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Cook Inlet Energy busy

Posted: July 14, 2012 - 8:19pm  |  Updated: July 14, 2012 - 8:20pm

Cook Inlet Energy, operator of the small Redoubt Shoal and West MacArthur River fields on Cook Inlet’s west side, is completing assembly of a drilling rig on the Osprey offshore platform and will have the rig operating in the next few weeks, company CEO David Hall said.

Cook Inlet Energy is a subsidiary of Tennessee-based Miller Energy Resources.

The company also has a second onshore drilling rig now operational at the West MacArthur field, Hall said. It is Miller Rig 34 smaller than Miller Rig 35, which is now positioned on the platform. Cook Inlet Energy brought Rig 34 to Alaska in 2010 and has been working to weatherize it and adapt the rig to work in Alaskan conditions.

The rig is now operational, Hall said. It is most suited for drilling shallower gas wells, he said.

Rig 35, a heavier rig, was purchased by Cook Inlet Energy in Texas and then disassembled and shipped to Nikiski in 2011. From there the rig components were shipped in increments to the Osprey platform.

Hall said there is now one well producing about 200 to 220 barrels per day on the Osprey of six wells that were drilled by Forest Oil, the original developer. Cook Inlet Energy intends to do workovers, or repairs and maintenance, of the older wells as well as “sidetracks,” or new well bores drilled off older wells. The plan is to restore production on all six wells.

There are also potential new oil and gas deposits that can be drilled from the Osprey with Rig 35 once the work on the older wells is finished.

“We see a variety of ‘grass roots’ targets. We intend to keep the rig very busy,” Hall said.

Hall said Cook Inlet Energy is also planning an 8-inch, 25-mile, new pipeline across the Inlet that would eliminate the need for tanker shipments from the west side to east side.

The proposed $53 million Trans-Foreland pipeline is being planned to carry 90,000 barrels per day. That far exceeds current production in the area, but Hall said the pipeline would lower current costs of transporting oil by shuttle tankers from the Inlet’s west side to the Tesoro Corp. refinery on the east side.

Those costs now run to $11 and $12 per barrel. Hall said the goal is to reduce the expense of getting oil to Tesoro to about $4 a barrel, which is the range of costs before the prior system was disrupted by the eruption of the nearby Mt. Redoubt volcano in 2009. The eruption resulted in the flooding and subsequent shutdown of the Drift River terminal.

Lower transport costs would allow Cook Inlet and other companies, such as Hilcorp, which now operates the nearby Trading Bay and Granite Point fields, to boost west Cook Inlet development. Engineering is now underway on the pipeline and Hall said construction could begin in 2014, with oil shipments beginning late that year.

Hilcorp, which purchased Chevron Corp.’s Cook Inlet producing properties early this year, said it supports Cook Inlet Energy’s plan.

“This is something we’re following. We’re not a partner in the project but we support the idea of a pipeline,” Hilcorp spokeswoman Lori Nelson said.

However, this does not change Hilcorp’s near-term plan to reopen the Drift River terminal in October, she said.

Hilcorp plans improvements to flood protection [filtered word] around crude oil storage tanks at the terminal. That would allow four 270,000-barrel capacity storage tanks at the site to be used again.

The terminal was closed in 2009 when Mt. Redoubt erupted but limited loading of oil was later restarted via a direct connection of an offshore loading platform with the 20-inch pipeline that connects Drift River with the producing fields.

The terminal is connected with the west Cook Inlet oil fields by a 42-mile, 20-inch pipeline. When the terminal and storage tanks were closed the offshore loading facility was still operated. This allowed smaller intermittent shipments of crude to be made with oil stored at tanks at Granite Point.

Having the terminal and four larger storage tanks available at Drift River will allow more oil to be stored, reducing the number of tanker trips and allowing the vessels to be fully loaded, Nelson said. That will increase the efficiency of the operation.

Because of the limited capacity of tanks at Grante Point oil has to be shipped every 10 to 12 days, Nelson said. That means the small tankers charted by Tesoro can only be partly filled, which raises costs. Being able to store oil at Drift River would allow the tankers to be fully loaded and would also reduce the number of tanker trips across the Inlet, Nelson said.

Tim Bradner can be reached at tim.bradner@alaskajournal.com.

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