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Hilcorp snags 3 leases on Cook Inlet sale

Oil and gas producer Hilcorp is continuing its Alaska expansion with three new exploration leases in the Cook Inlet basin.

Hilcorp, which operates most of the platforms in the inlet as well as a number of onshore gas wells and the cross-inlet pipeline, won three leases in the state’s areawide Cook Inlet and Alaska Peninsula oil and gas lease auction this week. The three leases cost the company about $178,000, with an average price of $21.43 per acre.

For the first time, the lease sale was entirely online. Alaska Division of Oil and Gas spokesman Dan Saddler said the state had been working on the online option since before the pandemic to make it easier for companies to participate, possibly driving prices higher due to competition.

"Certainly we want to make sure we get the best price for our commonly held resources," he said. "Making our oil and gas leases more available to a broader audience gives us an opportunity for more competition, and competition raises prices. We hope in the long term we hope this will be in the state’s benefits to have a broader market, and we hope people will bid higher for oil and gas."

However, Hilcorp was the only bidder, as it was in the last oil and gas auction in the inlet in 2018. Saddler said the company is showing its continued commitment to Alaska through additional leasing. Two of its new leases are on the Iniskin Peninsula, which is on the west side of Cook Inlet directly west of Anchor Point, and the third is just south the existing Cosmopolitan unit just offshore of Anchor Point and includes both onshore and offshore acreage. The Cosmopolitan unit is operated by BlueCrest Energy, a smaller oil and gas exploration company that began drilling in 2016.

The oil industry has been hit hard by low prices this year, a combination of an international trade standoff and decreased demand due to the pandemic. Prices have climbed again to about $41 per barrel for Alaska North Slope crude, but that can still mean pretty thin profit margins for companies operating in the state.

Saddler said the price per acre in Cook Inlet for this sale, though, is actually higher than in was in the previous sale.

"We are seeing average higher natural gas prices in Cook Inlet," he said. "I think it’s $8.13 per thousand cubic feet—Henry Hub is about $1.61. So, these prices, combined with the demand from biggest market for natural gas in Alaska, we’re pleased to see the upward pressure on prices and anticipate we’ll see continued interest in exploration and development in Cook Inlet."

The leases are for eight years initially, with the option to extend them for up to 10 years, at a royalty rate of 12.5 percent.

Reach Elizabeth Earl at

Elizabeth Earl is the news reporter/evening host for summer 2021 at KDLL. She is a high school teacher, with a background writing for the Peninsula Clarion and has been a freelance contributor to several publications in Alaska.
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