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Report: Gas shortage looms if production not increased

Posted: October 24, 2012 - 9:26pm

Cook Inlet natural resource producers will need to double or perhaps triple production of natural gas in order to avoid projected shortfalls to residential and commercial consumers that could come as soon as 2015 otherwise, a new study concludes.

Petrotechnical Resources of Alaska recently published a Cook Inlet gas study compiled for ENSTAR, Chugach Electric Association, Municipal Light and Power, Homer Electric Association and others. The study, which is an update of one published by the same group in 2010, concludes producers have not drilled enough wells and produced enough gas estimated necessary by the previous report to avoid looming shortages.

In 2010, PRA wrote that Cook Inlet producers needed to drill 13.6 wells each year meet forecasted demand. However, only five gas wells were added in 2010, seven in 2011 and four through June 2012.

The group also wrote producers needed an annual increased production rate of 42.2 million cubic feet per day to meet demand. In 2010, total increased production increased reached 18.5 million cubic feet per day, 12.3 million cubic feet per day in 2011 and 21.5 million cubic feet per day in 2012 — all of which are significantly lagging from the group’s suggested annual increase.

PRA’s Peter Stokes, who penned the report, estimated 157 new gas completions are needed to meet demand through 2020. That means 31 million cubic feet per day of gas needs to be added each year from new completions from 2013 to 2019 to withhold shortfalls, Stokes wrote.

“It is a lot,” he said.

The report bases gas needs on projections from regional utilities and the Donlin Creek Mine, which is projected to start consumption in 2020. It also takes into account the needs of the Tesoro refinery, ConocoPhillips’ Kenai LNG facility and field fuel gas.

Cook Inlet gas provides all of ENSTAR’s supply and accounts for 90 percent and 88 percent of generation for Chugach Electric and ML&P, respectively.

Additionally, HEA officials say the utility will need 4.4 billion cubic feet of gas per year starting in 2014 — when its contract with Chugach expires — for its Independent Light project, including the Nikiski combined cycle project and the Soldotna combustion turbine project. In 2014, 90 percent of HEA’s generation will be fueled by gas with the remaining coming from the utility’s share of power from the state-owned Bradley Lake hydroelectric facility.

The current situation that predicts a shortfall — where demands exceeds supply — is a blend of declining reserves and production from existing wells and the time it takes for new exploration to result in gas heading to market, Stokes said.

“There is a lot of activity going on, a lot of exploration going on, but unfortunately exploration, if it is going to be a meaningful discovery, is not likely able to be brought on quick enough to avoid this near term shortfall issue,” he said.

The time from new discovery to market is anywhere from three to five years depending on location and permitting, Stokes said.

“(Location) not only impacts the permitting, but it also impacts the construction to get facilities and pipelines in place,” he said. “Obviously, if you are out in the middle of Cook Inlet it is a little different than being in the city of Kenai like Buccaneer is with their Kenai Loop — that’s the best of all worlds to have a discovery there, but how many of those are you going to have?”

In his report, Stokes identified importing liquefied natural gas or compressed natural gas as the most logical solution to bridge the gap if production doesn’t ramp up.

“(Utilities) feel like this is real and they feel like bringing imported gas whether it is compressed or liquefied is the only thing that they have within their control because they are obviously not going out and drilling wells,” Stokes said.

The downside of importing LNG or CNG would be the cost, he said. But supply could increase and push prices down as more and more LNG facilities come online around the world in the coming years, Stokes contends.

“If you take the spot price today it is quite a bit higher than what Cook Inlet producers are receiving for the gas through their contracts,” he said.

Stokes also wrote the most likely sources of new production in Cook Inlet would be from existing fields such as the Beluga River unit, the Trading Bay unit or development of recent discoveries like Buccaneer’s Kenai Loop, Nordaq’s Shadura or Tiger Eye prospects, Cook Inlet Energy’s Otter well near the Beluga River unit or Apache’s onshore well near Tyonek that should be drilled within the year.

The report also looked at offshore exploration from Furie’s Spartan 151 drilling rig operating in the Kitchen Lights unit and Buccaneer’s Endeavour-Spirit of Independence rig, which is expected to drill the Cosmopolitan unit. But, those developments are three to five years from market, Stokes wrote.

