Cook Inlet oil and gas lease sale attracts just one company

Cook Inlet oil platforms are visible from shore on Dec. 13, 2016 near Kenai, Alaska. (Photo by Rashah McChesney/Alaska’s Energy Desk)

The State of Alaska held a lease sale for offshore acreage in Cook Inlet today, with modest results.

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The state offered 2.6 million acres, but just one company — Hilcorp — bid on 16,636 acres.

Hilcorp is currently the biggest oil and gas producer in Cook Inlet. The Texas-based company will pay $298,800 for the additional acreage it picked up at the sale. Hilcorp was also the sole company bidding during last year‘s state oil and gas lease sale for Cook Inlet.

“We’d always like to see a larger lease sale and more money come into the state,” Kyle Smith, leasing section chief with the Alaska Department of Natural Resources, said. “With the Cook Inlet, the gas demand has mostly been met through 2023, 2024 through existing gas contracts. And the incentives aren’t quite what they were years ago.”

Faced with dwindling funds, the legislature phased out tax credits for oil and gas companies in Cook Inlet over the past two years.

Smith added that the sale also shows most companies in Cook Inlet are focusing investments on producing from areas they’ve already leased, rather than exploring in new areas.