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Alaska Plans Largest 2011 Oil Lease Sale, Seeks Federal Action

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June 30 (Bloomberg) -- Alaska’s plan to lease land for oil and gas production in October may exceed any other sale in the U.S. this year, said Dan Sullivan, the state’s natural resources commissioner.

Governor Sean Parnell, a Republican, called for federal action to increase domestic crude output. “It’s time to unlock and unleash American resource potential,” he said in a webcast from Alaska made available today in Washington.

The state of Alaska plans to sell oil and gas leases for 14.7 million acres in the Beaufort Sea, on the North Slope and in the North Slope foothills. The state wants to push more petroleum through the Trans Alaska Pipeline System, the state’s oil and gas division said on June 9.

Alaska oil production has declined every year since 2002, according to the U.S. Energy Department, because of lower output from fields including Prudhoe Bay, operated by BP Plc, and Kuparuk, operated by ConocoPhillips. Production in May averaged 615,348 barrels a day, according to the Alaska Tax Division.

The 800-mile (1,287-kilometer) pipeline is scheduled to operate until 2035 and may close after that as production ebbs, Richard Newell, head of the Energy Information Administration, said on Feb. 3. The Trans Alaska Pipeline runs from Prudhoe Bay on the North Slope to Valdez, the northernmost ice-free port in the U.S.

An oil producer drilling straight down on state leases and tapping a reservoir that stretches into federal waters will have the right to drain the entire pool, said Sullivan, who was in Washington today to promote the October sale.

Royal Dutch Shell Plc, which purchased oil leases in federal waters off the Alaskan coast in 2005 and 2007, hasn’t started drilling because the Environmental Protection Agency and the Bureau of Ocean Energy Management, Regulation and Enforcement haven’t granted the necessary approvals. Sullivan said today he wasn’t sure whether permits for drilling on state lands will be issued by federal or state regulators.

The Obama administration plans to sell oil and natural-gas leases in Alaska’s National Petroleum Reserve by the end of the year, the Interior Department said on June 16.

To contact the reporter on this story: Katarzyna Klimasinska in Washington at kklimasinska@bloomberg.net

To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net

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