AOGA meets in Soldotna…Hilcorp updates Kenai Alliance…

While encouraging news from the Cook Inlet was presented last week by Hilcorp Alaska executives at the Kenai Chapter of the Alaska Support Industry Alliance meeting, at a joint Kenai/Soldotna Chamber of Commerce luncheon the Alaska Oil & Gas Assoc. (AOGA) the sounds of gloom were echoed by executive director Kara Moriarty. “Alaska’s production is still declining at an alarming rate and something needs to be done to get more oil in the pipeline and the issue didn’t go away just because the legislature didn’t address it. To quote economist Steve Forbes who told the Anchorage Economic District earlier this year ‘Your state has the worst energy tax policy in the world. The only worst I could find is North Korea.’ So we look forward to working with the policy makers in Juneau in January to encourage changes for a brighter oil and gas future than what we are looking at today,” said Moriarty who then presented a series of statistics and charts to support AOGA’s position. Moriarty pointed to a different tax structure for Cook Inlet and incentives that explain the resurgence of activity here, “I would like us to have a more competitive tax structure to revitalize the legacy fields on the North Slope just like we’ve revitalized Cook Inlet,” she said. 

At the Kenai Chapter of the Alliance Friday luncheon meeting John Barnes, Hilcorp Vice President in Alaska and Bo York facilities engineering manager were optimistic about the results or their summer activities, “As John Barnes said the beginning of the year the first six months got off to a slower start than expected due to the build up necessary of contractor base support infrastructure that wasn’t use to the demand Hilcorp brought in wanting to re-develop everything after the Chevron purchase, but now that we have our feet under us we are seeing a huge increase in actual production resulting from our activities and we are getting the intended results from our investments and the work we are doing is not just for the next few years but for the next ten to twenty years. Usually things begin to slow down in the fall, but I don’t see that happening this year and I think we’ll keep moving strong through the fall and into the winter months,” said York. Regarding the re-construction of the Drift River tank farm York said work is right on schedule, “Our initial time line back in February was to be done by October 1st and we’re going to be pretty close to that with some clean up work being completed by middle October, with operations to resume within the first two weeks of October,” he said. 

Apache general manager John Hendrix also expressed his satisfaction with their Cook Inlet operations this summer, “We’re continuing our 3 year seismic shoot and processing and interpreting our seismic data on the west side of Cook Inlet which allowed us to bring a rig up that arrived in Nikiski September 11th and we hope to be spuding a well in Tyonek in November and as I said again today our time table is for first production by May 11th of 2013 eighteen months from when we shot our first seismic,” Hendrix told the joint Chamber meeting. 

Cam Toohey, Shell Oil Co. manager of government affairs spoke to the roller coaster summer his company has had trying to begin exploration in the Chukchi Sea saying that they won’t be drilling to hydrocarbon depths this year but they have successfully begun their first wells and plan to be back next year to hopefully make a discovery. Given a major discovery Toohey said it would be 13-15 years before wells could be brought into production and that the their plan is to utilize the Trans Alaska Pipeline to bring the oil to market underscoring the need for increased production incentives on the North Slope to keep the pipeline viable for the future.