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Cook Inlet oil production up 25 percent

Posted: August 30, 2014 - 6:03pm

Cook Inlet oil producers have boosted output 25 percent in the last year, data from the state Department of Natural Resources indicates.

Production averaged of 16,288 barrels per day, compared in the first half of 2014 compared with 13,087 barrels per day in the same period of 2013.

Information from the Department of Revenue, which also tracks production, shows a similar growth trend, with an average of 15,800 barrels per day in fiscal year 2014 that ended June 30, compared with 12,200 barrels per day in the previous fiscal year.

In fiscal year 2010, production in Cook Inlet was 8,900 barrels per day after five years of decline from 20,300 barrels per day in fiscal year 2005, according to the Revenue Department data.

Alaska Natural Resources Commissioner Joe Balash credited the growth to increased investment by Inlet oil producers, mainly independents Hilcorp Energy and Cook Inlet Energy. The two companies have been drilling new wells and upgrading platforms acquired from others.

“Increased capital investment in the Cook Inlet fields has yielded higher employment and increased oil royalty revenue,” Balash said in a statement

The increase in activity has also led to new natural gas reserve additions, providing energy security for electric and gas utilities in the region and allowing ConocoPhillips to restart the idled LNG export plant near at Nikiski.

Because virtually all Cook Inlet oil is sold to Tesoro Corp.’s refinery near Kenai, the increased production helps maintain the viability of that plant, which produces most of the gasoline in the state as well as jet fuel and diesel.

The increases in production have also allowed the state to phase out reduced royalties that were granted for some of the Inlet’s aged platforms. The reductions were granted under a program that allows reduced royalty when platforms are near their economic limit of production.

The Monopod Platform in the Inlet, operated by Hilcorp, has increased to 2,900 barrels per day, up from 820 barrels per day in the first quarter of 2013. The Osprey platform, operated by Cook Inlet Energy, saw an increase from 226 barrels per day to 1,221 barrels per day in the same period.

As a result, state royalty rates were increased from a reduced rate of 10 percent to the normal 12.5 percent on the two platforms. The full royalty is 12.5 percent on most state oil and gas leases.

The combination of increased production and higher royalties being paid have increased Alaska’s royalty collections from $14 million in the first half of 2013 to $24.9 million in the first half of 2014, an increase of nearly 78 percent.

Cook Inlet oil and gas fields have been producing since the 1960s and 1970s and the current renaissance is typical when new companies, particularly independent companies, enter a producing basin that was pioneered and initially developed by large oil companies.

Over time, as production declines, the large companies find the remaining oil in the region to be unattractive compared with other, larger opportunities elsewhere, and tend to move on.

Independent companies like Hilcorp, which specialize in taking over mature producing fields and aggressively redeveloping them, typically buy the producing assets.

In Cook Inlet, Hilcorp purchased assets of Chevron Corp. and Marathon Oil Co. Cook Inlet Energy, a subsidiary of Miller Energy Resources of Tennessee, bid on and took over the bankrupt assets of Pacific Energy, which was operating the small Osprey platform and onshore wells on the Inlet’s west side.

Another major independent, Apache Corp., is exploring on its own in the Inlet with a major seismic program and one exploration well drilled so far.

Oil and Gas Division Director Bill Barron echoed Balash’s comments: “Increases in production from mature fields are not possible without significant investment by the operators,” he said.

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

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jford
3398
Points
jford 08/30/14 - 06:25 pm
1
5
Showing that independents came in under ACES,

increased jobs, increased production and increased revenues to the state.

What was that argument for SB 21 again?

Or should I say, What were those lies told to sell SB 21?

hunteralaska
113
Points
hunteralaska 08/31/14 - 08:24 am
4
1
Enhanced Oil Recovery Programs

I'm not sure either tax scheme played a significant role in the decision these companies made to implement their enhanced oil recovery programs. This is simply the life of an oil field and to give credit to either one smacks of sour grapes. It's obvious by the amount of investment in Cook Inlet that these companies did their homework prior to moving forward. All good business plans incorporate tax structure into planning. If SB21 was so bad, why did they continue with capital funding to increase production after it became the law? Why didn't they pull out if SB21 is so bad? As this article states: "As a result, state royalty rates were increased from a reduced rate of 10 percent to the normal 12.5 percent on the two platforms. The full royalty is 12.5 percent on most state oil and gas leases." With a 25% increase in production since they began, what's to gripe about? Is greater production, more jobs, more taxes for the State and profits for companies such a bad thing? Me thinks not.

jford
3398
Points
jford 09/01/14 - 04:32 pm
1
4
This oil was brought into production despite being under ACES.

