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Forcenergy files plans for royalty reduction for Redoubt, West Foreland field in Cook Inlet Alaska Oil and Gas Conservation Commission will hold public hearing Jan. 5 on local hire, local purchase provisions in plans Kristen Nelson PNA News Editor
Forcenergy Inc. has filed field plans with the Alaska Oil and Gas Conservation Commission for Redoubt and West Foreland. Both are eligible for royalty reduction under legislation enacted to encourage local hire and production from Cook Inlet fields discovered but not in production. The commission has scheduled a Jan. 5 hearing; copies of the field plans at available from the commission.
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 2000. Delineation drilling would begin in the third and fourth quarters of 2000.
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 PNA in October that gas from this well would be used at Forcenergy’s West McArthur River field and possibly also at Redoubt.
“It’s about a mile and a half south — maybe less than that — from our onshore facilities at West McArthur River,” he said. The purchase was made before the bankruptcy filing, Carlson said; the company has been building a road and laying a pipeline this fall.
Redoubt slipped a year Carlson said that the company had continued permitting for exploration activities at Redoubt during the bankruptcy proceedings. “Our intent,” he said, “is to do next spring what we had scheduled to do this spring.”
The plan calls for delineation drilling in the third and fourth quarters of 2000 and evaluation of drilling data and formulation of a development plan in the first half of 2001.
Oil from Redoubt would end up going through the Cook Inlet pipeline system. “We would build pipelines that would deliver it to Trading Bay and then it would go into the Cook Inlet Pipeline system,” he said. But permitting for pipelines and other production work has not begun — that would be a totally separate permitting process, Carlson said.
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.”
Original plans delayed Forcenergy’s plans at Redoubt were delayed when oil prices plunged last winter and Unocal, which is a 30 percent working interest owner, decided not to participate. Forcenergy filed for Chapter 11 bankruptcy protection in March. A reorganization plan is out for approval and creditors and shareholders had until Nov. 30 to vote on the plan. If they approve, the bankruptcy court must agree before it takes effect.
A confirmation hearing was scheduled for Dec. 13.
Forcenergy operates Cook Inlet’s West McArthur River oil field, which it acquired from Stewart Petroleum. It also owns shares of oil producing properties in the Trading Bay Field and in the Trading Bay Unit of the McArthur River Field, which it acquired from Marathon Oil Co. Unocal operates those.
—The Associated Press contributed to this story.
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