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Gas supplies tight; producers to rescue?

Posted: December 15, 2012 - 9:01pm  |  Updated: December 15, 2012 - 9:10pm

The weather has been cold and natural gas supplies in Southcentral Alaska are very tight. Enstar Natural Gas Co. distributed near-record amounts of gas in its system during recent cold weather and is drawing down supplies from a new gas storage facility on the Kenai Peninsula.

Meanwhile, utilities in the region are anxiously awaiting word on possible new supplies that producers might be able to make available this winter.

In one development, Hilcorp Energy is racing to get a new gas well on line by Dec. 15 which could boost gas supplies by an additional 6 million cubic feet per day, company spokesman Lori Nelson said.

“Our crew are really focused on getting this on production quickly, although the new snow hasn’t helped,” she said.

The well is “Red Pad,” about eight miles east of Anchor Point. The discovery was made several years ago by Unocal Corp. and is now being developed by Hilcorp.

Meanwhile, a newly-completed gas well drilled by Buccaneer Energy in its small Kenai Loop gas field, Kenai Loop No. 4, was to be tested the weekend of Dec. 8 and 9, but results have not yet been announced. The Kenai Loop field is near the city of Kenai.

Buccaneer has also increased the amount of gas being produced from its one well in the Kenai Loop field, and announced recently that it sold a quantity of gas from the well to an unidentified purchaser for $15 per thousand cubic feet, or mcf, which is about twice the prevailing contract prices for gas sales in Cook Inlet region.

In another development, utilities in Southcentral Alaska say they hope a final resolution of antitrust issues on the acquisition of Marathon Oil’s producing properties, expected after the first of the year, will allow Hilcorp to sign additional gas supply contracts.

Enstar Natural Gas is very concerned about a supply gap of 4 billion cubic feet out of the 33 billion cubic feet needed in 2013 for customers, Enstar spokesman John Sims said. Until a proposed consent decree between the state and Hilcorp that resolves antitrust issues is approved by a Superior Court, which is expected in late January, Hilcorp is unable to sign new gas contracts based on the acquired Marathon assets, Hilcorp’s Alaska manager, John Barnes, told Anchorage business and community leaders in a briefing to Commonwealth North’s energy task force Dec. 7.

Members of the task force had pressed Barnes on whether Hilcorp could negotiate gas sales contracts contingent on the consent decree approval, but Barnes and a company attorney present said Hilcorp couldn’t do it.

“They told us they can’t sell gas they don’t legally own,” said Mary Ann Pease, a local business consultant who chairs the Commonwealth North panel.

Hilcorp’s Nelson said a public comment period on the consent decree closes Jan. 7, after which the decree will be assigned to a judge for a hearing.

“We’re hoping to see this resolved by the end of January. The timeline isn’t helping us, but it is what it is,” Nelson said.

It won’t help gas supplies this winter, but Buccaneer Energy still plans to drill a gas prospect at Cosmopolitan, an offshore oil and gas discovery in Cook Inlet. However, even if the gas accumulation that is known there can be commercially produced it can’t be done in time for this winter.

Buccaneer is now awaiting final inspections by the U.S. Coast Guard and American Bureau of Shipping for repairs to its Endeavour jack-up rig, which is still at Homer, according to company spokesman Jay Morakis.

The Endeavour was brought to Alaska from Singapore in the fall but work needed to be done on its arrival, some of it due to storm damage while en route, has delayed its being put to work.

Once the inspections are completed and state permits are approved for drilling at Cosmopolitan the rig will move to that location, three miles off Anchor Point, and begin drilling.

A determination is being awaited from the Alaska Oil and Gas Conservation Commission that a “gas only” well can be drilled into the gas deposit, Morakis said.

This would allow the company to drill a shallow well to test the gas formation and then later drill deeper into the oil formation once an amendment to Buccaneer’s oil spill contingency plan is approved by the state Department of Environmental Conservation, Buccaneer vice president Mark Landt told the Cook Inlet Regional Citizens Advisory Council Dec. 7.

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Watchman on the Wall
Watchman on the Wall 12/16/12 - 10:06 am
supply & demand

Once again the money making Fictional Supply & Demand of Natural Gas pops up it's head around cold weather time.
Funny how the Savior Suppliers come to Save the Day, for a price that is & It's a major surprize here this shortage of gas right after the practice sesson, TEST of reducing energy Day a few weeks back.
or is it?

Sam Von Pufendorf
Sam Von Pufendorf 12/17/12 - 05:20 pm

WoW, why would the supply and demand issue pop up in July when energy for electricity and heat as at its low? These prospects have been beeing drilled for years and even though "Red Pad" was discovered years ago, it was then not a very profitable prospect that would deliver enough gas to feed the Colliers facility.
It's not a conspiracy, it's capitalism!

Watchman on the Wall
Watchman on the Wall 12/17/12 - 06:34 pm
SVP how long do they take?

How long do conspiracies take to develope? I never said conspiracy, but now that ya mention it that sounds more the case and they was a setting us up to spring into action fer da fall this winter.
Can i say i love ya with out any ill effects or ideas about this comment? I really do appreciate your expertice and knowledge of many things and together we do make a good team of sharing info to the unsuspecting public, do we not?
Where ya been during the day time? I notice that your posting around 4-5 am and this is the first in some time during the day and 12 hrs since this mornings post, have ya been working grave yard?
I guess as a long time BSer and the ability to smell rats afar off i just tend to be suspicious of almost every one that says have i got a deal for you and i'm looking out for you and want to help so please trust me. Then there are the ones that ya know are lying thru their teeth and they say Trust Me Again. Really?
ILB talking to UL8R & glad your back, if ya are in fact back.
Stock up on some more wood while ya can before they outlaw burning wood from cut down trees.

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