Job Outlook in Cook Inlet: LNG project could create thousands of openings.

• Author: Shipe, O'Hara
• Position: OIL & GAS

Alaska's first oil claims were filed in the 1890s on the Iniskin Peninsula on the west shore of Cook Inlet. In 1898 the first well was drilled, and although it produced marginal amounts of oil, it was not enough to support production and the well was largely abandoned until the 1960s.

Following Alaska statehood, oil companies began to buy exploration leases in Cook Inlet in hopes of striking it rich. A total of twenty successful wells have been drilled in the upper Cook Inlet and all but four are still in production, but the area is still only classified as a moderate-sized deposit.

Until recently, Cook Inlet has been disregarded as a depleted oil and gas producing basin, but that's beginning to change. Cook Inlet's modest production has been increasing since 2015, reaching 15,000 barrels per day in 2017. According to the Resource Development Council, increased production occurred after 2013 when Alaska changed its oil tax policy from tax credits based on investment to credits based on production. With lowered tax rates for producing wells, the new tax system made Alaska more competitive and an attractive place to invest.

Texas-based Hilcorp submitted more than $3 million in bids securing 76,615 acres at the federal lease sale and an additional 26,822 acres at the state lease sale. Hilcorp was the only bidder in both instances, but that is not entirely uncharacteristic of the company that has made a specialty out of acquiring declining fields and reinvesting to rebuild them.

Hilcorp's investment could not have come at a better time: statewide, the oil and gas industry has lost about 4,000 jobs since peaking at 14,800 in 2014. Support industries such as construction are also reporting continued job losses. However, the Anchorage Economic Development Council's 2018 Economic Forecast suggests that employment will stabilize statewide in 2018.

The State of Oil and Gas in Cook Inlet

Although Hilcorp plans to drill up to six new wells in Cook Inlet, the project that has garnered the most attention is their proposed cross-inlet pipeline. Estimated to cost $73 million, the new pipeline would repurpose an existing natural gas pipeline as an oil line to feed Hilcorp's Nikiski Refinery. The plan also includes constructing nearly nine miles of new subsea and onshore pipelines. Once realized, the pipeline would cut down on the number of oil toting barges traveling across the inlet. Hilcorp believes this will not only reduce the price of oil production...