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THE EXPLORERS 2004: North Fork project closer to development NorthStar’s southern Kenai Peninsula unit gets funding for second well, gasline north to KKPL Kay Cashman Petroleum News
In mid-August 2004, Alliance Energy of Tulsa, Okla. announced it had agreed to fully fund development of NorthStar Energy Group’s North Fork unit on Alaska’s southern Kenai Peninsula. The deal included ‘fast-tracking’ a pipeline north to connect the gas field with Kenai Kachemak Pipeline gasline to Kenai and drilling a second well in the unit so that a gasline could be built south to Homer, which has no source of natural gas.
Under a farmout agreement between Alliance and NorthStar, development of the North Fork field east of Anchor Point would include drilling the second well (No. 41-36,) “as soon as January 2005,” NorthStar President Barry Foote told Petroleum News Aug. 19, 2004. (The lion’s share of the North Fork field is held by field operator Gas-Pro, which is owned by NorthStar.) Homer agreement with Enstar gets approved Foote also said the Regulatory Commission of Alaska issued final approval in the summer of 2004 for the gas sales agreement between Enstar Natural Gas Co. and NorthStar, which would bring natural gas from North Fork to Homer.
Dan Dieckgraeff, Enstar’s manager of finance and rates, told Petroleum News a year ago, when the companies first announced the agreement, that following RCA approval it would probably take a year and a half to two years to begin delivering gas to Homer. Commission approval, he said, was just the first step.
In October 2004, Dieckgraeff said the contract with NorthStar called for part of the line to be built by each firm with Northstar obligated to construct a pipeline to transport gas from its leases to Anchor Point and Enstar required to construct a pipeline extension from Anchor Point to Homer and install local gas distribution facilities in Homer.
The 20-year gas supply agreement, Dieckgraeff said, also called for “redundant deliverability of reserves” – i.e more than one well to supply Homer. (The existing well, never produced, was drilled in 1965 by Standard Oil of California when it was looking for oil.)
“We don’t want to hang the town on one well. We want to have a second source for gas in case we have deliverability failure at one place,” Dieckgraeff said.
NorthStar must also prove up its gas reserves and, using an independent petroleum engineer, that its leases constitute a commercial quality gas field. Specifically, the agreement between NorthStar and Enstar calls for 14.5 billion cubic feet of “present proven reserves,” RCA said.
Gas to go north, too Initially, the commission said, “these pipelines would not be interconnected with the existing gas pipeline network on the Kenai Peninsula. However, NorthStar has said it hopes to find sufficient gas reserves to exceed the gas volumes necessary to meet Enstar’s load in Homer and to interconnect with the KKPL. NorthStar would like to sell additional gas into the Southcentral market so it contemplates building a pipeline to Anchor Point large enough to accommodate both the gas necessary to serve Enstar plus additional volumes.”
Part of the reason Northstar was looking at also going north with its gas was because the Homer market was “too small a market to justify development of a single well,” Northstar said in public comments to RCA.
At the end of three years of service Enstar expects to be serving 1,500 customers in Homer, Dieckgraeff, said. The 10 to 11 mile four-inch pipeline to Homer will cost about $3.5 million.
Willbros, ENSR handling pipeline north Alliance has engaged Willbros Pipeline Engineers and ENSR “to permit and build the pipeline north” to connect with the KKPL, Foote said in August.
He also mentioned the possibility of his company building the entire line to Homer; something he said he was interested in talking to Enstar about.
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