Active oil, gas leases abound; foreign oyster found on jack up rig

By Naomi Klouda
Homer Tribune

MAP PROVIDED - The map supplied by the Division of Oil and Gas shows the units and those issued to date.

MAP PROVIDED - The map supplied by the Division of Oil and Gas shows the units and those issued to date.

A total of 19 leases owned by four oil and gas concerns stretch inland from East End Road to Anchor Point, considered at various stages of activity for onshore work.
Another dozen or so leases are along the Cook Inlet side clustered around Anchor Point and stretching down to Ninilchik.
Buccaneer Alaska owns the most onshore leases, at 11 ranging in costs from $6.85 per acre to $28.70 per acre. Armstrong Cook Inlet has another five, Apache Alaska Corporation two and Hilcorp has several pending leases.
A map provided by Alaska Division of Oil and Gas of active leases south of Soldotna shows a patchwork of potential oil and gas drilling activity in the years to come. Armstrong’s work at Anchor Point off the North Fork Road is now supplying natural gas to Anchor Point, with another well planned for drilling on the same pad this year.
What happens when the state has a lease sale is that companies bid per acre, starting with a minimum bid. Whoever gets the highest bid per acre gets the lease. Saree Timmons, leasing section manager at the Alaska Department of Natural Resources, Division of Oil and Gas, said the formula is spelled out in state statutes.
The formula multiplies dollars per acre times number of acres paid up front to gain the lease. They also pay an annual rent on the leases of $1-$3 and up per acre. Some rents go as high as $250 a year.
For example, Buccaneer has one parcel that is 3,406 acres at $11 per acre. The total “bonus” paid to the state is $37,476 in the competitive bid process.
These methods include combinations of fixed and variable bonus bids, royalty shares, and net profit shares. Minimum bids for state leases vary but have recently ranged from $5 to $25 per acre. Fixed royalty rates are generally 12.5 percent or 16-2/3 percent, although some have been as high as 20 percent. A sliding scale royalty has also been used. Primary lease terms are initially set between five and ten years.
Cook Inlet’s 112 bids priced out at $19.34 per acre, according to numbers compiled by the division.
The Homer-area list compiled by Kyle Smith, the legislative and policy advisor with the division of Oil and Gas, are on state lands except two Armstrong parcels that are federal transferred leases. All the lease rental rates per acre are $1 the first year, $1.50 the second year, $2 for the third year, $2.50 for the fourth year, and $3 every year thereafter. The pending Hilcorp lease will have a $10 rental rate per acre for years 1-7 with an uplift to $250/acre in years 7-10 if the lease is not in a unit or in production, Smith said.
Homer will be relatively new to understanding oil and gas issues compared to the rest of the Kenai Peninsula, which has seen activity for nearly 50 years.
Michael O’Meara, standing in for Bob Shavelson at Cook Inletkeeper while Shavelson is out of town, said about 30 years ago, Homer had a lot of gas and oil interest.
“The reason there are no oil rigs drilling and working in Kachemak Bay is because back in 1976, they were told by the legislature to buy back the leases,” O’Meara said. “People newer to Homer don’t know as much about it, the ones that have lived here a long time had a lot of experience with it.”
Because corporations that drill for natural resources are concerned about extracting and making a profit on their investments, the concern for other resources like commercial fishing won’t be the focus.
“It’s incumbent on people to make clear what their concerns are and insist on the companies taking a high standard. It’s not that you can stop oil and gas development, but it should go on with a concern for the communities’ welfare,” O’Meara said.
When the work on the North Fork developed, by Armstrong Cook Inlet, over the past two years, it went on relatively quietly. It supplied a small job boom and Armstrong sought to allay concerns by answering questions in community meetings.

Endeavour Rig’s foreign oyster?

Homer Tribune/Sam Kuzmin - Larry Smith holds a possible foreign oyster.

Homer Tribune/Sam Kuzmin - Larry Smith holds a possible foreign oyster.

The Endeavor jackup rig is generating questions from Cook Inletkeeper and the environmental community in terms of possible invasive organisms it may have carried into Kachemak Bay.
Homer’s Larry Smith, involved on numerous conservation councils through the years, obtained a shell that is believed to be a foreign oyster.
The Alaska Department of Fish and Game Invasive Species staff is said to have characterized the oyster encrustation as a serious concern and warned that other organisms, including pathogens, may well be part of the rig’s incrustation — all could potentially have harmful impacts to both native species and mariculture species, O’Meara said.
Tammy Davis, the state’s invasive program leader with the Department of Fish and Game, said Buccaneer has hired a biologist from URS Consulting Services to conduct a study. The state isn’t approved to board or sample organisms on the vessel. “We will be requesting a sample or the results of the study,” Davis said. “This is a wakeup call and makes the state aware of the potential for a vector for bringing in non-native species.”­­
Jay Morakis, the spokesman for Buccaneer, said as soon as the company found out the concern about invasive species, they hired the environmental consultants to begin their studies.

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Posted by on Sep 12th, 2012 and filed under Headline News. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

1 Response for “Active oil, gas leases abound; foreign oyster found on jack up rig”

  1. Louise says:

    Any news on the results? What does this mean when a state leader isn’t approved to board or sample a vessel to conduct state business on the behalf of the commons?

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