In addition to those developments, Cook Inlet demand has changed slightly since PRA’s 2010 study, Stokes wrote. There has been a 9.4 percent reduction in demand because of more efficient electric generation and a .4 percent reduction due to wind power.

“What we are seeing is that there is probably not enough activity that will avoid a shortfall probably in the 2015 timeframe,” he said. “A shortfall in 2014 is if we shut down all activity right now, which we know is not going on.”

Stokes said the newly-commissioned Cook Inlet Natural Gas Storage Alaska facility will help producers fully utilize gas wells by allowing a year-round place for the gas to go. And, he said, if there is not enough production, the facility could be used to store imported LNG necessary to bridge the gap if a shortfall occurs.

“It is not creating new gas,” he said of CINGSA. “It obviously helps with peaking in the winter time, but if there is not enough gas to fill it up in the summer time, then you don’t have enough gas to handle the annual demand.”

Brian Smith can be reached at brian.smith@peninsulaclarion.com.

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Norseman
3613
Points
Norseman 10/25/12 - 07:09 am
5
0
This is beyond absurd. Here

This is beyond absurd. Here we have huge deposits of natural gas and companies exploring and developing these gas fields.
With all of this abundance of natural gas you would think that we Alaskans would be able to plan on staying warm through the winter.
But no, instead we have politicans going to Japan and China trying to negotiate deals on selling our natural gas to them. In the meantime, us Alaskans can ponder whether our houses and business will freeze up.

As we sit idly by ,watching big oil export our natural gas to foregin countries so they can manufacture cheap widgets, we all can huddle together around a bonfire to stay warm. That is until they start selling the rest of the forests to Asia as well. Then we will need to rely on the hot air from our politicans to keep warm.

Watchman on the Wall
2893
Points
Watchman on the Wall 10/25/12 - 08:12 am
3
2
It's a conspired CONTROL thingy by BIG MONEY

Very true Norseman and have you watched any REAL NEWS this morning showing that the price of gasoline is going down to around or below $3.00.
Every where we turn we see manipulation of facts for a desired result of more control being placed on all people.
I agree we do have more natural gas and oil that any of the world here in North America and it is restricted from being produced at every level by many stupid claims that amount to total BS but are allowed to continue on as we all get less & less for providing our families with simple basic life sustaining things.
Gasoline is manipulated beyound imagination right out North Road to the point of we pay some of the highest prices nationally here on the Kenai. But we just sit around and allow them to bend us over that old oil barrel with no sight of relief from the abuse we all must indure together as Alaskans forced on us all by fellow Alaskans.
Who can we trust as we spiral downward economically as a Nation and State that can and should be totally energy independant from Foriegn oil and gas. It's all about the $Benjamins$ leading to more for those that already have a lot of them and less for those that seek to have more of them, but never will have more under this Global Scam being perpatrated on us all.
Some Hope and Change their to believe in from all government officials, sadly Alaskan officials as well.

Watchman on the Wall
2893
Points
Watchman on the Wall 10/25/12 - 08:26 am
3
2
CONTROL FREAKS ABOUND

If they control fuel and food & money, do they then CONTROL EVERYTHING need for every one to survive & provide UNRESTRICTED ACCESS TO THINGS NEEDED for our families survival in every area of life?
If they control all things needed to provide for our families do they then control all of us also inable them to control completely?

gfds98765
1013
Points
gfds98765 10/25/12 - 12:13 pm
3
1
"""do they then CONTROL

"""do they then CONTROL EVERYTHING needed for every one to survive """ Yes WotW.

YES a resounding yes. Yes they do. That's the progressive plan to 'make a fair playing field.' To level the field so everyone has a 'fair shot' at equal 'social justice.'

spwright
1376
Points
spwright 10/25/12 - 03:07 pm
5
0
New Gas Storage Facility

Thur 10/25/12
Well now I'm Confused. The Brand Spanking New Underground Natural Gas Storage Facility on Bridge Access Road, Kenai was supposed to SOLVE all of those Gas Shortage Problems here on the Kenai.

Somebody's got some splainin' to do

I'm not buying this story of Natural Gas Shortage. Seems like a scheme to increase Our Natural Gas Monthly Bills to Enstar ?

SPW"Airborne"

Watchman on the Wall
2893
Points
Watchman on the Wall 10/25/12 - 04:18 pm
1
1
SPW i ben trin to do some splainin 2 ya.

