Business | Oil & Gas
Arctic drilling bids hit record
A sale of oil and gas rights in US waters of the Chukchi Sea, off the northwestern coast of Alaska, has brought in a record $2.66 billion despite protests over the opening the environmentally sensitive area to drilling.
- Reuters
- Published: 01:04 February 8, 2008
Anchorage: A sale of oil and gas rights in US waters of the Chukchi Sea, off the northwestern coast of Alaska, has brought in a record $2.66 billion despite protests over the opening the environmentally sensitive area to drilling.
Bidding for the acreage being offered by the federal government's Minerals Management Service (MMS) surpassed the previous record set in the early 1980s, underscoring how high oil prices have transformed high cost regions into hotspots.
Estimate
The federal government, in its latest budget, had estimated it would receive only $67 million for the acreage, said MMS Director Randall Luthi, who travelled from Washington to attend the sale. "It is now worth the money to explore some of these areas that were so expensive and are still so expensive to get into," Luthi told reporters after the bids were opened.
Royal Dutch Shell, which has targeted Alaska as a key area for exploration, lodged the highest bid, offering $105.3 million for a single exploration block.
The MMS believes up to 15 billion barrels of recoverable oil reserves and 77 trillion cubic feet of recoverable gas reserves lie beneath the Chukchi Sea.
Earlier exploratory activity confirmed the presence of oil but there was little interest in the area due to the high cost of producing oil in Arctic waters.
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