Introduction
The Division of Oil and Gas (DOG) in the Alaska Department of Natural Resources is the state agency responsible for leasing the state lands for oil and gas exploration and development. According to the DOG, the State of Alaska generates approximately 80 percent of its revenue from oil and gas-related activities. The DOG maintains records of all oil and gas lease sales in Alaska since 1959, covering nearly 17 million acres of leased land. The agency also monitors lease agreements and manages all rental, royalty and bonus payments.
Auction Mechanism
The state statute requires oil and gas leases to be sold by competitive bidding. The State of Alaska allocates drilling rights to private firms through first-price sealed-bid auctions. Approximately 9,000 tracts have been offered and 6,000 of them successfully sold since 1959. A typical lease auction works in the following manner. Potential bidders must qualify with the DOG prior to submitting bids. The state sets a fixed royalty rate at 12.5 percent, which represents the portion of oil and gas taken by the state, either in-kind or in-value. When the state collects the in-kind royalty, it takes physical possession of its share and sells it. When the in-value royalty is collected, the lessee maintains possession of the state’s share and pays the state for it. To auction a tract, the state solicits bids for the bonus (a per-acre, lump-sum payment made at the time of leasing), requiring a minimum bid of either $5 or $10 per acre. The lease is awarded to a qualified bidder with the highest bid. The DOG occasionally requires interested parties to bid on other variables instead of the bonus payment, such as royalty rate or net-profit sharing rule. Lease terms are 5, 7 or 10 years, depending on the location of the tract.
Auction Data
The data was extracted from the records of the Division of Oil & Gas in the Alaska Department of Natural Resources. The data set includes selected information for every oil and gas lease sale held in Alaska during 12/10/1959 – 09/01/2006 period. Each tract is identified by a unique Alaska Division of Land (ADL) number. The winning bidder, winning bid, bid variable, and other fixed terms of lease data are available for 9,248 auctions. Other limited drilling information, such as well type, depth and location, is included as well.