Great hope for Kenai Peninsula oil and gas industry: Exploration continues as new fields are being developed.

• Author: Jones, Patricia

Since the Swanson River oil field discovery in 1957, Alaska's Kenai Peninsula has claimed a significant role in the state's developing oil and gas industry.

Now, after 45 years of development and continued exploration, the area is considered by most in the industry as a mature field, but one with opportunity remaining for additional discoveries.

"There's tremendous new hope," said Larry Houle, general manager of the Alaska Support Industry Alliance. "It is a mature field, but with today's technologies such as 3-D seismic ... there's a significant amount of optimism for the area."

Companies pursuing additional exploration opportunities in the area, both on the Peninsula and in the Cook Inlet area, include Phillips Petroleum, UNOCAL and Marathon Oil-all three part of the original Swanson River discovery. Others pursuing interests in the area include XTO Energy, Forest Oil and even smaller, independents such as Pelican Oil.

"Companies are really taking a hard look at some of the old fields," Houle said. "There's renewed enthusiasm about Cook Inlet, as a result of renewed exploration."

In addition to the area's oil and gas production, the Kenai Peninsula hosts several facilities that refine those raw energy products into useable materials ready for market. Those facilities include a liquefied natural gas plant, an oil refinery and a plant that converts natural gas into fertilizer. Added to the list most recently is a GTL test plant in Nikiski, which converts natural gas into a synthetic, clean-burning liquid that can replace diesel fuel.

Such refineries, coupled with oil and gas production work, provide nearly 700 well-paid jobs for South-central Alaskan residents. Average wages for employees of those oil and gas producers is almost $7,800 a month, according to an economic study completed by the McDowell Group and Information Insights.

An economic impact study of the oil and gas industry in Alaska was contracted by the Alliance and the Alaska Oil and Gas Association. Released in early 2001, the economic analysis is based on data collected from the industry in 1999, a somewhat slow year for the state's oil and gas industry, Houle pointed out.

According to the study, the oil and gas industry accounted for 26 percent of employment arid 36 percent of payroll within the Kenai Peninsula Borough.

"Clearly, the oil and gas industry is the largest private employer in the Kenai area," Houle said, referring to the study.

In addition to direct employment by producers, the study included in its employment and payroll figures indirect employment through producers' purchasing of goods and services and induced economic impact from employee spending in the area. The sum of those three employment categories puts the total number of oil and gas industry jobs in the Kenai Peninsula at 4,273, with a total payroll of $177 million annually.

"The oil industry has been a significant economic force in the Kenai Peninsula Borough for more than 40 years and is the single largest source of well-paying jobs in the region," wrote the authors of the economic report.

In addition to jobs and spending in local businesses, these natural resource producers provide valuable products for use by other Alaskans. Gasoline, jet fuel and diesel are produced at the Tesoro Refinery in Nikiski, and shipped throughout the state to the company's retail outlets.

"The oil and gas business has been a very strong driver for the Peninsula," said John Barnes, manager of Marathon...