They have a plan and it's not good for Democrates or Republicans or nonaffiliated folks, non of us.
Did ya go on line and look up HAARP to see what OUR govt is doing and not splainin to us why da is?
Maybe we had all vote early especially if one lives on the east coast which is gonna get tored up bad and probably no legtricity for weeks after the election.
Can ya say ORGANIZED CONTROL?

spwright
1376
Points
spwright 10/25/12 - 05:12 pm
1
1
Oh Child Please

Thur 10/25/12 Are You just now discovering the HAARP project in Alaska ? That's been around for decades & all sorts of Conspiracy Theories abound about that project.
Even Whack Job Jesse Ventura Mister Conspiracy Himself has visited the HAARP Project.
SPW"Airborne"

Watchman on the Wall
2893
Points
Watchman on the Wall 10/25/12 - 05:55 pm
2
1
I only wish i was as well learned as you

I only wish i was as well learned as you, but thats life, some of us have to be simple minded so as to be able to put self aside and understand what Gods plan are for his creation.
The simple minded, weak shall receive the Kingdom of God and smart people will figure out how to not be included in that plan so they can also receive their due.
I'll take stupid and not knowing about HAARP until now, but knowing about Gods plans for a while is better.
I bet many others also don't know about HAARP as well.
So when something is proven right is it still a Conspiracy?
What if Jesse and i vote, will what we say not be a Conspiracy then?
As i read more on the WEB SITE ABOUT HAARP i learn and see that there is a slight problem with this Conspiracy stuff because it's existance is actual proven fact and government acknowledgement of it has also been done.
It sure explains alot of what we see in reguard to earthquakes, or floods or droughts or tornadoes or hurricane, Perfect Storms that only target certain areas and don't affect others when all common sence says that it should have done more.
This HAARP thingy helps me understand the book of Job better now as satan is given power to causes earthquakes and floods and whilrwinds that destroy all of Jobs riches and family and satan has not stopped his assult on ALL of mankind since in his desire to CONTROL & DESTROY PEOPLE.
Thanks for calling me Child, as in Child of King Jesus i assume your refering.

lkpomn912
931
Points
lkpomn912 10/25/12 - 06:01 pm
5
0
NORSEMAN is right on the mark!

NORSEMAN is right on the mark!
this is absurd. We are sitting on a gold mine of oil & gas and being fed mud pie lies.

freedomlibertytruth
1398
Points
freedomlibertytruth 10/25/12 - 11:40 pm
2
0
not at all believable after a

not at all believable after a hundred years of exploration, drilling, and refining that they are shockingly hit with this "shortage".

What are they really up to? Conspiracy SPWRIGHT?
just cause we don't know the 'secret' doesn't mean they aren't up to something rotten, illegal or subversive.

jake
63
Points
jake 10/26/12 - 06:46 am
2
0
????

What do the "Points" mean and how are they calculated?

Watchman on the Wall
2893
Points
Watchman on the Wall 10/26/12 - 09:02 am
2
2
Answer to Jake

It's the number of posts that each person makes i do believe.
The thumbs down are for control freaks that want to stiffle others Freedom os speach or differance in opinion against all those that differ from them.
Welcome and watch out for TROLLS as you share your FREEDOMS OF SPEACH, while we still have those rights afforded us under OUR Constitution and Bill of Rights as a Soverign Nation formed Under God, not men.

Media Critic
87
Points
Media Critic 10/26/12 - 10:45 am
1
1
Freedom of "Speach"

Watchman, you seem confused about your constitutional rights. And a few other things. The First Amendment protects your speech with respect to the government. With respect to this and other websites owned by, paid for by and controlled by individuals or corporations, you have no freedoms. At all. It amazes me that the Clarion doesn't exercise its rights to clamp down on some of the stupidity here more than it does.

Brian Smith
14
Points
Brian Smith 10/26/12 - 10:59 am
1
1
Reserves versus supply

A clarifying point to Norseman and lkpomn912 — the report is looking at the amount of gas being produced and not the amount in the ground. You are right: Cook Inlet holds massive amounts of gas. Simply put the old wells are declining and new wells aren't being drilled and tapped fast enough to meet projected demand. There seems to be a three to five year gap from when new exploration will result in more gas. Utilities are considering importing LNG to bridge that gap until exploration can catch up.

