Hilcorp Scoops Up Seven Blocks in Cook Inlet Lease Sales

Hilcorp Alaska LLC was the sole bidder in federal and state lease sales in Alaska, snapping up six state blocks and one federal block.

The Alaska Department of Natural Resources (DNR) Division of Oil and Gas held a special lease sale for the Cook Inlet region, accepting bids on 721 tracts, concurrently with Lease Sale 258 held by Bureau of Ocean Energy Management (BOEM). 

In announcing the bonus lease round, DNR Deputy Commissioner John Crowther said, “The basin still holds significant potential and an important step to unlocking it is to consistently offer open acreage to explorers.” 

The state accepted bids from Dec. 12 until Dec. 28 and revealed the results on Dec. 30 about an hour before the federal livestream opening of bids for Sale 258.  

Hilcorp bid on Blocks 73, 142, 148, 284, 285 and 287 in the state sale, bidding nearly $360,000. 

“The Alaska Department of Natural Resources is encouraged by the preliminary results from both Cook Inlet lease sales today,” Sean Clifton, policy and program specialist with DNR’s Division of Oil & Gas, told Hart Energy. 

Hilcorp Alaska bid on one block near acreage they already hold in BOEM’s federal lease area, he said. 

“The State of Alaska’s Cook Inlet lease sale saw bids on six tracts from Hilcorp, which is among the better results in recent years and builds on momentum from the prior annual Cook Inlet oil and gas lease sale held in May 2022,” Clifton said. “These initial results show Hilcorp is continuing their investment and development in Cook Inlet after bidding on their first Alaska leases ten years ago.”

Kara Moriarty, president/CEO of Alaska Oil & Gas Association, said continued Cook Inlet lease sales are necessary in meeting the energy needs of Alaskans.

“The global demand for oil and gas remains, and successful bids were made in both the state and federal Cook Inlet lease sales,” she told Hart Energy in an email statement. “Over half of Alaska’s population relies on safe and affordable natural gas from Cook Inlet to heat and power their homes and oil development from the Inlet is made into a variety of fuels utilized by everyday Alaskans and the Ted Stevens Anchorage International Airport.” 

Lease sale 258

Hilcorp was also the only bidder in Lease Sale 258 for Cook Inlet acreage that was held on Dec. 30. BOEM livestreamed the opening of the bid, presided over by Mark Storzer, acting regional director for the BOEM Alaska Region Office.

“For today’s sale, BOEM received one bid on one block,” Storzer said.

Hilcorp submitted a bid of $63,983 for Block 6255 in the Seldovia area of the Cook Inlet offshore Alaska. The minimum bid set for the block, which covers 2,304 hectares, was $57,600.

“Hilcorp is proud of our work to revitalize Cook Inlet natural gas production,” Luke Miller, Hilcorp’s manager for Alaska government and public affairs, told Hart Energy. The region is “an energy source that nearly two-thirds of Alaskans depend on to heat and power their homes and businesses.” 

Following the lease sale, BOEM said there will be a 90-day evaluation process to ensure the public receives fair market value before the lease is awarded. There will also be a Department of Justice review of antitrust considerations. Awarded leases will be posted to BOEM’s website when the review process is completed.

In total, BOEM had made available 193 blocks in the northern part of the Cook Inlet Planning Area in federal waters, stretching roughly from Kalgin Island in the north to Augustine Island in the south. There are 14 active federal leases in the area, which were awarded in Lease Sale 244 in 2017. That sale generated $3 million in total bids.

In the last 20 years, only two other sales for the region have been held. Lease Sale 191 in 2004 received no bids and Lease Sale 149 in 1997 received bids on two tracts. 

Cook Inlet Sale 211 in 2009 and Sale 219 in 2011 were canceled due to lack of industry interest.

BOEM canceled Lease Sale 258 itself in May 2022, citing lack of industry interest. BOEM held the lease sale at year’s end to comply with a deadline set by the Inflation Reduction Act of 2022 for holding the lease sale.

Sale 258 was the only time acreage offshore Alaska was included in the 2017-2022 National Outer Continental Shelf (OCS) oil and gas leasing program.