Mental Health land leased for oil and gas development

MAT-SU -- The Alaska Mental Health Trust Authority land office recently accepted 17 bids on about 80,000 acres the nonprofit corporation had available for oil and gas development in the Cook Inlet area.

In the Trust land office's 2004 lease sale, 39 tracts were offered and 21 bids received on 17 of the tracts.

According to information from the land office's Web site, bids were received from Unocal and Marathon Oil for tracts on the Kenai Peninsula, and from Aurora Gas LLC, Forest Oil Co. and Storm Cat Energy Corp. For tracts on the north and west sides of Cook Inlet. Of the 19 leases in the Mat-Su, most were in the Beluga area, and Denver-based Forest Oil and Gas was listed as the high bidder for those tracts. Storm Cat Energy Corporation of Calgary leased two tracts near Big Lake. Last month, Scott Zimmerman, formerly the vice president of operations and engineering for Evergreen Resources Inc., was chosen as Storm Cat's company president.

No bids were apparently issued on four leases near Chickaloon.

"I am very pleased with today's outcome," Franger said in a press release issued last week. "With this sale, the trust nearly doubled the acreage it has leased in the Cook Inlet area since the inception of our leasing program. We look forward to working with the lessees in their efforts to explore and hopefully develop oil or gas production from trust land."

The land sale is the fourth held in three years by the land office. The office, he said, exists to manage the land provided through the Alaska Mental Health Enabling Act of 1956.

"[The land] has to generate revenue to support Mental Health Trust actions in the state," Franger said. "We take the income from the trust to spend on programs."

Franger said the land office made $15 million last year on land-trust actions, such as land leases, timber sales and revenue from development on leases. The oil and gas portion, Franger said, has not yet proved productive, although it's gaining in popularity.

Land leased under the 2004 oil and gas lease sale, Franger said, is subject to a five-year lease, and any activity happening on the leased land falls under the jurisdiction of state and federal agencies monitoring oil and gas development actions.

Friends of Mat-Su employee Jody Gilbert said the group was disappointed in the under-the-radar public notice given about the lease sale.

"We do this for a living, looking for this information, and we still didn't know," Gilbert said. She said the group was aware land was going to be leased, but could not find information about the public-comment period. "Communication within that whole department, we feel, could be improved."

Franger said public notice was given prior to the lease sale, through advertisements published in Anchorage Daily News, in an article published in Petroleum News and on the state's Web site.

Being an organization operating through a trust, the trust's approach to public comments is different than other state or local agencies' approaches may be.

"We have to manage trust land for the purpose of benefiting the beneficiaries of the trust," Franger said.

Contact Rindi White at rindi.white@frontiersman.com