Cook inlet challenges: pursuing increased Southcentral Alaska oil and gas production.

• Author: Orr, Vanessa
• Position: OIL & GAS

[ILLUSTRATION OMITTED]

Alaska is a land rich in natural resources, and the Cook Inlet region, located in Southcentral, is no exception. Home to both oil and gas reserves, the area boasts a number of producing wells, and companies continue to invest time and money in the quest to find even more productive sites.

Yet, even as companies such as ConocoPhillips, Chevron Corp., Marathon Oil Corp., Pioneer Natural Resources and XTO Energy blanket the region, there are obstacles on the horizon. March's explosion of Mount Redoubt halted production at many of Chevron's facilities, and forced the offloading of oil from the Drift River Terminal, located 22 miles from the summit, to a safer locale. Decreasing supplies of natural gas are not only affecting the bottom lines of some of these companies, but also threaten the sustainability of villages in Southcentral that rely on affordable gas to make it through the winter. Commodities prices, for many years not a concern, are now affecting the ability of oil and gas companies to fund exploration and expansion projects.

Despite these challenges, Alaska's oil and gas producers continue to look at the region as a place well worth their while. "We're actively drilling wells and working over our older wells to keep things productive," said Erec Isaacson, vice president, Commercial Assets Alaska, ConocoPhillips. "We're committed to Cook Inlet."

THE BIG PICTURE

According to an Alaska Oil and Gas Association (AOGA) educational update, "Cook Inlet Challenges and Opportunities" by Steve Wright, asset development manager for Chevron Alaska, Cook Inlet is currently home to seven offshore fields (four oil and three gas) and 16 offshore platforms, 12 of which are active. There are 29 onshore fields (26 gas and three oil) and three gas-storage facilities in the region. Oil production currently equals 13,200 barrels of oil per day (BOPD) with total gas production equaling 412 million cubic feet of gas per day (MMCFPD).

While Cook Inlet oil production has declined dramatically from a high of 200,000 BOPD, gas level supply also has recently begun to decline from historic levels. Wright said gas deliverability from the Inlet's four largest fields--Beluga River, north Cook Inlet, McArthur River and Kenai--are currently producing approximately 9 billion cubic feet per month, down from 14 billion cubic feet per month in early 2004.

"Cook Inlet has transitioned from a production region with a significant overhang in natural gas...