|
How much Cook Inlet gas? Decker reviews what is known about gas reserves, undiscovered gas resources Alan Bailey Petroleum News
A major revival in industry activity in Alaska’s Cook Inlet basin is turning a pending shortfall of gas for Southcentral utilities into a gas surplus, with contracted gas supplies from the basin extending several years into the future. But how much gas now remains to be developed in the basin? And how long might gas supplies from the basin last?
In a Feb. 14 meeting of the Commonwealth North Energy Action Coalition in Anchorage Paul Decker, acting director of Alaska’s Division of Oil and Gas, reviewed the current state of knowledge of gas resources in the basin and the impact of the upsurge in exploration and development on production forecasts.
Two studies During the gloomy days of pending gas shortages the division conducted two studies of Cook Inlet gas resources. The first of these studies, completed in 2009, used production and geologic data from Cook Inlet gas fields to assess how far into the future the gas fields might support the continuing utility gas demand in Southcentral Alaska of some 90 billion cubic feet per year. The second study, completed in 2011, considered the economic feasibility of the projections made in 2009. Now, a few years later, it is possible to compare what has happened in terms of gas production with what those reports suggested might be possible.
In the 2009 study, an assessment of the production decline from existing gas wells showed that, in the absence of any further gas field development, production would soon have fallen short of utility gas demand, Decker said. However, the use of gas reservoir pressure trends to assess how much gas might be produced from existing gas reservoirs, assuming the drilling of new development wells to access that gas, demonstrated that the gas shortfall could be deferred somewhat. A geologic analysis of well data to extrapolate the likely extent of gas-bearing horizons in four of the larger gas fields suggested further potential for development drilling in existing field reservoirs. That pointed to the possibility of meeting the 90 bcf per year gas demand target out to 2018 or 2019. However, factoring in further potential pay zones with a 50 percent likelihood of development success extended that time horizon to around 2027 or 2028, Decker said.
Economic analysis Recognizing the extensive investment that would be needed to push Cook Inlet gas production out into the future, the division’s 2011 study applied a series of economic variables to various production scenarios, using a statistical technique to derive a probability distribution for possible future production profiles. The analysts found that production of the required 90 bcf of gas per year appeared economically feasible until at least around 2018 or 2020, and that gas exploration success would likely move that time horizon well into the future. In 2013 the division reviewed the results of its earlier work, estimating that 1.1 trillion cubic feet of gas remained in the 28 known fields around the basin. At that point, about 8 tcf of gas had already been produced from the basin, Decker said.
Recent developments in the Cook Inlet basin have tended to support the conclusions of the division’s studies, with new utility gas supply contracts now lined up through around 2018 or 2019, Decker said.
Hilcorp impact A prime driver behind the recent uptick in Cook Inlet activity has been Hilcorp Energy, the company that in 2011 and 2012 took over the oil and gas fields formerly owned by Chevron and Marathon.
Hilcorp has “absolutely transformed the commercial landscape for gas in the basin,” Decker said.
In addition, a new gas storage facility, the Cook Inlet Natural Gas Storage Alaska facility near the city of Kenai, has stabilized seasonal gas production by enabling the storage of surplus summer production for use in the winter, when demand is high. And in 2012 Buccaneer Energy brought the new Kenai Loop gas field on line on the Kenai Peninsula, Decker said.
Since the upsurge in Cook Inlet activity began, 75 new wells have been drilled in the basin, with 22 of these wells being exploration wells; 36 of the wells have been gas wells, Decker said. Well workovers and other forms of production enhancement have resulted in gas reserve additions of some 3 percent, he said. And new knowledge gleaned from new development drilling has caused the division to increase its gas resource estimate for the seven largest gas fields by 440 bcf, he said.
New exploration Meantime, active exploration in the Cook Inlet basin is starting to bear fruit. Furie Operating Alaska has been moving ahead with its offshore Kitchen Lights field. A Kitchen Lights appraisal well demonstrated the existence of 29 gas-bearing horizons in the field. And, while verified reserves figures for the field remain confidential, initial plans for the field envisions the production of 80 million cubic feet per day of gas, Decker said.
Offshore the southern Kenai Peninsula, drilling by Buccaneer in the Cosmopolitan prospect found a significant gas resource at relatively shallow levels. BlueCrest Energy, the company that now operates Cosmopolitan, wants to transfer the rights to the gas resource to WesPac Midstream, a company interested in building a small liquefied natural gas facility for the supply of gas to Fairbanks in the Alaska Interior. WesPac’s development plan envisages two small offshore monopod platforms and up to 12 wells, Decker said.
Decker commented that significant gas exploration potential remains in the Cook Inlet basin, although future gas discoveries may involve relatively small, subtle underground gas traps, rather than the large geologic structures that characterize the gas fields that have been discovered in the past. The U.S. Geological Survey has estimated that there may be about 19 tcf of undiscovered gas in the basin, he said.
Future demand But, as a major gas line from the North Slope also becomes a future possibility, what might be the potential future gas demand in Southcentral Alaska? In addition to the local utility demand, there are an LNG plant that ConocoPhillips operates at reduced capacity on the Kenai Peninsula and a nearby mothballed fertilizer plant, owned by Agrium. Japanese company Resource Energy Inc. has proposed constructing an LNG plant for exporting LNG to Japan; WesPac has its LNG plant proposal; and there is a future possibility of supplying Cook Inlet gas by pipeline to the planned Donlin Gold mine in western Alaska. The total demand from all of these projects, if all were to fully come on line, would amount to about 275 bcf per day, a figure that suggests a need for some prioritization in determining what is implemented, Decker said.
However, the potential economic viability of Cook Inlet gas and the resurgence in the Cook Inlet gas industry bode well for the local economy in the Cook Inlet region. Future unknowns include price comparisons between Cook Inlet gas and North Slope gas delivered to Southcentral, if the North Slope gas line is built. People need to make sure that, whatever happens, as much gas as possible is produced from the Cook Inlet, Decker said.
|
