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Unocal budgets $112 million for exploration, pipeline 2001-2003 Three exploration wells drilled this year, two more planned; eight wells for 2002 including Deep Creek, Anchor Point Kristen Nelson PNA Editor-in-Chief
Unocal Alaska has budgeted $112 million for Cook Inlet gas exploration and pipeline work from 2001 through 2003, Dan Thomas, manager of gas marketing Alaska for Unocal Global Trade, told the Alaska Legislature’s Joint Committee on Natural Gas Pipelines Nov. 8.
For this year, the figure is $8 million; in 2002 it is $49 million and in 2003 $55 million.
The company has also applied for two new Kenai Peninsula units, Thomas said (see story page 9), has drilled three exploration and innovative step-out wells on the Kenai Peninsula this year and has two more exploration wells planned for this year.
Without Regulatory Commission of Alaska approval of the Enstar contract, Thomas said, the additional wells would not have been drilled — nor would the eight exploration wells the company has planned for 2002. (See RCA contract approval story in Nov. 4 issue of PNA.) That contract price for Cook Inlet natural gas is based on Henry Hub gas prices.
Thomas said Cook Inlet started out with a 100-year supply of natural gas and average utility prices for Cook Inlet gas have reflected a blend of contracts from wells discovered in the 1950s and 1960s.
Higher price cost of exploration A higher gas price is necessary if there is going to be exploration because it costs more to do business in Alaska — the Cook Inlet area is not known the way the area is, for example, in West Texas, Thomas said. There are environmental issues, Cook Inlet must complete for capital with project worldwide and the royalty value is uncertain.
By 2003, Thomas said, there will be gas shortages in Cook Inlet on the very coldest days of winter. Unocal is looking now at gas for the next 15 to 20 years. But, he predicted, there will be shortages in Cook Inlet before a North Slope pipeline is built.
In a move to deal with seasonal shortages, Unocal has begun gas storage in Cook Inlet to meet peak needs on cold winter days, Thomas said. We injected all summer, he said, and are now withdrawing.
This is a first for Cook Inlet, although companies have discussed the need for gas storage in Cook Inlet in the past. The Alaska Oil and Gas Conservation Commission approved a Unocal application for gas injection into the Tyonek formation of Swanson River unit well 43-28 in mid-June.
Kenai to Kachemak pipeline The Kenai Kachemak pipeline project, from the Kenai gas field south to Homer, is expected to take two years to construct, Thomas said, with gas reaching the southern end of the line by the end of 2003.
Unocal, Marathon Oil Co., Enstar and a Homer Electric Association subsidiary are the partners in the pipeline project, which began permitting for route selection this fall.
Along the pipeline route are the Marathon-operated Ninilchik unit, in which Unocal is a partner (see story page 8) and Unocal’s South Ninilchik prospect. Unocal’s Deep Creek prospect is a few miles east. Farther south is Unocal’s Anchor Point prospect, also along the proposed pipeline route.
The pipeline is planned to be 16 inches in diameter, but with numerous wells yet to be drill, we hope it will end up at 20 inches, Thomas said.
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