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Providing coverage of Alaska and northern Canada's oil and gas industry
December 2012

Vol. 17, No. 50 Week of December 09, 2012

RCA approves service area expansion

With Red Pad Pipeline area added to certificate for Semco Energy’s Alaska Pipeline Co. subsidiary, Red Pad gas can move to market

Kristen Nelson

Petroleum News

With a pipeline in place and approval by the Regulatory Commission of Alaska, a natural gas discovery made by Union Oil Company of California in 2004 is expected to be moving to market soon.

The accumulation, at Red Pad in the Nikolaevsk unit some 14 miles southeast of Ninilchik on the southern Kenai Peninsula, has changed hands twice since its discovery. Chevron acquired Union Oil in 2005 and in July 2011 Hilcorp acquired Chevron’s Cook Inlet assets.

In a Nov. 30 order, RCA approved an application by Alaska Pipeline Co. to expand the service area in its certificate of public convenience and necessity to include the area of the Red Pad pipeline.

Alaska Pipeline Co., a Semco Energy subsidiary, is regulated on a consolidated basis with Enstar Natural Gas Co., a division of Semco. Enstar is Alaska Pipeline Co.’s only customer, RCA said, and is served under an intra-company special contract.

The Red Pad Pipeline is a six-inch coated steel pipeline running between Hilcorp’s Red Pad and Alaska Pipeline Co.’s Anchor Point Pipe Line.

Enstar spokesman John Sims told Petroleum News in a Dec. 4 email that the pipeline has been completed and tested.

Hilcorp spokesman Lori Nelson said in a Dec. 5 email that the Hilcorp team is working to expedite production and anticipates being operational on or before Dec. 15.

RCA said Hilcorp funded the Red Pad Pipeline through a contribution in aid of construction agreement.

The commission said its approval was based on the record and on Alaska Pipeline Co.’s 50 years of experience successfully operating pipeline systems, and on the “significant need to increase the production of natural gas in Southcentral Alaska.”

The project cost is estimated at $8.4 million and RCA is requiring filing of final costs within 60 days of completion.

Union Oil had agreed to study the possibilities of a line in early 2011, although that proposal was a line south to North Fork, to connect with the line Armstrong Cook Inlet was building to connect with the 21-mile extension Alaska Pipeline Co. had completed to its existing line on the Kenai Peninsula. Production from North Fork through a new line connecting to the Alaska Pipeline Co. extension began in early 2011.

In an agreement reached with the Alaska Department of Natural Resources’ Division of Oil and Gas in 2011 for extension of the Nikolaevsk unit, Union Oil agreed to commit to construction of a pipeline by the end of 2011 as a condition of extending the unit, formed in 2004.

The company’s Cook Inlet assets were up for sale at the time, and Union Oil specified in its fourth plan of development for the unit that should it sell its unit interests, the new operator would be bound by commitments in the plan and would be required to make the same pipeline construction decision by Jan. 1, 2012.

Hilcorp’s purchase of the Union Oil Cook Inlet assets was announced in July 2011.

The 2004 Red 1 well tested 3.2 million to 5.8 million cubic feet per day in a 26-hour test. The Red 2 well, also drilled in 2004, was tested but there were no measureable hydrocarbons.






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