US lease sale off Alaska coast prompts bid from Health & Fitness Journal

©Health & Fitness Journal. FILE PHOTO: A view of the Midtown Anchorage headquarters of Hilcorp Alaska LLC, a subsidiary of Texas-based Hilcorp Energy Company, in Alaska, U.S. April 8, 2020. REUTERS/Yereth Rosen

By Nichola Groom and Valerie Volcovici

(Health & Fitness Journal) – The US government on Friday received just a single bid from Hilcorp Alaska for oil and gas drilling rights off the coast of Alaska, the first federal auction in the region in more than five years.

The offer of nearly 1 million acres in the Cook Inlet was among concessions to the oil and gas sector included in President Joe Biden’s signature climate change law, the Inflation Reduction Act (IRA).

According to the law, the Ministry of Interior is obliged to carry out the sale by December 31st. The agency had scrapped the Cook Inlet sale earlier this year ahead of the IRA’s passage, citing a lack of industry interest.

Hilcorp Alaska is a unit of Hilcorp Energy LP, the largest privately held US energy producer. Texas-based independent exploration and production company (E&P) makes investments in legacy assets.

The Home Office’s Bureau of Ocean Energy Management (BOEM) announced that Hilcorp has made the only bid for a block, which was offered for $63,983 on Friday. BOEM oversees offshore energy development for the Ministry of the Interior.

BOEM had offered 193 blocks covering approximately 958,202 acres (387,771 hectares). Cook Inlet stretches 180 miles from Anchorage to the Gulf of Alaska.

Last week, five environmental groups sued the administration for blocking the sale, claiming it failed to adequately consider the auction’s impact on climate change, as well as the consequences for threatened species like the Cook Inlet beluga and humpback whales.

“This damaging sale should not have happened in the first place and we will continue to challenge it in court and fight to preserve the beautiful Cook Inlet,” Kristen Monsell, ocean legal director at the Center for Biodiversity, said Friday.

The federal government has conducted several oil and gas leasehold sales in Cook Inlet since the 1970s, but to date no production has occurred in federal waters there. There are 14 active federal leases in Cook Inlet, all of which were purchased by Houston-based Hilcorp at the last federal auction in the area in 2017.

The region’s operating oil and gas platforms are all in state waters, but oil production has declined significantly since its peak in the 1970s.

The acreage offered for lease has the potential to produce 192.3 million barrels of oil and 301.9 billion cubic feet, according to a Home Department estimate.

After Friday’s sale, there will be a 90-day appraisal process to ensure taxpayer fair market value before a lease is awarded.