March 05, 2002 --- Vol. 8, No. 24March 2002

EIA official says U.S. not counting on Alaska gas to meet rising demand

United States gas consumption is likely to rise 48 percent by 2020, but Alaska gas isn't being counted on to help meet that demand, said a senior official with the U.S. Energy Information Administration.

The EIA's annual energy outlook doesn't factor in a proposed pipeline from Alaska's North Slope unless gas prices rise substantially, James Kendall, director of the EIA's oil and gas forecasting and analysis division, told a Calgary conference March 4.

He said the EIA assumes gas prices will have to reach $3.50 per thousand cubic feet, and remain there for three to four years to make an Alaska Highway pipeline viable.

"The pattern of pricing is really crucial," said Kendall.

He said the EIA expects demand will rise by 2 percent a year, despite last year's slump of 4.8 percent due to the economic slowdown and a price spike of $10 per thousand cubic feet.

The bulk of the new supplies will come from the Gulf of Mexico and non-conventional sources, such as coalbed methane, Kendall said, adding that Canada is expected to meet about 15 percent of U.S. consumption, the same level as in 2000.

Robert Daniels, president of Anadarko Canada Corp., said the fall in gas prices over the past year is the result of a "perfect storm of low commodity prices.

"Demand will grow and that will support higher prices. We think gas prices will stabilize in the $3 range," he told the conference.

February ANS crude oil production down slightly from January

The North Slope's two newest fields Alpine and Northstar reached production levels at or above capacity during February. But loss of the main compressor at Northstar from Feb. 8 through Feb. 14 decreased output from that field to volumes below 8,000 barrels per day for six days.

Northstar production averaged 36,140 bpd in February, up 1.13 percent from 35,736 bpd January.

BP Exploration (Alaska) spokesman Ronnie Chappell told PNA March 5 that BP has two high-pressure compressors at Northstar. One of the compressors had a mechanical problem and BP was required to take it offline.

"Normally, if we had completed the process of commissioning the field we would have had a second compressor to bring on line in its place," Chappell said, but functional checkout hadn't been completed on the second compressor so it wasn't available to bring into immediate service. Production began from the Northstar field in November.

The second compressor is now up and running and field production has reached rates in excess of 60,000 bpd, Chappell said. "Overall startup has gone very well," he said: "We continue to line out the plant and production from the field has been on track with expectations."

Alpine came online in November 2000 rated for 80,000 bpd but has been de-bottlenecked to handle some 100,000 bpd. The field averaged 98,398 bpd in February, down 2.4 percent from a January average of 100,817 bpd.

Overall North Slope production for February averaged 1,051,894 bpd, down 0.4 percent from a January average of 1,056,222 bpd.

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