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NEWS BULLETIN

July 16, 2013 --- Vol. 19, No. 47July 2013

Chugach signs new Hilcorp gas contract to 2018

Chugach Electric Association has asked the Regulatory Commission of Alaska to approve a new gas supply agreement with gas producer Hilcorp Alaska. The new agreement, together with Chugach Electric’s existing contracts, will ensure that the utility has sufficient gas to meet its anticipated power generation needs through the first quarter of 2018, Chugach Electric says.

Faced with pending gas supply shortages from the Cook Inlet basin, Southcentral utilities had been anticipating having to import gas into the region within the next couple of years or so. But with Hilcorp, a newcomer to the basin, pursuing an aggressive development program across many of the basin’s gas fields, the utilities have recently been talking about the projected gas shortfall moving out to 2018. The new supply agreement with Chugach Electric, which runs from the beginning of 2015 to early 2018, would appear to confirm that more optimistic view of the gas supply situation.

According to a July 12 tariff advice filed with the Regulatory Commission of Alaska by Chugach Electric, the utility anticipates purchasing about 17.7 billion cubic feet of gas from Hilcorp during the term of the purchase agreement, with pricing following price caps specified under a consent decree agreed between Hilcorp and the State of Alaska to address anti-trust concerns following Hilcorp’s takeover of both Chevron’s and Marathon Oil’s Cook Inlet gas fields.

—Alan Bailey

Buccaneer completes Cosmo No. 1 well

Buccaneer Energy Ltd. recently finished drilling the Cosmo No. 1 well and now plans to test a relatively shallow oil discovery at the Cook Inlet prospect, the company said today.

The local subsidiary of the Australian independent said it has drilled the offshore well to a total depth of 7,599 feet, slightly shallower than its initial target of 8,000 feet. Now, Buccaneer plans to install a 7-inch liner in the well to accommodate a production test of an oil discovery at the base of the Tyonek formation, according to the company.

Buccaneer said it collected 60 sidewall core samples, six hydrocarbon samples (one gas and five oil) and 27 pressure results using a Modular Formation Dynamics Tester.

As previously announced, Cosmo No. 1 encountered oil-bearing sands in the Lower Tyonek, some 400 feet shallower than the oil shows in previous Cosmopolitan wells. All told, according to Buccaneer, Cosmo No. 1 encountered some 488 feet of “indicated oil and gas pay,” including 18 gas zone and eight oil zones, in the Tyonek formation.

The well also found oil in the Starichkof and Hemlock formations, where previous Cosmopolitan wells discovered hydrocarbons. Cosmo No. 1 found 43 feet of “indicated” oil pay in the Starichkof and 149 feet of “indicated” oil pay in the Hemlock, according to the company. “Not all of the zones intersected will be flow tested,” Buccaneer said.

Buccaneer is the operator of the Cosmopolitan prospect and holds a 25 percent working interest in the leases there, with BlueCrest Energy Inc. holding the majority stake.

Buccaneer drilled the well using the Endeavour jack-up drilling rig.

—Eric Lidji

See stories in July 21 issue, available online at 11 a.m. Friday, July 19 at www.PetroleumNews.com

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