CHUKCHI POOREST OCS SALE IN RECENT MEMORY

The second federal oil and gas lease sale in the Chukchi Sea off Northwest Alaska logged the poorest performance of any major federal sale of frontier acreage in recent memory. Chukchi Sea Sale 126 netted a paltry $7,117,304 in apparent high bids for 28 tracts that received 30 bids. Only five companies showed up for the sale, exposing $7,405,804.

Sept. 2, 1991

3 min read

The second federal oil and gas lease sale in the Chukchi Sea off Northwest Alaska logged the poorest performance of any major federal sale of frontier acreage in recent memory.

Chukchi Sea Sale 126 netted a paltry $7,117,304 in apparent high bids for 28 tracts that received 30 bids. Only five companies showed up for the sale, exposing $7,405,804.

That compares with the first Chukchi sale, which drew a record 653 bids for 351 blocks, more than any other federal sale outside the Gulf of Mexico. All but one of the bids were accepted. Sale 109 garnered more than $478 million in high bids out of $666 million exposed in often spirited bidding that covered 40 or more apparent structures.

Last week's sale also compares with a recent Beaufort Sea sale that netted only $16.8 million in apparent high bids and was described as dismal.

Industry officials cited environmental opposition, high costs, and regulatory uncertainty as factors in that poor showing.

A few smaller apparent new structures were indicated in the bidding in Sale 126 that otherwise focused on fill-in acreage near existing leases.

The sale lasted only about 15 min, less time than it took for prefatory remarks and a presale protest by an environmentalist group at the Anchorage auction.

It offered 3,454 blocks covering 18 million acres in water depths of 98-263 ft 3-108 miles offshore.

SALE RESULTS

Mobil Oil Corp. dominated last week's sale, apparently acquiring 22 tracts for $6.25 million.

Bidding alone, Mobil met no competition save for two low priced parcels in separate bids by Petrofina Delaware Inc. and a combine of ARCO Alaska Inc., Chevron U.S.A., and Texaco Inc. It offered the sale's highest bid, $720,905, for a tract at the heart of a cluster of eight that apparently indicated a sizable structure northeast of a big group of tracts drawing $170 million in top bids in the earlier sale (see map, OGJ, May 30, 1988, p. 29).

"We were surprised by the lack of size of the sale and certainly pleased to be high bidder on all the tracts we bid on," a Mobil official said.

A combine of Chevron and Texaco met no opposition when it apparently acquired two of the tracts at the tail of the eight tract cluster.

The FINA Inc. unit apparently acquired-again, without competing bids-four fill-in parcels for $580,608 in the southern portion of a big cluster of leases that drew $107 million in bids in the earlier sale.

Conspicuous by their absence from the sale were companies that were some of the dominant bidders in the 1988 sale: Shell Oil Co., which drilled the frontier area's only four wells and snared with partners almost half the 1988 sale's tracts, and Amoco Production Co. and Exxon Corp., which were active in bidding for many of the leases in the earlier sale.

No results from those wells have been disclosed.