MMS Offshore Alaska Program Overview MMS Offshore Alaska Program Getting Back to the Resources AAPL OCS Workshop The Woodlands, Texas John Goll U.S. Minerals Management Service January 2004

Today’s Topics Access Lease Sales Economic Incentives Beaufort Sea Cook Inlet Economic Incentives North Aleutian Basin Permitting Info Sources

Alaska OCS Potential (Risked, Undiscovered, Conventionally Recoverable) Low to High Estimates Oil Gas billions barrels TCF Alaska OCS Total 17 - 35 55 - 227 Chukchi 9 - 25 14 - 154 Beaufort 4 - 12 13 - 63 Hope 0 - 0.3 0 - 11 Norton 0 - 0.2 0 - 9 Cook Inlet 0.3 - 1.4 0.7 - 2.5 (MMS 2000 National Assessment)

Access: The OCS 5 Year Plan 2002-2007-- Alaska Traditional Sales Beaufort Sea 2003, 2005, 2007 Cook Inlet 2004, 2006 Interest Based Sales (annual calls) Chukchi Sea/Hope Basin Up to 2 sales Norton Basin 1 sale

Beaufort Sea Sale 186 September 2003

Beaufort Sea Economic Incentives Royalty Suspension volumes/per lease Up to 30 or 45 Million barrels, (depending on Zone A or B) With price floor $18/barrel With price ceiling ($28/barrel 1994 inflation adjusted) Royalty rate 12.5% Primary Term 10 years Minimum bid $15/$10 Rental rate sliding $3 – 12.50/acre (Zone A) $1 – 8/acre (Zone B)

Beaufort Sea

Request for Information out now – due 1/30 Beaufort Sea Planning Area Oil (billion barrels) Gas (trillion cubic ft) CRR 3.6 - 6.9 - 11.8 12.9 – 32.1 – 63.3 ECR ($18/bbl; $2.11/mcf) 0.0 - 1.8 - 6.6 0.0 – 2.9 – 9.7 ECR ($30/bbl; $3.52/mcf) 1.0 - 3.2 - 7.8 0.6 – 4.2 - 10.7 Beaufort Sea models assume that oil is transported through TAPS and on to West Coast markets. Natural gas produced with oil would be reinjected for enhanced oil recovery until oil depletion and then produced and transported by a future gas pipeline to outside markets. Request for Information out now – due 1/30 Next Sale: March 2005

Alaska Permitting State//MMS MOU Recent Beaufort Sea permitting successes http://www.dnr.state.ak.us/

Working with the Communities North Slope Borough Tribes - Government-to-government AEWC Keep communities informed Visits Consultation on Projects Nuiqsut Paisanich:  Nuiqsut Heritage:  A Cultural Plan In this Place:  A Guide for Those Who Would Work in the Country of the Kaktovikmuit.

Cook Inlet Sale 191 November 2003 April 2004 May 19, 2004 Letter to Governor FEIS Coastal Zone Consistency Determination PNOS Defer 2 areas April 2004 Final Notice of Sale May 19, 2004 The Sale

Cook Inlet Sale 191 Proposed Economic Incentives Royalty 12.5% fixed Royalty Suspension Volume 30 Million BBls Oil Equivalent (includes natural gas) with floor & ceiling Minimum Bid $10/acre (was $25) Rental Rate $2/acre (was $5) Initial Lease Term 8 years (was 5 yrs)

Cook Inlet

Cook Inlet Planning Area. Oil (billion barrels) Cook Inlet Planning Area Oil (billion barrels) Gas (trillions cubic ft) CRR 0.3 - 0.8 - 1.4 0.7 – 1.4 – 2.5 ECR ($18/bbl; $2.11/mcf) 0.1 - 0.4 - 1.0 0.1 – 0.6 – 1.3 ECR ($30/bbl; $3.52/mcf) 0.2 - 0.6 - 1.2 0.5 – 1.0 – 1.7 Cook Inlet models assume oil and gas production is sent to local refineries and markets in Alaska. Sale 191: May 19, 2004 2nd Sale: May 2006

The 5 Year Plan – Chukchi Sea/ Hope Basin – Norton Basin Keeping Options Open Local Use (?) Interest approach: Chukchi/Hope 2 sales Local use? Call #2 – early 2004 Norton Basin gas for locals? Call #3 – early 2004

Chukchi Sea Planning Area. Oil (billion barrels) Chukchi Sea Planning Area Oil (billion barrels) Gas (trillions cubic feet) CRR 8.6 - 15.5 - 25.0 13.6 – 60.1 – 154.3 ECR ($18/bbl; $2.11/mcf) 0.0 - 1.0 - 7.2 not available ECR ($30/bbl; $3.52/mcf) 1.4 - 6.1 - 11.0 not available Chukchi Sea models assume that oil is transported through TAPS and on to West Coast markets. Natural gas was not assessed owing to lack of gas transportation system and availability of known gas reserves close to current facilities at Prudhoe Bay.

Hope Basin Planning Area. Oil (billion barrels) Hope Basin Planning Area Oil (billion barrels) Gas (trillions cubic ft) CRR 0.0 - 0.1 - 0.3 0.0 – 3.4 – 11.1 ECR ($18/bbl; $2.11/mcf) 0.0 - <0.1 - 0.1 0.0 – 0.6 – 4.9 ECR ($30/bbl; $3.52/mcf) 0.0 - <0.1 - 0.2 0.0 – 1.5 – 6.0 Hope Basin models assume a local market exists for natural gas.

Norton Basin Planning Area. Oil (billion barrels) Norton Basin Planning Area Oil (billion barrels) Gas (trillions cubic ft) CRR 0.0 - <0.1 - 0.2 0.0 – 2.7 – 8.7 ECR ($18/bbl; $2.11/mcf) 0.0 - <0.1 – 0.1 0.0 – 1.0 – 5.0 ECR ($30/bbl; $3.52/mcf) 0.0 - <0.1 – 0.1 0.0 – 1.6 – 6.4 Norton Basin models assume local consumption of gas and gas-products.

North Aleutian Basin Moratoria Gas Prone Oil Presidential [Congressional] Gas Prone 7 TCF Mean 17 TCF (5%) Oil 230 MMB Mean 570 MMB (5%)

Lift Moratoria? Before Consideration: Congress State Lift appropriations ban State Request from Governor Support in the Communities

MMS Geological Information http://www.mms.gov/alaska/ref/akref.htm Geological Reports Beaufort Sea Chukchi Sea Norton Basin Gulf of Alaska Summary packages Beaufort Sea Chukchi Cook Inlet Norton Basin

MMS Research University of Alaska Technology and Assessment Program Walrus haulout Technology and Assessment Program engineering and oil spill response Environmental Studies Program University of Alaska CMI Marine Minerals Technology Center Monitoring

DOI/State/UAA Whatever Information you need on resources Moving to UAA Library this summer http://www.arlis.org

Upcoming MMS OCS Sales www.mms.gov/alaska/ 907-271-6010 Cook Inlet 191 May 19, 2004 Beaufort Sea 195 March 2005 Alaska DNR: www.dnr.state.ak.us/ BLM Alaska: www.ak.blm.gov/ MMS