The argument to sell SB 21 was the oil corporations couldn't make a go of things under ACES. ACES was supposed to be too much tax on oil companies.

Without the massive 20 billion dollar tax cuts in SB 21, the story was, no oil companies could or would increase production. They said the oil companies would go somewhere else.

This proves that argument wrong. This proves that was a lie.

This proves they played you for a fool.

These independent companies came in under ACES and increased production all without any of the tax cut provisions of SB 21.

And they didn't say they couldn't do it without more tax breaks. They simply did the work.

This is exactly what Parnell and the Republican Majority said wouldn't happen, couldn't happen.

This is what the big oil companies said couldn't be done.

It was all a lie. It was a 20 billion dollar scam.

Exxon, BP and Conoco said they wanted 2 billion dollars in tax cuts every year for ten years or it was no go in Alaska.

Under ACES, if the big three tried to say they couldn't do something, independents came in and proved them wrong.

We have the records and the history to show that's a lie, a bluff, a scam.

We should learn a lesson and tell the big three to take a hike. There will always be oil companies wanting our oil. The big three want our oil.

We don't have to give it away for pennies on the dollar, we can make fair market money on our oil. We should make fair market money on our oil.

But no, Parnell and the Republican Majority jumped to the tune the big three started playing and a very slim majority of voters couldn't tell they were being played for fools.

If you can sell oil without giving away 20 billion dollars, why give away 20 billion dollars?

Tell me again you can't see what the problem is with SB 21.

A ten year old with a lemonade stand could figure it out, surely you're as smart as a ten year old.

…it seems as though a few too many voters weren't very smart at all.

hunteralaska
113
Points
hunteralaska 09/02/14 - 07:40 am
3
1
A Different View

We all view it differently. In your effort to make a point, you resorted to abusive ad hominem which usually involves attacking the traits of an opponent as a means to invalidate their arguments. Equating someone's character with the soundness of their argument is a logical fallacy and at the very least an indicator of what kind of person you are.

jford
3398
Points
jford 09/02/14 - 09:52 am
1
3
Having a different view, doesn't mean it has any credibility.

If the supporters of SB 21 can't sell their policy without lying, they don't have any positive traits, they have no honor, they have no integrity.

The only 'character' they have is deceit, dishonesty and untrustworthiness.

When a lie is exposed, it's no fallacy, it's a lie.

When liars are caught in their lies, it's not any rhetorical sleight of hand, it's liars lying their lies.

SB 21 and the lies of it's supporters isn't about what kind of person I am.

(...that's all you got? You're no longer trying to sell the same lies? You're no longer attempting to create fictions to support the failed policy? Now you're just having a sad?)

SB 21 is about the lies in the policy and the liars who tell lies in their attempt to support it.

This article proves the lie. If you're sad, I suggest you direct your blame onto the people who played you for a fool. They got away with your 20 billion. That's the message.

You just don't like the messenger.

But that doesn't change the message. They lied, you bought into the lies. You were played. Big time.

.

If you ever think you want to put your trust in the oil corporations, read this first:

http://www.rollingstone.com/politics/news/sludge-match-chevron-legal-bat...

jford
3398
Points
jford 09/03/14 - 09:27 pm
0
0
Update, how we're doing with SB 21.

FAIRBANKS — That Alaska is facing a $2 billion budget hole seems as unlikely as a rainy day in December, but here it is.

The new forecast from the Department of Revenue predicts state income is suddenly expected to slide by billions, creating a deficit of $2 billion this fiscal year.

The state will have to use about one-eighth of its easily-available rainy day savings to pay the bills. This comes six months after lawmakers and the governor described the budget as the embodiment of fiscal restraint.

Alaska asks oil companies to help write rules for oil tax cut, Parnell and the Republican majority approve SB 21, a massive 2 billion dollar a year giveaway. ….that worked out well.

For the oil companies.

Lots of ideas have surfaced in the past few days to explain Alaska's vanishing dollars but state reports show it's oil production declines and the new law that cuts oil taxes.

Reports show the production tax decline this year of 50 percent, from $4 billion in fiscal year 2013, under ACES, to $2 billion in fiscal year 2014 under SB 21. (2 billion lost because of SB 21)

That we've reached $2 billion deficit territory at a time when the Legislature and governor said the opposite should be enough to demonstrate that they started lying a long time ago and need to be voted out of office for malfeasance.

Vote out the corrupt liars. Vote out Parnell and the members of the Republican majority.

They played you for fools.

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