Buccaneer Energy Ltd. is the newest natural gas producer in Alaska.
The Australian independent brought the Kenai Loop No. 1 well online on Jan. 14, according to the company. Buccaneer said it expects to produce up to 5 million cubic feet per day from the well for up to three months while it monitors reservoir pressure.
Through contracts negotiated last year, the company will sell Kenai Loop gas either into Enstar Natural Gas Co.’s daily winter auction, a local spot market for supplies during peak demand, or to ConocoPhillips for use in the Kenai liquefied natural gas facility.
“We are extremely proud of the speed and efficiency our team has displayed in going from discovery to permitting and production at Kenai Loop in less than nine months. This includes the construction of a pipeline and the facilities necessary to drill, produce and transport a substantial amount of natural gas,” Buccaneer Director Dean Gallegos said in a statement. “Buccaneer is looking forward to an active 2012 with drilling at Kenai Loop likely to commence in second quarter 2012, prior to the start of its offshore program.”
Once sustained production begins from Kenai Loop, Enstar plans to use the supplies to meet its contractual obligations to Cook Inlet Natural Gas Storage Alaska’s storage facility on the Kenai Peninsula, expected to come online in the first half of this year.
Pricing ‘standard’
Like other recently approved gas supply agreements in Cook Inlet, pricing in the contract is indexed to the New York Mercantile Exchange gas futures, with additional floor and ceiling prices adjusted for inflation. The price won’t drop below $5.75 per thousand cubic feet between March and November or $6.85 per thousand cubic feet between December and February, and won’t go above $10 per thousand cubic feet.
The contract requires Buccaneer to deliver a total of 12 billion cubic feet to Enstar, with an option to increase that total volume to 31.5 bcf, pending successful follow-up drilling.
The contract also requires Buccaneer to complete two new wells at Kenai Loop. The company met its first deadline last year and must drill it second well by Nov. 1, 2013.
—Eric Lidji
