of California,
Berkeley. 720 pp.
6. USGS. 1979. An environmental evaluation of potential petroleum
development on the National Petroleum Reserve in Alaska. NPR-A
105(b). 238 pp.
7. Whitten, K.R., R.D. Cameron, and W.T. Smith. 1981. Calving .
distribution of the Central Arctic Caribou Herd, 1981. Prelim.
Rpt. Alaska Department of Fish and' Game. Fairbanks, Alaska.
7 pp.
ACTIVITY/ISSUES MATRIX FOR NORTH SLOPE PROJECTS APPENDIX E
L_
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DEPARTMENT OF NATURAL RESOURCES r -
PUBLIC
NOTICE
OTHER STATE FEDERAL REQUIRED
LEAD AGENCIES OR AGENCIES OTHERS BY STATUTE WORK
ACTIVITY DIVISION DIVISIONS CONSULTED CONSULTED CONSULTED REGULATION T 11-lELINES PRODUCT
AdmInister 0/G DMEM, DLWM DFG, DEC, OCM, Parks NMFS, MMS BTF, NS No Approx. Approval or f ~ leases (approve (Joint Ag., AOGCC, Law COE, EPA Borough 60 days denial
plans of sign-off) FWS
operations)
f -Monitor 0/G leases DLWM DMEM, DFG, DEC, OCM, None No As needed Field report
for compl lance Law
(on-s itel
Mon !tor 0/G I eases DMEM Law None lessee No Annual Default r
for comp II a nee notice, if I (contracts> necessary
Witness test wells DMEM AOGCC None lessee No Approx. Certl f i catlonf
90 days
Approve and DMEM
administer units
Issue seismic DMEM, DLWM
MLUP' s (Joint
sign-of f)
Monitor seismic DLWM
operations for
canpl i ance (on-s itel
Monitor seismic DMEM
operations for
canpl i ance
(contracts)
Issue land use DLWM, DMEM
permits (Joint
sign-off)
Monitor 38.35 DPS
r I ght-of·-w ay during
construction
Administer 38.35 DLWM
right-of-way after
construction
DFG, DEC, OCM, DGGS,
Law, DLWM, Parks, Ag.
DFG, DEC, OCM, DGGS,
Parks
DMEM, DFG, DEC, OCM
Law, DGGS
DFG, DEC, OCM, Parks,
Ag. I Forestry, DGGS
None
t+1S NS Borough Yes
pub I ic
MMS, NMFS BTF, AEWC, No
NS Borough
natIve group
None None No
None None No
None NS Borough No
None None No
100 days Approva I or
denial
30 days ,4p prova I or
denial
Ongoing Field report
Ongoing Receipt of
seismic data
30 days Approval or
den Ia I
Duration Varied
of lease
*As necessary, the lead agency reviews the action for consistency with the Alaska Coastal Management Act.
**Competitive sales or sales to other than state agencies only.
DMEM
DGGS
DRD
DLWM
DPS
DTS
DFG
DEC
OCM
AACL
DPDP
Law
AOGCC
. DOTPF
DCRA
PUC
Parks
SPCO
Ag.
Revenue
Forestry
State Dept./Div. Abbreviations
Division of Minerals and Energy Management
Division of Geological and Geophysical Surveys
Division of Research and Development
Division of Land and Water Management
Division of Pipeline Surveil lance
Division of Technical Services
Department of Fish and Game
Department of Environmental Conservation
Office of Coastal Management
Agency Advisory Committee on Leasing
Division of Polley Development and Planning
Department of Law
Alaska Oi I and Gas Conservation Commission
Department of Transportation and Public Fact lltles
Department of Community and Regional Affairs
Pub I ic Utilities Commission
Division of Parks
State Pipeline Coordinator's Office
Division of Agriculture
Department of Revenue
Division of Forestry
COE
FWS
t+1S
BLM/OCS
NMFS
EPA
DOl
BLM
NS Borough
BTF
Federal Abbreviations
Corps of Engineers u.s. Fish and Wildlife Service
Minerals Management Service
Bureau of Land Management/Outer Continental
Shelf office
National Marine Fisheries Service
Envlornmental Protection Agency
Department of the Interior
Bureau of Land Management
other
North Slope Borough
Beaufort Sea Biological Task Force
<Composed of federal and state agency
representatives)
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ACTIVITY/ISSUES MATRIX FOR NORTH SLOPE PROJECTS
-ACTIVITY
LEAD
DIVISION
_::omp i I e computer DGGS
resource data base
'Identify baseline DRD
:!at a needed to
.assess cumulative
impacts
Industrial service DLWM
base concept -
·.315 coveyance
·Beaufort Sea DMEM
seasonal drl I ling
_decision
Implementation
Cross Is I and
Sag De Ita/Duck
·Is I and Deve I opment
Monitor land use
permit comp I I a nee
-Issue material
sales:
competitive
negotiated
38.05.315
DMEM
DLWM
DMEM
DLWM
DLWM
DLWM
Administer material DLWM
sales contracts
-Issue & administer
surface leases:
competitive
negotiated
38.05.315
Issue & administer
-tidelands leases:
competitive
negotiated
38.05.315
_Issue & administer
water
-approprl at ions:
temporary
permit to develop
certificate
Issue & administer
rl ghts-of-way
Issue 38.35
-rl ght-of-way leases
(common carr! er
pipelines)
DLWM
DLWM
DLWM
DLWM
DLWM
l_ Update & additions
to Five-Year Oi I
and Gas Leasing
Program I l_
DMEM
Conduct oi I & gas
lease sales; issue
leases
DMEM
OTHER STATE
AGENCIES OR
DIVISIONS CONSULTED
DLWM, DMEM, DRD, DTS
DFG, DEC, OCM, DGGS
AACL
DMEM, DFG, DEC, OCM
DLWM, DFG, DEC, OCM
Law, DPDP
DFG, DEC, OCM
DFG, DEC, OCM, DGGS
Law, AOGCC, DPS
None
DFG, DEC, DMEM, DOTPF
OCM*
None
DFG, DEC, DMEM, OCM
DFG, DEC, DMEM, OCM
DFG, DEC
DFG, DEC, DMEM
DFG, DEC, DMEM, DOTPF
OCM, OCRA, PUC, DPS
DGGS, DLWM, Parks, DRD
DFG, DEC, O<::M, AACL,
SPCO, Ag., Law, DTS,
Revenue, Legislature
DLWM, DFG, Parks, OCM
DEC, AACL, OOGS, SPCO
Revenue, Ag., Law, DTS
Legislature
FEDERAL
AGENCIES OTHERS
CONSULTED CONSULTED
COE, FWS
FWS
MMS, FWS
BLM/OCS
NMFS, EPA
COE
MMS, BLM
NMFS, COE
None
None
None
None
None
None
None
None
BLM/OCS
BLM, FWS
COE, DOl
NMFS, MMS
BLM/OCS
MMS, FWS
NMFS, COE
DOl
Industry
pub I i c
communities
NS Borough
NS Borough
Industry
BTF
NS Borough
NS Borough
None
industry
public
NS Borough
communities
None
industry
NS Borough
public
communities
industry
NS Borough
public -
communities
upland owner
industry
NS Borough
industry
NS Borough
Industry
NS Borough
industry
public
communities
industry
public
communities
natIve groups
spec. Interest
groups
PUBLIC
NOTICE
REQUIRED
BY STATUTE WORK
REGULATION TIMELINES PRODUCT
No
No
Yes
No
No
Likely
None
Yes**
No
Yes
Yes
Yes
Yes
Yes
No
Yes
Ongoing
Ongoing
160 days
Ongoing
Ongoing
Approx.
2 years
As needed
160 days
1-30 days
60-180 day
Ongoing
160 days
90 days
90 days
160 days
90 days
90 days
10 days
90 days
90 days
30-150
days
l80+days
3rd week
in Jan.
