Cook Inlet oil questions.

• Author: Richardson, Jeffrey
• Position: Cook Inlet, Alaska

Arco has announced that its Sunfish strike in Cook Inlet may have 750 million barrels of crude. Industry experts speculate about changes the find will spark throughout southcentral Alaska.

Analysts are grinning from ear to ear at Arco Alaska Inc.'s announcement last month that the Sunfish discovery in Cook Inlet may contain as much as 750 million barrels of oil. On the street, jubilation was contagious, with some optimists casually rounding the published figure up to a cool billion barrels and others spending the greenbacks sure to follow the flow of crude.

"I was pretty thrilled," says David Johnston, chairman of the Alaska Oil and Gas Conservation Commission, who was traveling outside the state when he heard Arco's announcement. He predicts "tremendous benefits" for the economies of Anchorage and the Kenai Peninsula. "It just staggers the imagination, it's huge."

Johnston, whose agency is responsible for overseeing industry efforts to obtain maximum productivity from Cook Inlet oil field, says it would be reasonable to expect that 30 percent to 50 percent of the 750 million barrels in reserves to be recoverable, given current technology and geologic understanding. While Arco's reserves estimate indicates the field is larger than Cook Inlet's McArthur field, Johnston says that from the standpoint of productivity, the two fields are comparable. The 600-million barrel McArthur field produced a peak of 45 million barrels a year during the 1970s.

Other industry experts agree the announcement is good news, but they, along with Arco officials, note there is work yet to be done to understand in detail the size and limits of the discovery.

"I don't think they know yet how they intend to develop it," says state petroleum specialist Dr. Charles Logsdon.

State labor economist neal Fried agrees that the 750 million barrels is an "impressive" figure, but says it's early to make assumptions about employment and other economic impacts. He notes that some production platforms in the North Sea are fully automated, an obvious damper on employment. While development of Sunfish will undoubtedly help sustain economic growth in southcentral Alaska and forestall the state's budgetary crisis, Arco's announcement does not presage a boom, in part because so much of the needed infrastructure is already in place.

"The psychological boost, although immeasurable, may be more important than any of the other things," says Fried.

According to Johnston and Logsdon, one of the most important benefits of the Arco delineation at Sunfish is that other oil companies are likely to perceive Alaska as a viable exploration risk and consider making new investments in the state. This would help reverse a recent trend for oil companies to invest exploration dollars overseas.

The techniques employed by Arco to delineate its discovery are still a matter of speculation, and according to a company spokesman, this information is proprietary. Although such technical angles are...