Exploration Licensing Program

  • Exploration Licensing Program

    The State of Alaska offers oil and gas exploration licenses through its exploration licensing program. The intent of the oil and gas exploration licensing program (AS 38.05.131-134) is to encourage exploration in areas far from existing infrastructure, with unknown hydrocarbon potential, and where there is a higher investment risk to the operator. Licensees are required to provide any data collected under an exploration license to the state (11 AAC 82.981). The exploration licensing program does not apply to certain lands (already subject to areawide lease sales) in the North Slope and Cook Inlet regions as specified by AS 38.05.131(b). The Asset Management section (formerly Leasing) of the Division of Oil and Gas administers the 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. View current exploration license projects and the exploration licensing process by clicking on the links below.

    Determinations of State Land Subject to Exploration Licensing

    Under AS 38.05.131(c), the Department of Natural Resources (DNR) commissioner shall make preliminary written determinations of the state land that may be subject to the provisions of exploration licensing. Preliminary determinations are given public notice using the methods described in AS 38.05.945(b). After completion of the comment period, DO&G evaluates the comments received. After evaluation of the comments received, the commissioner shall issue a final written determination of the state land that is subject to exploration licensing.

    Exploration license applications may be submitted in areas of the state that have undergone a determination of lands. A determination is not a sale, lease, license, or other disposal of interest in land, nor is it a best interest finding. DO&G is not constrained by a determination, and DO&G is not prevented from making a future finding that a specific exploration license proposal within a determination area is not in the state's best interest.

    The following areas of the state have been subject to a determination of lands. These areas have been found to be suitable for the exploration licensing program and explorationists may submit proposals within these areas:

    Exploration License Application Process

    The licensing process is initiated in one of two ways:

    • Each year during the month of April, applicants may submit to the commissioner a proposal to conduct exploratory activity within an area they have specified by using the division's exploration license application; or
    • The commissioner can, at any time, issue a notice requesting proposals to explore an area designated by the commissioner. Once a request for proposals has been issued, applicants will have 30 days to notify the commissioner of their intent to submit a proposal, and 60 days to submit the proposal.

    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.

    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.

    Licensing and Leasing an Exploration Area

    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.

    Annual Reports

    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.

    Assignments

    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 Asset Management 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.

    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 393173 Application Pending Pending Pending Pending
    Healy Basin 390606 Usibelli Coal Mine Inc. 204,883 $500,000 Jan. 1, 2011 10 years
    Houston-Willow Basin 391282 Samuel Cade and Daniel Donkel Pending Pending Pending Pending
    North Nenana 392535 Rocky Riley 25,294 $500,000 Jul. 1, 2015 5 years
    Tolsona 392209 Ahtna, Inc. 43,492 $415,000 Dec. 1, 2013 5 years