22-32 mo.
before
sale and
60-90 day
after sale
Computer
resource base
Report
Lease
Approve/deny
plans of
operations
Permission
to drill
Lease
operations
approved or
den led
Field report
Material
sales
contract
Issued
lease
Issued
lease
Issued
perm,it
Issued
right-of-way
Issued
lease
Annual
updated
schedule
Lease
contracts
awarded
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IMPLEMENTATION PROCEDURES FOR SEASONAL DRILLING RESTRICTIONS APPENDIX F
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Division of Minerals and Energy Management
Alaska Department of Natural Resources
PROCEDURES AND DEFINITIONS
EXPLORATORY DRILLING RESTRICTIONS
The following procedures and definitions will be applied in implementing the
State of Alaska's May 1982 decision (see Attachment 1) regarding seasonal
restrictions on exploratory operations in the Beaufort Sea.
As with the stipulation, these definitions and procedures apply only to the
state-owned and managed tracts sold in Lease Sale 36 (Beaufort Sea), Lease
'sale 30 (Joint State/Federal Beaufort Sea Sale) and other previously leased
nearby offshore acreage.
Items covered include an operational definition of the "mouths of major
rivers," the criteria to be used in determining when "open water" occurs, the
scope and responsibilities for the bowhead whale monitoring programs, and the
procedures to be used in determining an appropriate "threshold depth" for each
well.
Major River Determination
The stipulation requires that downhole activities below the threshold depth at
locations at the "mouths of major rivers" be suspended on April 30 unless an
extension is granted. The decision to restrict operations at the mouths of
these rivers centered on a concern that the overflow associated with the early
breakup of these drainages could isolate certain drill sites reducing their
accessibility in the event of an emergency.
To determine the extent of early spring overflooding associated with the major
rivers in the area, the Division reviewed available NOAA and LANDSAT imagery
and consulted with scientists familiar with the area to determine the extent
of past overflows associated with the Kuparuk, Sagavanirktok, Shaviovik, and
Canning Rivers. The extent of the flooding at the mouths of these rivers is
shown in Figures 1-2. These zones of flooding are based on information
presently available to the Department and may be modified if new information
warrants. Drill sites situated within these zones will be subject to the
April 30th suspension requirement. Extensions to May 15 may be granted on a
case-by-case basis if ice conditions justify. Operations will be allowed to
resume (except drilling below threshold depth at locations outside the barrier
islands) once the open water conditions prevail.
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k Field
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Figure 2
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of open water conditions
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'1'h$ S:'t:ipulation places no restrictions on drilling operations for locations on
and inside the barrier islands during the "open water" period. Unrestricted
operations are allowed during this period because of good accessibility to the
si~es and the much higher effectiveness of oil spill cleanup efforts during
the b}ren ~ater period relative to operations during freezeup and breakup.
For· :;t~ purpose of administering this stipulation, "open water" shall begin
whert :the. ice concentration between the drill site and a major onshore staging
a;ti4,:s'upport area (e.g. West Dock) does not restrict the transport of heavy
eqtiLtk~mt and supplies (including drilling muds, cleanup equipment, casing and
C:lri:l.,l,xigs) and when the ice .concentration within a mile radius of the drill
pad.·;.ts 25 percent or less •
.. , ·, .
:. ''f .. · • .. :;£/ .~
Once.;£he open water is declared, drilling and other downhole act1v1.ty below
th~. ~t'h.reshold depth will not be suspended until the commencement of the
boW:~~·~d ~hale migration or freezeup, whichever is first, even if ice
itte.lii'JJions result in ice concentrations greater than 25% • . -. ·': :-. ~~-;,_, ~.--p·· .... ,<, ..
rh,;'.~fre'ctor, Division of Minerals and Energy Management (DMEM), in
co~;$'~'rt:t!t·tion with the Department of Environmental Conservation (DEC), shall
detE!:rtP,ine when the criteria stated above have been met based on: 1)
··in~p'r;tttation obtained from on-site inspections by Department of Natural
Reilhlirces (DNR) or DEC representatives, at the request of the lessee, or
2)•0101i'roborating information and photographs obtained from a qualified
indepertdent consultant hired by the lessee who certifies that these conditions
eX:is't·~··
•.:.
Th~AleP:artment of Environmental Conservation will soon be seeking a consultant
to:>d(!ye1op an evaluation model to determine whether lessees are able to
c~~l!i1\up·oil in greater concentrations of broken ice. The evaluation model
wil(be used when a lessee desires to go from Tier I of the seasonal
rest.d:ction to Tier II • ..... ·.; .. ,
Wh~i~~ Monitoring Programs
· ......... 1,.
Twq 'different bowhead whale monitoring activities are required in the
stip.~lation. The first objective is to determine when the bowhead whale
mJ.g~~:tion is in the vicinity of the sale area so that activities which are
:p~#$b~ited during the migration may be suspended. The second objective is to
<d.~:t'c!~':ine if the activities allowed during the migration (e.g. drilling above
·th~"':f!b:r.eshold depth and testing through casing on and inside the barrier
is~a:txds) have an adverse impact on the behavior of the bowhead whale
· population.
A.pt~:gram to determine when whales are in or near the sale area will be funded
.and 1 ·~~ducted in 1983 by the federal Minerals Management Service. The scope
.~~r#4:;~).~~.tl,lr~ of the program will not be determined until the survey program
'cQ.fi4U..¢:tE~d this fall (1982) has been thoroughly evaluated.
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A second monitoring program will be required if lessees propose to drill above
the threshold depth or test through casing at a location on and inside the
barrier islands during the fall bowhead whale migration. The program will be
initiated and funded by the lessee(s) proposing to conduct the activity. The
proposed monitoring program should be submitted with the lessee's Plan of
Operations for the well for review by DNR, the National Marine Fisheries
Service and other members of the Beaufort Sea Biological Task Force. If the
proposed monitoring program is approved by the Department, the lessee may
conduct the stipulated operations during the migration period (provided other
necessary state and federal permits have been obtained).
Determination of the threshold depth
Operators planning to conduct exploratory drilling and other downhole
activities at any time between April 30 or May 15 (whichever applies) and
November 1, must submit for review and approval a "suggested threshold depth"
for each exploratory well to the Petroleum Manager, Division of Minerals and
Energy Management. The suggested threshold depth should be submitted as a
separate attachment to the Plans of Operations. The depth should be stated
both as a measured depth and as a sub-sea depth. This depth shall be selected
to provide a buffer of at least 300 feet above the shallowest anticipated
major hydrocarbon accumulation.
The suggested threshold depth must be accompanied by a written justification
which details the expected stratigraphic sequence at the proposed well site
and which explains why a major accumulation of hydrocarbons is not likely
above the threshold depth. Operators shall meet with DMEM personnel who have
been approved for access to confidential material to explain the geological
and geophysical basis for the proposed threshold depth. Support material,
including but not limited to seismic sections, geologic maps, cross sections,
and adjacent well data, should be presented during the meeting.
The geological and geophysical exhibits will be returned to the operator at
the end of the presentation. DMEM reserves the right to view the same
material at a later date while the subject well is still active. If an
operator is unable to meet with DMEM personnel, geological and geophysical
support material may accompany the written justification. All data, including
the proposed threshold depth and the written justi.fication, will remain
confidential at the request of the operatoro
If an operator is reasonably confident that an entire construction, rig-up,
drilling, logging, and testing program can be completed before the April 30 or
May 15 deadline, whichever is applicable, a proposed threshold depth need not
be submitted. If an operator chooses not to submit a proposed threshold depth
in its Plan of Operations, and unforeseen delays prevent completion of
proposed operations before April 30 or May 15, the operation must be
suspended. DMEM will review a proposed threshold depth of the well whenever
requested, but cannot guarantee timely approval unless the supporting data are
submitted in the Plan of Operations application.
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Operators are required to notify DMEM if information is acquired during
drilling which suggests that a major accumulation of hydrocarbons might be
encountered above the approved threshold depth.
