Exploration Licensing Program
Exploration licensing supplements the state's oil and gas leasing program and encourages oil and gas exploration outside of the known oil and gas provinces. Several large sedimentary basins exist within Interior Alaska, some of which are virtually unexplored. The highly variable structural geology of these basins offers the potential for structural traps in overthrust belts and strike slip systems. Various types of clastic and carbonate stratigraphic traps may also be present. Exploration licensing allows companies to explore these frontier basins with minimal costs added by the state.
An area selected for exploration licensing must be between 10,000 and 500,000 acres. The licensing process is initiated in one of two ways:
Submitted proposals must: (1) describe the area proposed to be subject to the license; (2) state the specific minimum work commitment expressed in dollars; (3) describe the amount and form of security to be posted based on the projected cost of the planned exploration work; (4) propose the term of the license (unless already established by the commissioner); and (5) verify that a prospective licensee meets minimum qualifications.
Within 30 days of receiving any proposal, the commissioner will either reject it in a written decision or give public notice of the intent to evaluate the proposal's acceptability. This notice will solicit public comments on the proposal(s) and request competing proposals. The commissioner may also modify any proposal and request a new one based on those modifications.
Current Exploration Licenses and Pending Applications
The state has issued five exploration licenses covering 525,629 acres and has received applications for two other areas.
LOCATION ADL FILE NUMBER LICENSEE ACRES COMMITMENT EFFECTIVE DATE TERM Gulf of Alaska Application Application Pending Pending Pending Pending Healy Basin 390606 Usibelli Coal Mine Inc. 204,883 $500,000 January 1, 2011 10 years Houston-Willow Basin Applicaton Samuel Cade and Daniel Donkel Pending Pending Pending Pending North Nenana 392535 Rocky Riley 25,294 $500,000 July 1, 2015 5 years Susitna Basin V 391794 Cook Inlet Energy LLC 45,764 $250,000 April 1, 2012 5 years Tolsona 392209 Ahtna, Inc. 43,492 $415,000 December 1, 2013 5 years
Best Interest Finding
After considering all submitted proposals and public comment on those proposals the commissioner will issue a written finding determining whether granting the exploration license is in the state's best interests. The finding must describe the limitations, conditions,stipulations or changes from the initiating proposal or competing proposals that are required to make the issuance of the license conform to the best interests of the state. If only one proposal was submitted, the finding must also identify the prospective licensee.
If the finding concludes that an exploration license should be awarded and there has only been a single applicant, that applicant will have 30 days after issuance of the finding to execute the license. If competing proposals are submitted and the commissioner determines that an exploration license should be awarded, the successful licensee will be determined by a sealed bid process, with the license awarded to the applicant who has committed the most dollars to an exploration program.
The recipient of a license must post a bond in the amount of the work commitment and pay a $1 per acre license fee. There are no additional charges during the term of the license, which can be up to 10 years. During its term, and following satisfaction of the required work commitment, any portion of the licensed area may be converted to oil and gas leases. The term of the leases can extend beyond the original term of the license. If converted, annual lease rentals are set at $3 per acre.
A licensee is required to submit annually a new report of direct exploration expenditures (if any), a new Schedule 2, an annual bond renewal as required by AS 38.05.132(c)(4)(A) and 11 AAC 82.945(c), and geologic and geophysical data as required by 11 AAC 82.981. Use the Exploration License Annual Report forms to submit the required information. Annual reporting periods start on the effective date, or anniversary of the effective date, and end the day before the following effective date anniversary.
Relinquishment of Lands
If by the fourth anniversary of the exploration license the licensee has completed less than 25 percent of the total work commitment the license will be terminated, with the remainder of the security forfeited to the state. If the licensee has completed less than 50 percent of the total work, then 25 percent of the licensed area will be relinquished, with an additional 10 percent relinquished each successive year until half of the original acreage has been relinquished.
When an individual or company wants to transfer or receive an interest in an existing oil and gas license, an "assignment of interest" application must be completed in triplicate and submitted to the division with a $150 filing fee. Both the assignor and the assignee must be "qualified" before the application can be approved. Contact the Leasing Section at (907) 269-8800 or E-mail for an assignment application and additional information. Download the assignment application, assignment instructions, qualification procedures for companies, or qualification form for individuals.