Alaska governor, commissioner promote upcoming lease sales

Thu Jun 30, 2011 10:09pm EDT

* Alaska to lease exploration rights in 14.7 mln acres

* Looks to reverse decline in oil production

* Alaska pipeline throughput declining

By Yereth Rosen

ANCHORAGE, Alaska, June 30 (Reuters) - Alaska's governor and natural resource commissioner on Thursday promoted upcoming state oil and gas lease sales as part of a strategy to reverse the decline in production from aging North Slope fields and to boost domestic energy production.

Governor Sean Parnell, a Republican, and Natural Resources Commissioner Dan Sullivan, made their pitch in speeches to the United States Chamber of Commerce in Washington, D.C.

They said they have high hopes for upcoming and long-scheduled October lease sales that will offer exploration rights in arctic regions sprawling over 14.7 million acres of state territory in the central North Slope, the Beaufort Sea and the Brooks Range foothills.

The exact amount of acreage available for leasing has yet to be determined.

"For America's sake, we are setting an example for what other resource states can do," Parnell said in a speech to the group.

Recordings of the speeches were made available to reporters.

Sullivan said he expects companies to bid for rights to explore the many small but untouched deposits of oil believed to still exist in the central North Slope, as well as shale oil in the foothills and oil in state territory bordering the "highly prospective" federally owned Arctic National Wildlife Refuge and National Petroleum Reserve-Alaska.

Parnell said the upcoming lease sales are part of a broader strategy to boost Alaska production to 1 million barrels a day within 10 years.

Currently, production is a little over 600,000 barrels per day, less than a third of the peak 2 million barrel daily output reached in 1988.

A new report issued on Wednesday by the operator of the Trans Alaska Pipeline System concluded that operation of the pipeline will no longer be viable if throughput falls under 350,000 barrels per day, a threshold that could be reached in a decade if current decline rates continue.

The lease sales promoted by Parnell and Sullivan are part of an area-wide leasing program that has been in place in Alaska since 1999 and started by then-Governor Tony Knowles, a Democrat.

Under the program, the Alaska Division of Oil and Gas holds annual lease sales offering all unleased state territory in vast and separate oil and gas regions -- the central North Slope, the North Slope foothills, the Beaufort Sea, Cook Inlet and the Alaskan Peninsula.

The state lease sales have drawn mixed responses over the years. The most lucrative was a North Slope area-wide sale in 2006 that drew $15.7 million in high bids. But some regularly scheduled sales have attracted no bids at all.

A state Cook Inlet area-wide lease sale held last week drew $11.1 million in high bids, mostly from Apache Corp (APA.N), but no bids were submitted for an Alaska Peninsula sale held the same day. (Editing by Bill Rigby and Carol Bishopric)

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