A letter signed by the operator shall be included with the Plan of Operation's
completion report which certifies that drilling and other downhole activity
~elow the threshold depth did not occur during the restricted periods.
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Attachment 1, page 1
Seasonal Restrictions on Exploratory Drilling on
State of Alaska Owned and ~1anaged Tracts in the Beaufort Sea
May 14, 1982
This seasonal drilling restriction decision will apply to state managed or
owned tracts in the 1979 Joint State-Federal Beaufort Sea Sale area (Sale
30), the planned Beaufort Sea Sale area (Sale 36), and other previously
leased nearby offshore tracts. This decision will be periodically
reevaluated on the basis of experience and new information.
A principle purpose of this decision is to insure that the migration route
of the bowhead whale will be oil free in the fall.
This decision assumes compliance with otherwise applicable laws and
regulations. Specifically, a Plan of Operations must be approved by the
Department of Natural Resources (DNR) and an Oil Discharge Contingency
Plan must be approved by the Department of Environmental Conservation
(DEC) •
The restrictions set out below apply only to exploratory drilling. As a
matter of policy, the State does not intend to impose seasonal drilling
restrictions during development or production stages; however, seasonal
restrictions may be imposed in the development and production stages when
they are necessary to satisfy requirements of the federal Endangered
Species Act, and other applicable state and federal laws and regulations.
The seasonal drilling restriction will not apply for exploratory
operations on Flaxman and Tigvariak Islands and on any other islands
subsequently identified by the Commissioner of Natural Resources, in
consultation with the Commissioners of Environmental Conservation (DEC)
and Fish and Game (DFG), as analogous to upland areas because of their
size and configuration.
Logistical, construction, and other activities* related to exploratory
drilling may be restricted outside the barrier islands during the fall
whale migration.
A whale study and monitoring program, developed in consultation with the
National Marine Fisheries Service, will be required in an effort to
measure the impact of noise and other disturbances on bowhead whale
behavior and on the migration. If adverse impacts are shown, the
activities which have caused them will be suspended until the whales leave
the area.
This decision assumes that adequate funding and trained personnel will be
available for monitoring and enforcement of applicable restrictions.
Tier 1 is effective immediately. Tier 2 will be available on a
case-by-case basis for each proposed well.
*This decision does not purport to deal ,with th~ approval of applications for
seismic activity. This issue will be dealt'with in a separate policy document.
Attachment 1, page 2
TIER 1
Exploratory drilling and other downhole activities will be allowed
areawide from November 1 to r~ay 15, and on and inside the barrie!~
islands **during the open water period except during the bowhead whale
migration. At the mouths of major rivers, downhole activities below the
threshold depth***, except for testing through casing, will cease by April
30 unless the Commissioner of Natural Resources, in consultation with the
Commissioners of Fish and Garne·and Environmental Conservation, determines
that ice conditions justify an extension to May 15. From May 1 in the
case of river deltas and from May 16 until the fall whale migration (and
on and inside the barrier islands during the migration), testing will be
permitted areawide provided that casing has been set through the zones to
be tested and DNR and DEC find compliance with other applicable laws and
regulations.
Exploratory drilling and other downhole activities above a predetermined
threshold depth will be allowed year-round, except that such activities
will cease at locations outside the barrier islands during the fall
bowhead whale migration.
TIER 2
All exploratory drilling and other downhole activities will be allowed
areawide year-round except outside the barrier islands during the fall
bowhead migration. Whale monitoring will be required to determine ~vhen
the whales are actually migrating through or near the area.
This modification of the drilling restriction will be approved on a
case-by-case basis for the benefit of lessees who demonstrate compliance
with applicable laws and regulations, including the theoretical and
physical capability to detect, contain, clean up, and dispose of spilled
oil in broken ice conditions.
The State (Department of Environmental Conservation) believes that lessees
do not currently possess adequate capability to clean up oil in broken
ice. Therefore, as a matter of policy, the State will not approve
exploratory drilling and other downhole activities, except as described in
Tier 1, during broken ice conditions unless and until the lessee can
demonstrate the capability to clean up oil in broken ice.
**The line connecting the salient points descr·ibed in the Lease Sale notices
for Sales 30 and 36 shall be utilized for defining "on and inside" and
"outside" the barrier islands.
*** The threshold depth is a point above which major accumulations of
hydrocarbons are not likely. This depth will be determined on a case-by-case
basis by the Division of Minerals and Energy Management after ~onsultation
with the Alaska Oil and Gas Conservation Convnission and, when appropriate, the
Minerals Management Service.
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[
LEASE· FORM APPENDIX G
FORM NO. OMEM-3-82
(NET PROFIT SHARE)
(Revised July 23, 1982)
This version (DMEM-3-82) of the oil
Sale 34, held September 28, 1982.
would require revsion of the lease
be released in April, 1983
and gas lease form was used for
Regulation changes are pending that
form. A revised form is expected to
STATE OF ALASKA
DEPARTMENT OF NATURAL RESOURCES
Competitive Oil and Gas Lease
ADL No.
THIS LEASE is made by and between the State of Alaska, acting by and through the Commissioner of Natural Resources or the
Commissioner's authorized agent, referred to in this lease as "the State," and
referred to in this lease as "the Lessee," whether one or more.
In consideration of the cash payment made by the Lessee to the State, which payment includes the first year's rental and any
required cash bonus, and the promises, terms, conditions, and covenants contained in this lease, including the Stipulation Is) numbered
attached to this lease and by this reference incorporated in this lease, the State and the Lessee agree as follows:
1. GRANT. (a) Subject to the promises, terms, conditions, and covenants contained in this lea5!!, the State hereby grants and
leases to the Lessee, without warranty, the exclusive right to drill for, extract, remove, clean, process, and dispose of oil, gas, and asspciated
substances in or under the following described tract of land:
containing approximately acres, more or less (referred to in this lease as the "leased area"); the nonexclusive right to
conduct within the leased area geological and geophysical exploration for oil, gas, and associated substances; and the nonexclusive right to
install pipelines and structures on the leased area to find, produce, save, store, treat, process, transport, take care of, and market all oil, gas, and
associated substances and to house and board employees in its operations on the leased area.
(b) For the purposes of this lease, the leased area contains the legal subdivisions as shown on the attached plat marked Exhibit
A.
(c) If the leased area is described above by protracted legal subdivisions and, after the effective date of this lease, the State
causes the leased area to be surveyed under the public land rectangular system, the boundaries of the leased area are those established by that
survey, when approved, subject, however, to the provisions of applicable regulations relating to those surveys. If for any reason the leased area
includes more acreage than the maximum permitted under applicable law (including the "rule of approximation" authorized in AS 38.05.145
and defined in AS 38.05.365(13)), this lease is not void and the acreage included in the leased area shall be reduced to the permitted maximum.
If the State determines that the leased area exceeds the permitted acreage and notifies the Lessee in writing of the amount of acreage that must
be eliminated, the Lessee shall have 60 days after that notice to surrender one or more legal subdivisions included in the leased area comprising
at least the amount of acreage that must be eliminated. Any subdivision surrendered must be located on the perimeter of the leased area as
originally described. If a surrender is not filed within 60 days, the State may terminate this lease as to the acreage that must be eliminated by
mailing notice of the termination to the Lessee describing the subdivision eliminated.
(d) If the State of Alaska's ownership interest in the oil, gas, and associated substances in the leased area is less than an entire
and undivided interest, the grant under this lease is effective only as to the State's interest in that oil, gas, and associated substances, and the
royalties and rentals provided in this lease shall be paid to the State in the proportion that the State's interest bears to the entire undivided fee.
2. RESERVED RIGHTS. (a) The State, for itself and ethers, reserves all rights not expressly granted to the Lessee by this lease.
