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NEWS BULLETIN

August 24, 2006 --- Vol. 12, No. 54August 2006

MMS includes Chukchi, North Aleutian basin in new 5-year plan

Alaska would see federal outer continental shelf lease sales in four areas under a proposed five-year plan and draft environmental impact statement issued today by the Minerals Management Service.

The Chukchi Sea has the most proposed sales in the Alaska OCS ó Sale 193 in 2007, Sale 212 in 2010 and Sale 221 in 2012. MMS said the Chukchi Sea sale area has been modified from the draft program it issued in February: a 25-mile buffer area along the coast has been removed from the proposed program, since there is no existing oil and gas activity in the area and the State of Alaska made no request to include leasing closer to shore.

Two Beaufort Sea OCS sales are proposed, Sale 209 in 2009 and Sale 217 in 2011.

There are two Cook Inlet sales on the proposed schedule, Sale 211 in 2009 and Sale 219 in 2011, but MMS said the Cook Inlet planning area is included as a special interest sale, which will take place only if enough interest is shown by industry in answer to a nomination call.

The North Aleutian basin also appears on the proposed sale schedule.

MMS said Alaska Gov. Frank Murkowski and the majority of local governments and tribal organizations requested that proposed sales in this area take place only in the area offered in Sale 92, held in 1988. The North Aleutian Basin planning area is currently withdrawn by presidential order under section 12 of the OCS Lands Act, MMS said, but the governor has requested that the president modify his withdrawal to allow sales in the Sale 92 area. If held, those would be Sale 214 in 2010 and Sale 223 in 2012.

The Department of the Interiorís MMS said the second draft of the new leasing plan would succeed the plan expiring on June 30, 2007. The agency will accept comments through Nov. 24; the draft EIS is open for comment until Nov. 22.

Enstar proposes connecting Homer to natural gas

Enstar Natural Gas Co. has made a new proposal for supplying natural gas to the city of Homer on Alaskaís Kenai Peninsula.

In a recent presentation to Homerís city council Enstarís Curtis Thayer and Charley Hernandez said that the utility could connect Chevronís Red gas well, approximately 14 miles southeast of Ninilchik on the Kenai Peninsula, to Homer by a new high-pressure gas line.

The new gas line would also connect to the north with the existing Kenai Kachemak gas pipeline.

The estimated cost for all the necessary gas lines is $30 million. The project would take about four years to complete and would significantly reduce the cost of energy in Homer, Enstar said.

Unocal (now part of Chevron) drilled two exploratory wells from the Red pad in the southern Kenai Peninsula Nikolaevsk unit in 2004.

In 2003, NorthStar Energy contracted with Enstar to supply gas to Homer from its North Fork unit, also on the southern Kenai Peninsula. Alliance Energy, a sister company to NorthStar, was going to build a pipeline from North Fork to Anchor Point to connect with a pipeline that Enstar would build from Anchor Point to Homer. But that deal was contingent upon NorthStar/Alliance drilling a second North Fork well to establish sufficient proven reserves to supply Homer with gas for 20 years.

A second well was not drilled in the North Fork unit.

In July, NorthStar told Enstar it could not fulfill the Homer gas supply contract.

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Editorís note: See full stories in the Sept. 3 edition of Petroleum News, available at noon on Friday, Sept. 1, online at www.PetroleumNews.com.

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