|
AOGCC accepts Forcenergy royalty reduction plan Company describes work plans, policy, local hire, contracts for work at West Foreland, Redoubt Kristen Nelson PNA News Editor
At a Jan. 5 hearing, the Alaska Oil and Gas Conservation Commission accepted plans from Forcenergy Inc. which qualify the company’s developments at Redoubt and West Foreland for state royalty reduction.
The fields are eligible for the royalty reduction under legislation enacted to encourage local hire and production from Cook Inlet fields discovered but not in production.
The Redoubt field plan is for Forcenergy’s five-lease 23,526-acre unit offshore in Cook Inlet north of Kalgin Island. Development at the field involves a platform, which Forcenergy plans to transport from Korea to Cook Inlet in the first and second quarters of this year. Delineation drilling would begin in the third and fourth quarters.
The West Foreland field is defined by a discovery gas well, the West Foreland No. 1, drilled by Pan American Petroleum Corp. onshore on the west side of Cook Inlet in 1962. Forcenergy acquired the lease from Phillips Petroleum Co. Gary Carlson, Forcenergy vice president for Alaska, told the commission that the pipeline and road are in between West Foreland and the company’s West McArthur River field where the gas will be used for fuel. Carlson said he doesn’t anticipate production before this summer. In response to a question from Commissioner Cammy Oechsli, Carlson said that royalties from the West Foreland lease would be paid to the Minerals Management Service, as production will not be from a state but from a federal lease. The royalty reduction program is for state leases only.
Five percent royalty The royalty reduction was adopted in 1998 and grants a reduction in the state’s royalty to 5 percent for the first 25 million barrels of oil and the first 35 billion cubic feet of gas produced in the 10 years following the beginning of production provided that production begins by Jan. 1, 2004.
Eligible Cook Inlet sedimentary basin fields named in the legislation include six fields discovered before Jan. 1, 1988, and undeveloped or shut in from at least Jan. 1, 1988, through Dec. 31, 1997: Falls Creek, Nicolai Creek, North Fork, Point Starichkof, Redoubt Shoal and West Foreland.
The commission’s role, as defined is the legislation, is to “accept written plans submitted by lessees,” hold a public hearing within 45 days and “grant approval of the plan if the plan contains a voluntary agreement by the lessee to use its best efforts to employ residents of this state, consistent with law, and to contract with firms in this state for work in connection with the development of the field, including the fabrication and installation of required facilities, whenever feasible.”
Local hire commitments Carlson presented Forcenergy’s policy on working with local communities and said that with the exception of himself and three “returning” Alaskans, Forcenergy’s Alaska staff had all been hired in state. Carlson also presented lists to the commission of individuals and companies providing work for the two fields. Forcenergy was substantially into the Redoubt project when the legislation was passed, he said.
There was no way to get the Osprey platform build locally, Carlson said, although the company did look at using a concrete platform which could have been built locally, but found it would have taken longer to permit a yard to build the platform than to actually construct the platform. For a feasibility study and engineering, he said, the company needed worldwide experience.
The living quarters, however, were built by VECO and Alaska-based subcontractors and will be towed to Korea this spring for installation on the platform. For platform installation, Carlson said that Forcenergy asked for bids from two local firms: one declined to bid; one wasn’t competitive. Stoltz Comex Seaway was selected as project manager. It’s a worldwide firm with Alaska experience, he said, and will be using local subcontractors.
|
