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February 2013

Vol. 18, No. 6 Week of February 10, 2013

Cook Inlet Energy gains gas security

Anchorage company reworks gas well on its Osprey platform to provide a cost-effective source of fuel for its oil field operations

Wesley Loy

For Petroleum News

Cook Inlet Energy LLC has cured its problem of securing affordable natural gas to fuel oil field operations.

The Anchorage-based company says it ran a successful test Jan. 26 on a recently recompleted gas well in its offshore Redoubt unit, then immediately put the well into production.

The RU-4A well, on the company’s Osprey platform, tested at a peak flow rate of 1.7 million cubic feet of gas per day, a Jan. 30 press release said. The well taps the Lower Tyonek gas sands at a measured depth of about 9,200 feet.

“Based on log analysis and well test results, the average net pay is 11 feet with an aerial extent of 130 acres,” the press release said. “Initial estimates of recoverable reserves by the company’s geologists are in excess of 1 billion cubic feet of gas.”

‘Critical’ need

The new production from the RU-4A well allowed Cook Inlet Energy to suspend purchases of gas supplies from third parties on Jan. 28.

The company had made establishing its own fuel gas supply a high priority due to a tight area gas market.

“We could clearly see that a secure supply of fuel gas was critical to keep operating costs down and to provide for security of supply,” said David Hall, Cook Inlet Energy chief executive. “Therefore, we’ve concentrated on developing fuel gas supplies before executing our oil development program.”

The company is working to restore production from shut-in and damaged oil wells on the Osprey platform, which the company and Miller acquired out of a bankruptcy sale in late 2009.

The Osprey platform is the newest and southernmost of the platforms in Cook Inlet.

Aside from the Redoubt unit, Cook Inlet Energy operates an assortment of other properties on the inlet’s west side, including the West McArthur River oil field.

Cook Inlet Energy is a subsidiary of Tennessee-based, publicly traded Miller Energy Resources Inc.

Mounting costs

The Jan. 30 press release from Miller said: “In the last three months CIE’s natural gas expenses have been approximately $450,000 per month. Declining gas supplies in the region have caused prices to increase significantly and have made it difficult to obtain contracts for the purchase of natural gas. The Cook Inlet lacks a spot market for natural gas, and all gas must be purchased under a contract. CIE’s fuel gas acquisition costs reached $15 per thousand cubic feet this winter and were projected to increase over the winter months.”

Aside from its Cook Inlet production, Miller Energy also has production in Tennessee.

The company, listed on the New York Stock Exchange, on Feb. 1 announced it had retained MZ Group as its investor relations adviser.

MZ Group will help tout what Miller’s chief executive, Scott M. Boruff, called “a tremendous base of both producing and undeveloped assets in Alaska and Tennessee.”






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