Producers 2025: AIX faces declining production

Kenai Loop field showing signs of maturity as in 13th year of production focus on aligning gas sales with deliverability

Eric Lidji

for Petroleum News

As it begins its second decade in Alaska, AIX Energy LLC continues to be a quiet and reliable presence in the Cook Inlet basin as operator of the Kenai Loop field.

Its 11th plan of development for the onshore field (effective for the period from May 7, 2025, through May 6, 2026) consists of a single sentence. "AIX will focus on aligning gas sales with field deliverability," per Chief Operating Officer Ronald C. Nutt.

In a slightly more expansive description of the activities for its 10th plan of development, Nutt had written that the company was "focused on obtaining reservoir information to better understand field reserves and deliverability, identifying operational efficiencies, maximizing gas sales, and maintaining a safe operating environment."

The note about "field reserves and deliverability" points to the inevitable changes underway at the maturing natural gas field.

Kenai Loop produced 1.24 billion cubic feet in 2022, 736 million cubic feet in 2023, 725 million cubic feet in 2024, and 311 million cubic feet through the first half of 2025.

The large drop between 2022 and 2023 can be traced directly to the Kenai Loop 1-3 well, which scaled back production in December 2022 and was suspended in October 2023.

Since then, the Kenai Loop field has been producing from a single well: Kenai Loop 1-1, the field's discovery well.

This well is also showing signs of age. It produced 2.44 million cubic feet per day in 2022. Production dropped to around 1.98 million cubic feet per day in 2023 and remained flat through 2024. It is down to around 1.71 million cubic feet per day through the first half of 2025.

Kenai Loop came online in 2012. Production began declining in 2016 and accelerated around 2018. AIX Energy installed a new compression facility at the field in 2019, which appears to be the largest investment AIX Energy has made in its time as operator.

Through the end of June 2025, the Kenai Loop field had produced 28.4 bcf, according to the Alaska Oil and Gas Conservation Commission. A Ralph E. Davis Associates Inc. report from the early 2010s estimated the field contained some 31.5 bcf of natural gas.

AIX history

The acquisition made AIX Energy the operator of the Kenai Loop field.

AIX Energy quickly increased its leasehold nearly eight-fold to 8,882 acres in May 2016, up from 1,049 acres in April 2015 -- not counting Alaska Mental Health Trust leases.

AIX Energy marked 10 years in Alaska in 2024. In its first decade in the state, the independent company sometimes behaved more like a Lower 48 operator.

Alaska had become accustomed to an oil industry led by several large or mid-sized operators who pursue ongoing campaigns to develop large or mid-sized fields. And while that dynamic exists "outside" Alaska, too, the Lower 48 is also home to many smaller operators working to maintain daily profitability at small, marginal fields.

In its first decade in Alaska AIX Energy rarely conducted a development campaign, never drilled an exploration well, never farmed-out work and rarely traded assets. After an initial burst of acquisitions, it had rarely expanded its holdings. The private company doesn't issue press releases or hold investor conferences, preferring to speak through its required regulatory filings.

For 10-plus years now, the company has been steadily focused on one simple goal: maintaining production to meet contracted demand.

In fact, AIX has been more likely to shrink than expand. Since taking over the field in 2014, the company had removed one well from service and forfeited two leases.

The approach is a stark contrast with its predecessor.

Australian independent Buccaneer Energy, which acquired the leases at the Kenai Loop field in late 2010 and early 2011. The acquisition was part of an ambitious strategy of growth, perpetually focused on new opportunities. These included many undeveloped properties, as well as interests in an offshore jack-up rig during basin-wide efforts in the 2000s and 2010s to expand offshore exploration in Cook Inlet and also an onshore drilling rig.

Buccaneer eventually became overextended and filed bankruptcy.

In its first year as operator, AIX Energy resolved some outstanding issues from its predecessor and began evaluating some of the maintenance projects it could pursue. It also began working to establish various gas sales agreements throughout the basin.

AIX Energy secured a short-term supply contract with Chugach Electric Association in late 2014 and resolved a pre-existing contract dispute with Cook Inlet Energy LLC in mid-2015. The company later secured a supply contract with Enstar Natural Gas Co.

Toward the end of 2015, Chugach Electric Association asked regulators to extend its existing natural gas supply agreement with AIX Energy by eight years, to March 31, 2024, with the possibility of an additional extension through March 31, 2029.

The flexible contract allowed the parties to negotiate sales on a case-by-case basis with a price cap rising by approximately 2% each year and volumes up to 3 billion cubic feet annually.

By early May 2017, AIX had at least four supply contracts: a non-firm contract with Tesoro, a non-firm contract with an un-named company (likely Chugach Electric Association), a firm contract with Tesoro and a firm contract with Enstar Natural Gas Co.

By the fall of 2017, AIX Energy had renewed its sales agreement with Enstar Natural Gas Co. through March 2021, calling for firm gas supplies that would increase slightly each year.

In an early 2022 filing, AIX Energy revealed it was selling its gas volumes exclusively to a single, unnamed purchaser under a one-year "Firm as Available" contract.