These reserved rights include, but are not limited to:
(1) the 1·ight to explore for oil, gas, and associated substances by geological and geophysical means;
(2) the right to explore for, develop, and remove natural resources other than oil, gas, and asrociated substances on
or from the leased area;
(3) the right to establish or grant easements and rights-of-way for any lawful purpose, including without limitation
for shafts and tunnels necessary or appropriate for the working of the leased area or other lands for natural resources other than oil, gas, and
associated substances;
(4) the right to dispose of land within the leased area for well sites and well bores of wells drilled from or through the
leased area tO explore for or produce oil, gas, and associated substances in and from lands not within the leased area; and •
(5) the right otherwise to manage and dispose of the surface of the leased area or interests in that land by grant, lease,
permit, or otherwise to third panies.
(b) Rights reserved by the State rnay be exercised in any manner that does not unreasonably interfere with or endanger the
Lessee's operations under this lease.
3. TERM. This lease is issued for an initial primary term of years from the effective date of this lease. The
term may be extended as provided in Paragraph 4 below.
4. EXTENSION. (a) This lease shall be extended automatically if and for so long as oil or gas is produced in paying quantities
from the leased area.
(b) This lease shall be extended automatically if it is committed to a unit agreement approved or prescribed by the State, and
shall remain in effect for so long as it remains committed to that unit agreement.
(c) (1} If the drilling of a well whose bottom hole location is in the leased area has commenced as of the date on which the
lease otherwise would expire and is continued with reasonable diligence, this lease shall conkinue in effect until 90 days after cessation of that
drilling and for so long as oil or gas is produced in paying quantities ·!rom the leased area. (2) If oil or gas in paying quantities is produced from
the leased area, and if that production ceases at any time, this lease shali not terminate if drilling or reworking operations are commenced on
the leased area within six months after cessation of production and are prosecuted with reasonable diligence; if those drilling or reworking
operations result in the production of oil or gas, this lease shall remain in effect for so long as oil or gas is produced in paying quantities from
the leased area.
(d) If there is a well capable of producing oil or gas in paying quantities on the leased area, this lease shall not expire because
the Lessee fails to produce that oil or gas unless the State gives notice to the Lessee, allowing a reasonable time, which shall not be less than six
months ~fter notice, to place the well into production, and the Lessee fails to do so. If production is established within the time allowed, this
lease is extended only for so long as oil or gas is produced in paying quantities from the leased area.
(el If the State directs or approves in writing a suspension of all operations on or production from the leased area (except for a
suspension necessitated by the Lessee's negligence), or if a suspension of all operations on or production from the leased area has been ordered
under federal, state, or local law, the Lessee's obligation to comply with any express or implied provision of this lease requiring operations or
production shall be suspendad, but not voided, and the Lessee shall not be liable for damages for failure to comply with that provision. If the
suspension occurs before the expiration of the primary term, the primary term shall be extended at the end of the period of the suspension by
adding the period of time lost under the primary term because of the suspension. If the suspension occurs during an extension of the primary
term under this Paragraph, upon removal of that suspension, the Lessee shall have a reasonable time, which shall not be less than six months
after notice that the suspension has been removed, to resume operations or production. For the purposes of this subparagraph, any suspension
of operations or production specifically required or imposed as a term of sale or bv any stipulation made a pan of this lease shall not be
considered a suspension ordered by law.
(f) If the State determines that the Lessee has been prevented by force majeure, after effons made in good faith, from
performing.any act that would extend the lease beyond the primary term, this lease shall not expire during the period of force majeure. If the
force majeure occurs before the expiration of the primary term, the primary term shall be extended at the end of the period of force maieure
by adding the period of time lost under the primary term because of the force majeure. If the force majeure occurs during an extension of the
primary term under this Paragraph, this lease shall not expire during the period of force majeure plus a reasonable time after that period,
which shall not be less than 60 days, for the Lessee to resume operations or production.
(g) Nothing in subparagraph (e) or (f) s•Jspends the obligation to pay royalties or other production or profit-based payments to
the State from operations on the leased area that are not affected by any suspension or force majeure, or suspenas the obligation to pay rentals.
5. RENTALS. (a) The Lessee shall pay annual rental to the State in accordance with the following rental schedule:
(1 l For the first year, $1.00 per acra or fraction of an acre;
(2) For the second year, $1.50 per acre or fraction of an acre;
(3) For the third year, $2.00 per acre or fraction of an acre;
(4) For the fourth year, $2.50 per acre or fraction of an acre;
(5) For the fifth year and following years, $3.00 per acre or fraction of an acre; provided that the State may increase the
annual rental rate as provided by law upon extension of this lease beyond the primary term.
(b) Annual rental paid in advance is a credit on the royalty or net profit share due under this lease for that year.
(c) The Lessee shall pay the annual rental to the Stlitll of Alaska (or any depository designated by the State with at least 60
days' notice to the Lessee) in advance, on or before the annual anniversary date of this lease. The State is not required to give notice that
rentals are· due by billing the Lessee. If the State's (or depository's) office is not open for business on the annual anniversary date of this lease,
the time for payment is extended to include the next day on which that office is open for business. If the annual rental is not paid timely, this
lease automatically terminates as to both panies at 11 :59 p.m., Alaska Standard Time, on the date by which the rental payment was to have
been madG.
6. RECORDS. The Lessee shall keep and have in its possession books and records showing the development and production
(including records of development and production expenses) and disposition {including records of sales prices, volumes, and purchasers) of all
oil, gas, ahd associated substances produced from the leased area. The Lessee shall permit the State of Alaska or its agents to examine these
books and records at all reasonable times. These books and records of development, production, and disposition must employ methods and
techniques that will ensure the most accurate figures reasonably available without requiring the Lessee to provide separate tankage or meters for
each well. 'The Lessee shall use standard and consistent accounting procedures.
[ ~
7. APPORTIONMENT OF ROYALTY FROM APPROVED UNIT. The landowner's royalty share of the unit production allocated
to each separately owned tract shall be regarded as royalty to be distributed to and among, or the proceeds of it paid to, the landowners, free
and clear of a! I unit expenses and free of any lien for them. Under this provision, the State's royalty share of any unit production allocated to
the leased area shall be regarded as royalty to be distributed to, or the proceeds of it paid to, the State, free and clear of all unit expenses (and
any portion of those expenses incurred away from the unit area), including, but not limited to, expenses for separating, cleaning, dehydration,
gathering, saltwater disposal, and preparing oil, gas, or associated substances for transportation off the unit area, and free of any lien for them.
8. PAYMENTS. All payments to the State of Alaska under this lease shall be made payable to the State in the manner directed by
the State, and, unless otherwise specified, shall be tendered to the State at
DEPARTMENT OF NATURAL RESOURCES
POUCH 7.005
ANCHORAGE, ALASKA 99510
or to any depository designated by the State with at least 60 days' notice to the Lessee.
9. PLAN OF OPERATIONS. (a) Except as provided in subparagraph (b) below, no lease operations shall be undertaken on the
leased area until a plan of operations has been approved by the State if:
( 1) the State of Alaska owns al! or part of the surface estate of the leased area;
(2) the lease reserves a net profit share to the State of Alaska; or
(3) the State of Alaska owns all or part of the mineral estate, but the entire surface estate of the leased area is owned by a
third party rather than by the State of Alaska and the surface owner requests that a plan of operations be required by the State.
(b) A lease plan of operations shall not be required by the State for:
(1) lease operations that would not require a land use permit under 11 AAC; or
(2) lease operations undertaken pursuant to an approved unit plan of operations in accordance with 11 AAC.
(c) Before undertaking operations on the leased area, the Lessee shall provide for full payment of all damages sustained by the
owner of the surface estate as well as by the surface owner's lessees and permittees. If the surface estate is owned by a third party rather than
by the State of Alaska, the Lessee shall also notify the surface owner of his opportunity to request that the State require a plan of operations
before allowing lease operations to be undertaken on the leased area.
