NEWS BULLETIN

September 09, 2004 --- Vol. 10, No. 76September 2004

Native corporations drop out, Thompson seeks other gasline investors

With the withdrawal of MidAmerican Energy Holdings Co. as a potential developer for an Alaska gas pipeline, 12 Alaska Native regional corporations elected not to meet a deadline for investment in Pacific Star Energy LLC, an Anchorage-based company formed by former ARCO executive Ken Thompson to give Alaskans a vehicle for equity investment in a natural gas pipeline from the North Slope to outside markets.

“After the MidAmerican deal fell through in late March PSE lost a lot of momentum with the Alaska Native corporations,” Thompson said. He said some of the CEOs of the Native corporations told him that when a new deal does come together they will likely form a new Native consortium instead of investing in PSE, “although they will look at both consortiums and decide which is best at that time.”

Thompson was urged by some Native leaders to dissolve PSE, but he disagreed: “It is important to keep visible and continue working with all Alaskans,” including the non-Native companies he had been talking to before MidAmerican came into the picture in January.

“I bought back all the stock myself. I still believe in the vision of having an Alaska-owned company for investment in a gas line; one that’s available for all Alaskans,” Thompson said.

Thompson’s goal for the coming year is to approach all interested Alaska private and corporate investors, including “alliance contractors, Native village corporations and individuals.”

Unocal to start producing Happy Valley at Deep Creek in November

Unocal has applied for a participating area at Happy Valley in the company’s Deep Creek unit on the Kenai Peninsula, and has told the Alaska Division of Oil and Gas that gas will be in production from Happy Valley in November.

Unocal drilled eight Happy Valley wells this year and last, is building a pipeline to connect Happy Valley to the Kenai Kachemak Pipeline and has begun installation of a gas processing facility on the main Happy Valley pad.

The company told the state the individual reservoirs were complex and have a low rate of production and in order to make the accumulation economic it will be necessary “to commingle production and combine the Lower and Upper Tyonek reservoirs into one participating area.”

Unocal also said combining the reservoirs “facilitates the seasonal deliverability of gas in the winter and storage of gas in the summer, significantly increasing the economic viability of the Deep Creek unit.”

The company plans to drill two or more development wells in the Happy Valley area over the next year and may also drill additional development wells in the Star development area “depending on the results of the recompletion work and uphole zone testing in the Star No. 1 well.”

Editor’s note: see full stories in Sept. 12 issue of Petroleum News.


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