Alaska Oil and Gas Lease Sales are Less than Desirable
An Alaska lease sale that offered oil and gas leases on nearly 9 million acres of onshore and offshore rights received a poor response, sparking concerns about the future of the industry.
The first lease sale offered rights on 4 million acres and could garner only five bids. The second round of sales offered 5 million acres and, as of last Wednesday, no bids had been received by the state Division of Oil and Gas. Four leases were sold in the Cook Inlet Basin in southern Alaska. Alaskan New Energy LLC as well as a group of individual private investors bid a total of $110,009 for oil and gas leases on 7,685 acres in the basin. The basin holds some of the state's oldest oil fields and provides much of the natural gas used in Alaska's urban centers.
Shaky Conditions are Not Surprising
According to the Division of Oil and Gas, the poor sale of oil and gas leases is not surprising when you consider the current recession. Several companies have scaled back their exploration and drilling efforts. 
Oil and gas company officials believe the recession is definitely impacting business. According to Kara Moriarty, the deputy director for the Alaska Oil and Gas Association, companies are being thrifty and are only looking to invest where they can get the best possible returns. Recently, Marathon Oil decided to scale back its natural gas development plans in the Cook Inlet Basin. According to officials, the company based the decision on current market conditions.
Even so, these are shaky times for the oil and gas industry in Alaska. Shell stopped operations in the Beaufort Sea and future drilling in Point Thomson is still in doubt. With Marathon putting the brakes on development, experts are questioning the future of the industry in Alaska. The oil and gas industry is looking to the state to introduce more competitive conditions to give business a push. The industry's biggest issue right now is the oil tax structure, which officials say has to be stabilized for the oil and gas sector to survive.
The Bush Administration auctioned off oil and gas leases along Alaska’s coast which, according to geological estimates, could contain up to 19 billion barrels of oil. That is more than the reserves of Mexico, Nigeria, and Kazakhstan combined.