(d) The Lessee shall file with the State 10 copies of its proposed plan of operations if the proposed operations are within the
coastal zone, and five copies if the proposed operations are not within the coastal zone.
(e) Application for approval of a plan of operations shall contain statements and maps or drawings setting out the following:
(1) the sequence and schedule of the operations to be conducted on the leased area, including the date operations are
proposed to begin and their proposed duration;
(2) projected use requirements directly associated with the proposed operations, including but not limited to the location
and design of well sites, material sites, water supplies, solid waste sites, buildings, roads, utilities, airstrips, and all other facilities and equipment
necessary to conduct the proposed operations;
(3) plans for rehabilitation of the affected leased area after completion of operations or phases of those operations; and
(4) a description of operating procedure designed to prevent or minimize adverse effects on other natural resources and
other uses of the leased area and adjacent areas, including fish and wildlife habitats, historic and archeological sites, and public use areas.
(f) In approving a lease or unit plan of operations, the State may require modifications it determines necessary to protect the
environment or the interests of the state. The State shall not require any modification that would be inconsistent with the terms of sale under
which the lease was obtained or with the terms of the lease itself, or would deprive the Lessee of reasonable use of the leasehold interest.
(g) The Lessee may, with the approval of the State, subsequently modify an approved plan of operations.
(h) Approval by the State of a plan of operations or any modifications of a plan of operations signifies only that the State has
no objection to the operations outlined in the plan from the standpoint of the lease administrator and does not relieve the Lessee of its
obligation to obtain approvals and permits required by other governmental agencies having regulatory authority over those operations.
(i) All of the Lessee's operations on the leased area shall be in corif,,rmance with the approved plan of operations.
(j) Upon completion of operations, the Lessee shall submit a report indicating the completion date of operations and
certifying compliance with requirements imposed as a condition of approval of the plan.
10. PLAN OF DEVELOPMENT. (a! Except as provided in subparagraph (d) below, within 12 months after certification of a well
capable of producing oil, gas, or associated substances in paying quantities, the Lessee shall file two copies of an application for approval by
the State of an initial plan of development that shall describe the Lessee's plans for developing the leased area. No development of the leased
area shall occur until a plan of development has been approved by the State.
(b) The plan of development shall be revised, updated, and submitted to the State for approval annually before or on the
anniversary date of the previously approved plan. If no changes from an approved plan are contemplated for the following year, a statement to
that effect shall be filed for approval in lieu of the required revision and update.
(c) The Lessee may, with the approval of the State, subsequently modify an approved plan of development.
(d) If the leased area is included in an aoproved unit, the Lessee shall not be required to submit a separate lease plan of
development for unit activities.
11. LOGS AND OTHER RECORDS OF OPERATIONS. (a) The Lessee shall file with the State all logs, geological and
geophysical surveys taken, a description of all tests run for each well drilled on the leased area, and a plat showing the exact location of each
well, within 30 days after each well or survey has been completed, suspended, or abandoned.
(b) Any information filed by the Lessee with the State in connection with this lease shall be available at all times for the
confidential use of the State for the purpose of enforcing compliance with the promises, terms, conditions, and covenants of this lease and the
provisions of Alaska law. Inspection of this information by a!ly persons other than officers or employees of the State of Alaska (and persons
performing any function or work assigned to them by the State of Alaska) shall be governed by applicable law.
12. DIRECTIONAL DRILLING. This lease may be maintained in effect by directional wells whose bottom hole location is on
the leased area but that are drilled from locations on other lands not covered by this lease. In those circumstances, drilling shall be considered
to have commenced on the leased area when actual drilling is commenced on those other lands for the purpose of directionally drilling into the
leased area. Production of oil or gas from the leased a.rea through any directional well surfaced on those other lands, or drilling or reworking of
that directional well, shall be considered production or drilling or reworking operations on the leased area for all purposes of this lease. Nothing
contained in this Paragraph is intended or shall be construed as granting to the Lessee any interest, license, easement, or other right in or with
respect to those lands in addition to any interest, license, easement, or other right that the Lessee may have lawfully acquired from the State or
from others.
13. DILIGENCE AND PREVENTION OF WASTE. (a) The Lessee shall exercise reasonable diligence in drilling, producing, and
operating wells on the leased area unless consent to suspend operations temporarily is granted by the State.
(b) Upon discovery of oil or gas on the leased area in quantities that would appear to a reasonable and prudent operator to be
sufficient to recover ordinary costs of drilling, completing, and producing an additional well in the same geologic structure at another location
with a reasonable profit to the operator, the Lessee shall drill those wells as a reasonable and prudent operator would drill, having due regard
for the interest of the State as well as the interest of the Lessee.
(c) The Lessee shall perform all operations under this lease in a good and workmanlike manner in accordance with the
methods and practices set out in the approved plan of operations and plan of development, with due regard for the prevention of waste of oil,
gas, and associated substances and the entrance of water to the oil· and gas-bearing sands or strata to the destruction or injury of those sands or
strata, and to the preservation and conservation of the property for future productive operations. The Lessee shall carry out at the Lessee's
expense all orders and requirements of the State of Alaska relative to the prevention of waste and to the preservation of the leased area. If the
Lessee fails to carry out these orders, the State shall have the right, together with any other available legal recourse, to enter the leased area to
repair damage or prevent waste at the Lessee's expense.
(d) The Lessee shall securely plug in an approved manner any well before abandoning it.
14. OFFSET WELLS. The Lessee shall drill such wells as a reasonable and prudent operator would drill to protect the State
from loss by reason of drainage resulting from production on other land. Without limiting the generality of the foregoing sentence, if oil or gas
is produced in a well on other land not owned by the State of Alaska or on which the State of Alaska receives a lower rate of royalty than
under this lease, and that well is within 500 feet in the case of an oil well or 1,500 feet in the case of a gas well of lands then subject to this
lease, and that well produces oil or gas for a period of 30 consecutive days in quantities that would appear to a reasonable and prudent operator
to be sufficient to recover ordinary costs of drilling, completing, and producing an additional well in the same geological structure at an offset
location with a reasonable profit to the operator, and if, after notice to the Lessee and an opportunity to be heard, the State finds that
production from that well is draining lands then subject to this leas~e, the Lessee shall within 30 days after written demand by the State begin in
good faith and ailigently prosecute drilling operations for an offset well on the leased area. In lieu of drilling any well required by this
Paragraph, the Lessee may, with the State's consent, compensate the State in full each month for the estimated loss of royalty through drainage
in the amount determined by the State.
15. UNITIZATION.-(a) The Lessee may unite with others, jointly or separately, in collectively adopting and operating
under a cooperative or unit agreement for the exploration, development, or operation of the pool, field, or like area or part of the pool, field,
or like area that includes or underlies the leased area or any part of the leased area whenever the State determines and certifies that the
cooperative or unit agreement is in the public interest.
(b) The Lessee agrees, within six months after demand by the State, to subscribe to a reasonable cooperative or unit agreement
that shall adequately protect all parties in interest, including the State. The State reserves the right to prescribe such an agreement.
(c) With the consent of the Lessee, and if the leased area is committed to a unit agreement approved by the State, the State
may establish, alter, change, or revoke drilling, producing, and royalty requirements of this lease as the State determines necessary or proper to
secure the proper protection of the public interest.
(d) Except as otherwise provided in this subparagraph, where only a portion of the leased area is committed to a unit
agreement approved or prescribed by the State, that ·commitment constitutes a severance of this lease as to the unitized and nonunitized
portions of the leased area. The portion of the leased area not committed to the unit will be treated as a separate and distinct lease having the
same &ffectiv~ date and term as this lease and may be maintained only in accordance with the terms and conditions of this lease, statutes, and
regulations. Any portion of the leased area not committed to the unit agreement will not be affected by the unitization or pooling of any other
portion of the leased area by operations in the unit, or by suspension approved or ordered for the unit. If the leased area has a well certified as
capable of prbduction in paying quantities on it before commitment to a unit agreement, this lease will not be severed. If any portion of this
lease is included in a participating area formed under a unit agreement, the entire leased area will remain committed to the unit upon
contraction of the unit and this lease will not be severed.
