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NEWS BULLETIN

March 24, 2010 --- Vol. 16, No. 20March 2010

Chevron pulls back on Cook Inlet natural gas storage at Ivan River

Chevron has informed Alaska officials the company is withdrawing its application for a state lease to store natural gas in the Ivan River unit on the west side of Cook Inlet.

Shannon Martin, a Chevron land representative, broke the news in a brief letter dated March 23 to Tom Irwin, Alaskaís natural resources commissioner.

The letter gave no reason for the application withdrawal.

Chevron, acting through its Unocal subsidiary, on Jan. 13 applied to the state Department of Natural Resources for the gas storage lease. The company also applied to the Alaska Oil and Gas Conservation Commission for an order authorizing underground gas storage in the Ivan River unit.

Chevron already has considerable Cook Inlet gas storage capacity, holding a state lease in the Pretty Creek unit and a federal lease in the Swanson River field.

Gas storage is a hot topic in Alaska and could achieve an even higher profile today, when the state House of Representatives is expected to vote on House Bill 280, known as the Cook Inlet Recovery Act.

The bill, whose prime sponsor is Republican Rep. Mike Hawker of Anchorage, provides tax credits and other incentives for companies to develop gas storage capacity in Cook Inlet.

Political leaders, utility managers and regulators view gas storage as a partial answer to Cook Inletís dwindling gas production and rising deliverability difficulties during cold winters.

Inlet gas is the main fuel for heating and electric power generation in Southcentral Alaska, the stateís main population center.

Kevin Banks, the stateís oil and gas director, told Petroleum News on March 23 he didnít believe Chevronís decision on Ivan River had to do with HB 280. That legislation likely would help rather than hinder the storage project, he said.

Editorís note: See full story in the March 28 issue of Petroleum News, which will be available online at noon on March 26 to subscribers at www.petroleumnews.com.

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