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Unocal announces Happy Valley gas discovery; KKPL holds open season
Unocal said Nov. 20 it has made a natural gas discovery at its Happy Valley prospect, part of the Unocal-operated Deep Creek unit, and southeast of the community of Ninilchik on the Kenai Peninsula in Southcentral Alaska.
The discovery well found 110 feet of natural gas pay and was followed by a successful appraisal well.
In a press release Unocal said it has approved development of the Happy Valley field and will likely drill three development wells in 2004.
First production from Happy Valley is planned for fourth quarter 2004. Average production from the field is expected to be 20-25 million cubic feet per day during 2005 at Henry Hub pricing, the company said.
The field is estimated to contain approximately 75-100 billion cubic feet of recoverable natural gas with finding and development costs averaging around 50 cents per thousand cubic feet, Unocal said. Binding open season Happy Valley gas sales will be under the Enstar Gas Sales Agreement, which Unocal signed in 2000, and covers the first 450 Bcf of gas that the company can deliver. The gas price is based on a 36-month trailing average of Henry Hub prices.
Kenai Kachemak Pipeline said Nov. 17 that it is holding “a binding open season for firm transportation service” for shipping gas “on a firm basis” on the proposed pipeline expansion project.
The company, which operates natural gas pipeline between the Ninilchik unit and the community of Kenai, said it “has recently been contacted by a potential shipper requesting that KKPL expand its existing pipeline system and has decided to hold an open season to determine the full extent of any interest by potential shippers” in the proposed expansion, which would be from the southern end of the exiting system in the Ninilchik unit to the Happy Valley exploration pad.
Marathon and Unocal are partners in the pipeline.
Kenai Kachemak said the primary purpose of the expansion, an extension of about 15 miles, would be to ship natural gas from Happy Valley. (See story in Oct. 12 issue of Petroleum News.)
Agreements are due Dec. 10, and would commit the contracting shipper to “a firm transportation service agreement” for at least 14 years. The 14-year commitments will be used to determine sizing of the system, Kenai Kachemak said, and once the expansion is in service, shippers will be able to contract for firm transportation for less than 14 years, or for interruptible transportation service, “to the extent of remaining available capacity.”
The pipeline extension is expected to be in operation in November 2004. More exploration wells Happy Valley is the second discovery for Unocal in its current exploration program on the southern Kenai Peninsula. The company participated with Marathon in the Ninilchik discovery in 2000, which is currently in production.
Unocal said it “has a growing inventory of exploration prospects in this emerging gas play” and plans to drill two to three additional exploration prospects in 2004.
“This is an important discovery for us and for our customer,” said Charles Pierce, vice president of the Unocal Alaska business unit. “We now have the basis for growth in this play as we have developed an attractive inventory of on-trend prospects. Having this kind of exploration leverage is a key element of our business unit’s and the company’s exploration strategy.”
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