16. INSPECTION. The Lessee shall keep open at all reasonable times, for inspection by any duly authorized representative
of the State of Alaska, the leased area, all wells, improvements, machinery, and fixtures on the leased area, and all reports and records relative
to operations and surveys or investigations on or with regard to the leased area or under this lease.
17. SUSPENSION. The State may from time to time direct or approve in writing suspension of production or other
operations under this lease.
18. ASSIGNMENT, PARTITION, AND CONVERSION. This lease, or any undivided interest in this lease, may, with
the approval of the State, be assigned, subleased, or otherwise transferred as to the entire leased area, or any one or more legal subdivisions
included in the leased area, or any separate and distinct zone or geological horizon underlying the leased area or one or more legal subdivisions
of the leased area, to any person or persons qualified to hold a lease. No assignment, sublease, or other transfer of an interest in th!s lease,
including assignments of working or royalty interests and operating agreements and subleases, shall be binding upon the State unless approved
by the State. The Lessee shall remain liable for all obligations under this lease accruing prior to the approval by the State of any assignment,
sublease, or other transfer of an interest in this lease. All covenants, conditions, and agreements contained in this lease shall extend to and be
binding upon the heirs, administrators, successors, and assigns of the State and the Lessee. Applications for approval of an assignment, sublease,
or other transfer shall comply with all applicable regulations and must be filed within 90 days after the date of final execution of the
instrument of transfer. Transfer of this lease or an interest in this lease will be approved by the State unless (1) the Lessee fails to comply with
applicable statutes and regulations, (2) the State determines in writing that the transfer would adversely affect the interests of the State of
Alaska, or (3) at the discretion of the State, if the transfer covers a portion of the leased area or a separate and distinct zone or geological
horizon. Where an assignment, sublease, or other transfer is made of all or a part of the Lessee's interest in a portion of the leased area, this
lease may, at the option of the State or upon request of the transferee and with the approval of the State, be severed, and a separate and
distinct lease shall be issued to the transferee having the same effective date and terms as this lease.
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19. SURRENDER. The lessee at any time may file with the State a written surrender of all rights under this lease or
any portion of the leased area comprising one or more legal subdivisions or, with the consent of the State, any separate and distinct zone or
geological horizon underlying the lea>ed area or one or more legal subdivisions of the leased area. That surrender shall be effective as of the date
of filing, subject to the continued obligations of the Lessee and its surety to make payment of all accrued royalties and to place all wells and
surface facilities on the surrendered land or in the surrendered zones or horizons in condition satisfactory to the State for suspension or
abandonment. After that, the Lessee shall be released from all obligations under this lease with respect to the surrendered lands, zones, or
horizons.
20. DEFAULT AND TERMINATION; CANCELLATION. {a) The failure of the Lessee to perform timely its obligations
under this lease, or the failure of the Lessee otherwise to abide by all express and implied promises, terms, conditions, and covenants of this
lease, is a default in the Lessee's obligations under this lease. Whenever the Lessee fails to comply with any of the provisions of this lease {other
than a provision which, by its terms, provides for automatic termination), and fails within 60 days after written notice of that default to
commence and diligently prosecute operations to remedy that default, the State may terminate this lease if at the time of termination there is
no well on the leased area capable of producing oil or gas in paying quantities. If there is a well on the leased area capable of producing oil or
gas in paying quantities, this lease may be terminated by an appropriate judicial proceeding. In the event of any termination under this
subparagraph, the Lessee shall have the right to retain under this lease any and a!l drilling or producing wells for which no default exists,
together with a parcel of land surrounding each well or wells and rights-of-way through the leased area that are reasonably necessary to enable
the Lessee to drill, operate, and transport oil or gas from the retained well or wells.
{b) The State may cancel this lease at any time if the State determines, after the lessee has been given notice and
a reasonable opportunity to be heard, that (1) continued operations pursuant to this lease probably will cause serious harm or damage to
biological resources, to property, to mineral resources, or to the environment {including the human environment), {2) the threat of harm or
damage will not disappear or decrease to an acceptable extent within a reasonable period of time, and {3) the advantages of cancellation out-
weigh the advantages of continuing this lease in effect. Any cancellation under this subparagraph shall not occur unless and until operations
under this lease have been under suspension or temporary prohibition by the State, with due extension of the term of this lease, continuously
for a period of five years or for a lesser period upon request of the Lessee. Any cancellation under this subparagraph will entitle the Lessee to
receive compensation as the Lessee demonstrates to the State is equal to the lesser of { 1) the value of the cancelled rights as of the date of
cancellation, with due consideration being given to both anticipated revenues from this lease and anticipated costs, including costs of
compliance with all applicable regulations and stipulations, liability for clean-up costs or damages, or both, in the case of an oil spill, and all
other costs reasonably anticipated under this lease, or {2) the excess, if any, over the Lessee's revenues from this lease {plus interest on the
excess from the date of receipt to date of reimbursement) of all consideration paid for this lease and all direct expenditures made by the Lessee
after the effective date of this lease and in connection with exploration or development, or both, pursuant to this lease, plus interest on that
consideration and those expenditures from the date of payment to the date of reimbursement.
21. RIGHTS UPON TERMINATION. Upon the expiration or earlier termination of this lease as to all or any portion
of the leased area, the Lessee shall be directed in writing by the State and shall have the right at any time within a period of one year after the
termination, or any extension of that period as may be granted by the State, to remove from the leased area or portion of the leased area all
machinery, equipment, tools, and materials. Upon the expiration of that period or extension of that period and at the option of the State, any
machinery, equipment, tools, and materials that the Lessee has not removed from the leased area or portion of the leased area become the
property of the State or may be removed by the State at the Lessee's expense. At the option of the State, all improvements such as roads, pads,
and wells shall either be abandoned and the sites rehabilitated by the lessee to the satisfaction of the State, or be left intact and the Lessee
absolved of all further responsibility as to their maintenance, repair, and eventual abandonment and rehabilitation. Subject to the above
conditions, the Lessee shall deliver up the leased <)rea or those portions of the leased area in good condition.
22. DAMAGES AND INDEMNIFICATION. (a) No rights under the reservation pursuant to AS 38.05.125 may be
exercised by the State or by the Lessee until provision has been made to pay the owner of the land upon which the reserved rights are sought to
be exercised full payment for all damages sustained by the owner by reason of entering on the land. If the owner for any reason refuses or
neglects to settle the damages, the State or the Lessee may enter upon the land after posting a surety bond determined by the State, after
notice and an opportunity to be heard, to be sufficient as to form, amount, and security to secure to the owner payment for damages, and may
institute legal proceedings in a court of competent jurisdiction where the land is located to determine the damages which the owner of the land
may suffer. The Lessee hereby agrees to pay any damages that may become payable under AS 38.05.130 and to indemnify the State and ho!d it
harmless from and against any claims, demands, liabilities, and expenses arising from or in connection with such damages. The furnishing of a
bond in compliance with this Paragraph shall be regarded by the State as sufficient provision for the payment of all damages that may become
payable under AS 38.05.130 by virtue of this lease.
{b) The Lessee shall indemnify the State for, and hold it harmless from, any claim, including claims for loss or damage to
property or injury to any person caused by or resulting from any act or omission committed pursuant to this lease by or on behalf of the
Lessee. The Lessee shall not be held responsible to the State under this subparagraph for any loss, damage, or injury caused by or resulting
from the sole negligence of the State.
{c) The Lessee expressly waives any defense to an action for breach of a covenant of this lease or for damages resulting from
an oil spill or other harm to the environment that is based on the fact that the act or omission complained of was committed by an independent
contractor. The Lessee expressly agrees to assume responsibility for all actions of its independent contractors.