Norseman
3613
Points
Norseman 10/26/12 - 11:20 am
4
0
You are not getting it. The

You are not getting it. The fact is we have natural gas being produced AND the big oil companies can make more money by sending it out of state. When we have a critical shortage of natural gas do you think it is prudent for big oil to ship what remains to some foreign country instead?
I remember the saying, "let them eat cake", and later she was beheaded.

They make huge profits while us Alaskans wonder how we will heat our homes and businesses.
...................................

"ConocoPhillips Alaska, one of the North Slope's major producers, reported net earnings of $535 million during the third quarter.

That's down from net earnings of $551 million during the second quarter, which the company attributes mainly to lower production during the slower summer maintenance season. But it's up compared to the third quarter of 2011.

ConocoPhillips is among the companies that are arguing for a change in Alaska's tax structure, which they say eats too deeply into profits when oil prices are high and discourages additional investment."

lkpomn912
931
Points
lkpomn912 10/26/12 - 11:58 am
3
0
reserves vs supply vs burn off 'waste' gas

reserves vs supply vs burn off 'waste' gas.
Now i know that someone is actually reading these posts, thanks Brian Smith, you have done some decent articles.

You have been on the north slope, and watched the burning of waste gas, perhaps? It was a full-on shock to see day after day, year after year, the burning of natural gas that could have been captured and used by Alaskans.

Watchman on the Wall
2893
Points
Watchman on the Wall 10/26/12 - 02:34 pm
1
1
Media critic are you just starting out?

Thanks for singling me out from all other posters here on the Clarion web site and expressing your opinion against only me it does seem.
I would wonder as to why you are doing so, but it does not take a rocket scientist to figure out it's probably due to my occasional referance to Jesus and his eternal word given to all humans as a means of preparation for what we all see coming like a Frank-enstorm, judgment day.
I do thank the Clarion for this site and allowing me, you and others the ability to share our thoughts with some moderating of those thoughts and opinions.
I was given a time out because of other media critics like you that don't like the message or the messanger and complained, i have toned it down in a major way from what i use to be and am still working on that highly opinionated sharing.
I also thank the Clarion for allowing you the opertunity to practice being a onesided media critic as you seem to be and thats OK as well and i ain't gonna ask the Clarion to restrict you for that though.
Have a GR8 Day, and keep practicing while we still have computer access which may be the next thing restricted from us all by OUR Friendly Govt.

I ask if your new at being a media critic not to be mean or hateful, but due to your points total showing that you are new at expressing your opinion on this site thats much appreciated by Many.

bornalaskan
31
Points
bornalaskan 10/27/12 - 08:26 pm
1
0
Gas

Why cant State of Alaska drill oil instead of oil companies we could do it as a non profit and keep our gas and oil here and
we all would prosper not just a chosin few.

Watchman on the Wall
2893
Points
Watchman on the Wall 10/27/12 - 09:51 pm
2
1
WE DO, WE HAVE, THEY CAPED THEM ALL

CONTROL OF ALL RESOURCES IS THE ANSWER AND THAT LEADS TO CONTROL OF ALL HUMANS.

Sam Von Pufendorf
1088
Points
Sam Von Pufendorf 10/27/12 - 10:15 pm
1
0
"waste" gas

The waste gas to which you refer is actually purge gas to maintain positive flow through the pressure relief system which would come into play in an unforseen shutdown or facility upset. This prevents raw explosive gas from being vented to atmosphere in such conditions.

Watchman on the Wall
2893
Points
Watchman on the Wall 11/02/12 - 11:45 am
2
1
Threats again of Gas shortages

When the controlers of resources want more control or money for their pockets then people are WARNED of possible shortages even though there are none.
This supposed gas shortage was given last yr was it not?
WE HAVE WAYS OF CONTROLING YOU FOR OUR DESIRED END GAMES IS EXACTLY WHATS BEING SAID HERE, WITH SCARE TACTICS OF INSTATUTED SHORTAGES TO PRESSURE PEOPLE INTO GOING A CERTAIN DIRECTION AND FEAR WORKS WONDERS IN THEIR GAME OF CONTROLING FURTHER.
There is no shortages other than the ones they create, PERIOD.

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