State approves 2 production suspensions

Kristen Nelson

Petroleum News

The Alaska Department of Natural Resources’ Division of Oil and Gas has approved two production suspensions requested by Cook Inlet Energy, a Glacier Oil & Gas Corp. company.

The suspensions are both in Cook Inlet: the Redoubt unit and the West McArthur River unit, with the Sword participating area included as part of the West McArthur River approval.

In requesting the suspensions CIE-Glacier cited global low prices combined with a lack of demand (see story in June 7 issue of Petroleum News).

The division said CIE-Glacier has committed to keeping the facilities appropriately staffed and under continuous monitoring. “All oil producing wells will be shut-in, and all pipelines and flowlines will be purged, cleaned, and protected from freeze and corrosion.” In addition, vessels and tanks used in processing will be emptied and protected.

In the case of Redoubt, which produces from the Osprey platform and uses the onshore Kustatan production facility, those “will be maintained in ‘warm-standby’ status,” the division said.

The division said due to current market conditions, both globally and locally, oil and gas would be produced from the units “at marginal or loss-generating terms, and at significantly reduced royalty value for both the State and private mineral owners.” The plans in the request for suspension would “protect the public interest and CIE-Glacier by conserving the hydrocarbons until more favorable market conditions persist.”

The suspensions will run for the current terms of the unit plans of development, through April 30, 2021, in both cases. The division said should suspension of production be required past that date, it would require written request no later than 45 days from the expiration of the current plan of development.

- KRISTEN NELSON