23. BONDS. {a) If required by the State, the Lessee shall furnish a bond prior to the issuance of this lease in an amount
equal to at least $5 per acre or fraction of an acre contained in the leased area, but no less than $10,000, and shall maintain that bond as long as
required by the State.
{b) The Lessee may, in lieu of the bond required under (a) above, furnish and maintain a statewide bond in accordance with
applicable regulations.
{c) The State may, after notice to the Lessee and a reasonable opportunity to be heard, require a bond in a
reasonable amount greater than the amount specified in {a) above where a greater amount is justified by the nature of the surface and its uses
and the degree of risk involved in the types of operations being or to be carried out under this lease. A statewide bond shall not satisfy any
requirement of a bond imposed under this subparagraph, but shall be considered by the State in determining the need for and the amount of
any additional bond under this subparagraph.
(d) If the leased area is committed in whole or in part to a cooperative or unit agreement approved or prescribed
by the State, and the unit operator furnishes a statewide bond, the Lessee need not maintain any bond with respect to the portion of the leased
area committed to the cooperative cir unit agreement.
24. AUTHORIZED REPRESENTATIVES. The Director of the Division of Minerals arid Energy Management,
Department of Natural Resources, State of Alaska, and the person executing this lease on behalf of the Lessee shall be the authorized
representatives for their respective principals for the purposes of administering this lease. The State or the Lessee may change the designation of
its authorized representative or the address to which notices to that representative are to be sent by a notice given in accordance with Paragraph
25 below. Where activities pursuant to a plan of operations are underway, the Lessee shall also designate, pursuant to a notice under Paragraph
25 below, by name, job title, and address, an agent who will be present in the state during all lease activities.
25. NOTICES. Any notices required or permitted under this lease shall be by electronic media producing a permanent
record or in writing and shall be given personally or by registered or certified mail, return receipt requested, addressed as follows:
TO THE STATE:
DIRECTOR, DIVISION OF MINERALS AND ENERGY MANAGEMENT
DEPARTMENT OF NATURAL RESOURCES
POUCH 7-005
ANCHORAGE, ALASKA 99510
TO THE LESSEE:
Any notice given under this Paragraph shall be effective when delivered to the above authorized representative.
26. STATUTES AND REGULATIONS. This lease is subject to all applicable state and federal statutes and regulations
in effect on the effective date of this lease, and insofar as is constitutionally permissible, to all statutes and regulations placed in effect after the
effective date of this lease. This lease shall not be interpreted as a limitation upon the exercise by the State of Alaska or by the United States of
America of the power to enact and enforce legislation or to promulgate and enforce regulations affecting, directly or indirectly, the activities of
the Lessee or its agents in connection with this lease or the value of the interest held under this lease.
27. INTERPRETATION. This lease is to be interpreted in accordance with the rules applicable to the interpretation
of contracts made in the State of Alaska. The Paragraph headings are not part of this lease and are inserted only for convenience. The State and
the Lessee expressly covenant that the law of the State of Alaska shall apply in any judicial proceeding affecting this lease.
28. INTEREST !N REAL PROPERTY. It is the intention of the parties that the rights granted to the Lessee by this
lease constitute an interest in real property in the leased area.
29. SEVERABILITY. If it is finally determined in any judicial proceeding that al)y provision of this lease is invalid,
the State and the Lessee may jointly determine and agree by a written amendment to this lease that, in consideration of the promises, terms,
conditions, and covenants contained in that written amendment, the invalid portion will be treated as severed from this lease and that the
remainder of this lease, as amended, will remain in effect .
. 30. DEFINITIONS. All words and phrases used in this lease are to be interpreted where possible in the manner required
in respect to the interpretation of statutes by AS 01.1 0.040. However, the following words have the following meanings unless the context
unavoidably requires otherwise:
( 1) "oil" means crude petroleum oil and other hydrocarbons, regardless of gravity, that are produced in
liquid form by ordinary production methods, including liquid hydrocarbons known as distillate or condensate recovered by separation from gas
other than at a gas processing plant;
(2) "gas" means all natural gas (except helium gas) and all other hydrocarbons produced that are not
defined in this lease as oil;
(3) "associated substances" means all substances except helium produced as an incident of production
of oil or gas by ordinary production methods and not defined in this lease as oil or gas;
(4) "drilling" means the act of boring a hole to reach a proposed bottom hole location through which oil
or gas may be produced if encountered in paying quantities, and includes redrilling, sidetracking, deepening, or other means necessary to reach
the proposed bottom hole location, testing, logging, plugging, and other operations necessary and incidental to the actual boring of the hole;
(5) "reworking operations'" means all operations designed to secure, restore, or improve production
through $Ome use of a hole previously drilled, including, but not limited to, mechanical or chemical treatment of any horizon, plugging back to
test higher strata, etc.;
(6) "paying quantities" means quantities sufficient to yield a return in excess of operating costs, even
though drilling and equipment costs may never be repaid and the undertaking considered as a whole may ultimately result in a loss; and
(7) "force majeure" means war, riots, acts of God, unusually severe weather, or any other cause beyond
the Lessee's reasonable ability to foresee or control (including delays caused by judicial decisions or lack of them), whether similar to those
enumerated or not .
. 31. CONDITIONAL LEASE. If all or a part of the leased area is land that has been selected by the State under laws
of the United States granting lands to the State, but the land has not been patented to the State by the United States, then this lease is a
conditionlll Ieese as provided by law until the patent becomes effective. If for any reason the selection is not finally approved, or the patent
does not become effective, any rental, royalty, or other production or profit-based payments made to the State under this lease will not be
refunded.
32. NONDISCRIMINATION. The Lessee and the Lessee's subcontractors shall not discriminate against any employee
or applicant because of race, religion, color, sex, age, or national origin. The Lessee and its subcontractors shall, on commencement of any
operations under this lease, post in a conspicuous place notices setting forth the provisions of nondiscrimination.
33. ROYALTY ON PRODUCTION. Except for oil, gas, and associated substances used on the leased area for development
and production or unavoidably lost, the Lessee shall pay to the State as a royalty percent in amount or value of the oil,
gas, and -associated substances saved, removed, or sold from the leased area and of the gas used on the leased area for extraction of natural
gasoline or other products from the leased area.
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34-. VALUE. (a) For the purposes of computing royalties due under this lease, the value of royalty oil. gas, or associated
nubstances shall not be less than the highest of:
(1) the field price received by the Lessee for the oil, gas, or associated substances;
(2) the volume-weighted average of the three highest field prices received by other producers in the same
field or area for oil of like grade and gravity, gas of like kind and qualiW, or associated substances of like kind and quality at the time the oil,
gas, or associated substances are sold or removed from the leased or unit area or the gas is delivered to an extraction plant if that plant is
located on the leased or unit area; if there are less than three prices reported by other producers, the volume-weighted average shall be
calculated using the lesser number of prires received by other producers in the field or area;
(3) the !.essee's posted price in the field or area for the oil, gas, or associated substances; or
(4) the volume-weighted average of the three highest posted prices in the same field or area of the other
producers in the same field or area for oil of like grade snd gravity, gas of like kind and qualitY, or associated substances of like kind and
quality at the time the oi!, ges, or associated substances are sold or removed from the leased or unit area or the gas is delivered to an extraction
plant if that plant is located on the leased or unit area; if there are less than three prices posted by other producers, the volume-weighted
average shall be calculated using the lesser number of prices posted by other producers in the field or area.
(b) If oil, gas, or associated substances are sold away from the leased or unit area, the term "field price" in
subparagraph (a) c:bove shall be the cash value of all consideration received by the Lessee or other producer from the purchaser of the oil, gas,
or associated substances, less the reasonable costs of transportation away from the leased or unit area to the point of sale. The "reasonable costs
of transportation" are as defined in 11 AAC 83.228--11 AAC 83.229 as those regulations exist on the effective date of this lease.
