What needs to be done if there is a large oil or gas discovery in Cook Inlet?
What can be done to monetize it?
What infrastructure will be needed?
These are all questions John Torgerson, executive director of the Kenai Peninsula Economic Development District, and his organization has been tasked with answering. He contends the questions must be asked to prepare the local area and industry in the event one of the many new companies exploring Cook Inlet finds what they are looking for — big pockets of previously undiscovered hydrocarbons.
“If we are not, what do we do to prepare ourselves?” Torgerson said. “What needs to be done, I guess. Mineral management says we got 19 trillion cubic feet of gas out in the Inlet. That’s a huge volume. Of course it is not discovered and some people believe it and some people don’t.”
Torgerson thinks Cook Inlet will continue to see more drilling activity as time goes on — more than the North Slope this winter he estimates — culminating to levels that haven’t been seen since the 1970s or “pre-discovery days.” Much has changed in local industry as levels of Cook Inlet oil production dropped from 214,624 barrels of oil per day in 1971 to 10,235 barrels a day in 2010.
To make sure local industry can handle what might be found, Torgerson is helping start what he calls a “facility and workforce assessment” of the area. The study is being funded by about $100,000 from the state and $50,000 from the Kenai Peninsula Borough, he said. Torgerson hopes to have a request for proposals generated by early October and findings generated by late January, as requested by legislators, he said.
“There are some things we can do within the scope of the grant to advocate for the Kenai and we will do the maximum amount we can,” he said.
Data collected would be in part generated from industry recommendations and then be put back in the hands of industry with a local presence as well as those looking at developing a local presence, he said.
“We would ask the questions and a lot of that might be proprietary to the individual companies,” Torgerson said. “So whether or not they share future plans to another company is another thing, but they will probably speak in very general terms, which would be OK. At least we would have an idea for doing that.”
Examples of ideas the survey could generate to handle a large discovery could include building a larger public docking system for larger tankers, reopening Agrium or providing enough gas for the ConocoPhillips liquefied natural gas facility to operate year-round, he said.
“But those are business decisions of major corporations and not the decision of anyone here,” he said. “But we would see what barriers to business that might exist and see what we might do to assist.”
The workforce assessment portion of the study would look at staffing a potential discovery and that could mean additional training facilities as long as it doesn’t duplicate what’s already being offered, he said. That would be a “natural add-on,” Torgerson said.
“We already know the companies now are scrambling to find trained anything in the oil drilling business with production and pipeline welding and things of that nature,” he said. “We used to supply about 30 percent of the workforce for all of the oil in Alaska, North Slope included, and now we are down under 5 (percent), is my understanding.”
State Rep. Mike Chenault, R-Nikiski, said he has been keeping an eye on the study’s progress.
“I think we need to look at what our options could be, or what they are, and I think we need to keep those options open,” he said. “If we find a lot of gas in Cook Inlet, then the biggest issue we are going to have is how do we monetize that?”
Torgerson said the information gathered could also help in discussions about where to bring a North Slope gas pipeline to tidewater. Infrastructure developed to handle a Cook Inlet find could help, or also go hand-in-hand with a gas pipeline.
All that could help lure the pipeline to Nikiski over other areas, including Valdez, Torgerson said.
“There has been some talk about, ‘We’re not large enough for the bigger tankers to come in and out of Cook Inlet,’” he said. “Well ConocoPhillips has been bringing in not the biggest tanker, but one of the biggest tankers all this year.”
Chenault contends a gas pipeline terminus in Nikiski could help spur exploration in Cook Inlet despite fears he has heard that it would drive it away. He said most exploration companies are looking for oil in the Inlet and if they discover large gas pockets “there is nowhere for them to sell their gas.”
“If you have a pipeline from Prudhoe to here, that means you have businesses that are utilizing that gas and it gives corporations that are here drilling the opportunity to be able to get rid of gas if they do have a big gas find,” he said.
Brian Smith can be reached at email@example.com.