(c) In the event the Lessee does not sell in an arm's-length transaction the oil, gas, or associated substances after removal from
the leased or unit area, the term "field price" in subparagraphs (a) and (b) above shall mean the price, on the leased or unit area, the Lessee
would expect to receive for the oil, gas, or associated substances if the Lessee did sell the oil, gas, or associated substances in an arm's-length
transaction. The Lessee shall determine this price in a consistent and logical manner using information available to the Lessee and report that
price to the State.
(d) The State may establish minimum values for the purposes of computing royalties on oil, gas, or associated substances
obtained from this lease, with consideration baing giver. to the price actually received by the Lessee, to the price or prices paid in the same field
or area for production of like quality, to posted prices, to prices received by the Lessee and other producers from sales occurring away from the
leased area, and to other releyant matters. In establishing minimum values, the State may use, but is not limited to, the methodology for
determining "prevailing value" as defined in 11 AAC 83.227 in circumstances where terms of a contract set a single price for oil, gas, or
associated substances for periods of longer than six years without adjustments tied to market conditions, or where the terms of a contract
set prices which do not reasonably reflect market conditions for production from that field or area prevailing at the time the contract is
executed or renegotiated, or where fraud or an intent to evade payment is demonstrated. Each minimum value determination will be made only
after the Lessee has been given notice and a reasonable opportunity to be heard. Under this provision, it is expressly agreed that the minimum
value of royalty oil, gas, or associated substances under this lease may not necessarily equal the price of the oil, gas, or associated substances.
35. ROYALTY IN VALUE. Unless the State elects to receive all or a portion of its royalty in kind as provided in
Paragraph 36 below, the Lessee shall pay to the State the value of all royalty oil, gas, and associated substances as determined under Paragraph
34 above. Royalty paid in value shall be free and clear of all lease expenses (and any portion of those expenses that is incurred away from the
leased area). including, but not limited to, expenses for separating, cleaning, dehydration, gathering, saltwater disposal, and p~eparing the oil,
gas, or associated substances for transportation off the leased area. All royalty that may become payable in money to the State of Alaska shal!
ba paid on or before the last day of the calendar month following the month in which the oil, gas, or associated substances are produced.
The amount of all royalty in value payments which are not paid when due under this lease or which are subsequently determined to be due as
the result of a redetermination shall bear interest from the date the obligation accrued, until it is paid in full, at a variable rate per annum equal
to the prime rate as announced from time to time by the Bank of America, San Francisco, California, plus one and one quarter (1.25) percent
per annum. Royalty payments shall be ac:companied by copies of run tickets or other information relating to valuation of royalty as the State
may require which may include, but is not limited to, evidence of sales, shipments, and amounts of gross oil, gas, and associated substances
produced.
36. ROYALTY IN KIND. (a) At the State's option, which may be exercised from time to ti~e upon not less than six
months' notice to the Lessee, the Lessee shall deliver all or a portion of the State's royalty oil, gas, or associated substances produced from the
leased area in kind. Delivery shall ba on the leased area or at a place mutually agreed to by the State and the Lessee, and shall ba delivered to
the State of Alaska or to any individual, firm, or corporation designated by the State.
(b) Royalty oil, gas, or associated substances delivered in kind sh'lll ba delivered in good and merchantable
condition and ba of pipeline quality, and shall be free and clear of all lease expenses (and any portion of those expenses incurred away from the
leased area). including, but not limited to, expenses for separating, cleaning, dehydration, gathering, saltwater disposal, and preparing the oil,
gas, or associated substances for transportation off the leased area.
(c) After having given notice of its intention to take, or after having taken, its royalty oil, gas, or associated
substances in kind, the State, at its option and upon six months' notice to the Lessee, may elect to receive a different portion or none of its
royalty in kind. If, under federal regulations, the taking of royalty oil, gas, or associated substances in value by the State creates a supplier-
purchaser relationship, the Lessee hereby waives its right to continue to receive royalty oil, gas, or associated substances under that relationship,
and further agrees that it will require any purchasers of the royalty oil, gas, or associated substances likewise to waive any supplier-purchaser
rights.
(d) The Lessee shall furnish storage for royalty oil and natural gas liquids produced from the leased or unit area
to the same extent that the Lessee provides storage for the Lessee's share of oil and natural gas liquids. The Lessee shall not ba liable for the
loss or destruction of stored royalty oil and natural gas liquids from causes beyond the Lessee's reasonable control.
(e) If a State royalty purchaser refuses or for any reason fails to take delivery of oil, gas, or associated
substances, or in an emergency, and with as much notice to the Lessee as is practical or reasonable under the circumstances, the State may elect
without penalty to underlift for up to six months all or a portion of the State's royalty on oil, gas, or associated substances produced from
the leased or unit area and taken in kind. The State's right to underlift is limited to the portion of royalty oil, gas, or associated substances that
the royalty purchaser refused or failed to take delivery of, or the portion necessary to meet the emergency condition. Underlifted oil, gas, or
associated substances may be recovered by the State at a daily rate not to exceed 10 percent of its royalty interest share of daily production at
the time of the underlift recovery.
37. REDUCTION OF ROYALTY. After initial production for two years from the field in which the leased or unit
area is located has occurred, the State, in its discretion, may reduce the Lessee's obligations to pay royalty on all of the leased area or on any
tract or portion of the leased area segregated for royalty purposes upon (1) request by the Lessee, (2) a clear showing by the Lessee that the
revenue from all oil, gas, and associated substances produced from the field is insufficient to produce a reasonable rate of return with respect to
the Lessee's total investment in the field, and (3) a clear showing by the Lessee that a reduction in royalty will increase total production from
the field.
.38. SHARE OF NET PROFIT. The Lessee shall pay to the State of Alaska of the net profit derived from this lease.
For the purposes of this Paragraph, calculation of the net profit shall be determined in accordance with 11 AAC 83.201 through
11 AAC 83.295 as those regulations exist on the effective date of this lease, which by reference are made a part of this lease. The amount
of interest to be earned on the net profit share development account pursuant to 11 AAC 83.212 will be the average of the prime rates of
the Citiba;nk, NA New York; Chase Manhattan Bank, NA New York; and the Bank of America, NT and SA San Francisco, prevailing during the
month.
IN WITNESS WHEREOF the parties have executed this lease effective as of the day of • 19
LESSEE STATE OF ALASKA
By:
Title:
THE UNITED STATES OF AMERICA
ss. Acknowledgement of Lessor
STATE OF ALASKA
This certifies that on the day of 19 , before me, a notary public in and for the State of
Alaska, duly commissioned and sworn, personally appeared ,
to me known to be the person who executed the foregoing lease on behalf of the State of Alaska, who, after being duly sworn according to law,
stated to me under oath that he or she has authority pursuant to law to execute the foregoing lease on behalf of the State of Alaska, acting
thn;~ugh the Department of Natural Resources, and that he or she executed the same freely and voluntarily as the act and deed of the State of
Alaska and' for the Department of Natural Resources.
WITNESS my hand and official seal.
Notary Public in and for Alaska
My commission expires
INSERT NOTARY ACKNOWLEDGEMENT OF LESSEE'S SIGNATURE HERE.
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ARCTIC SLOPE OIL AND GAS DEVELOPMENT MAP APPENDIX H
-, The Arctic Slope Oil and Gas Developme~t Map is in the attached folder.
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ACKNOWLEDGEMENTS
This document was prepared by the staff of the Division of Minerals and Energy
Management:
Kay Brown, Director
Jim Eason, Deputy Director
Pam Rogers, Leasing Manager
Kristina O'Connor, Chief, Environmental/Social Unit
Ron Beran, Chief, Legal/Land Status Unit
Ed Phillips, Petroleum Economist
Cass Ariey, Petroleum Geologist
Bob Butts, Natural Resource Manager
Dave Johnston, Geologist
Wayne Hanson, Cartographer
Dan Smith, Drafting Technician
Nancy Hendrickson, Clerk Typist
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