Phillips Alaska Inc. plans $8 million in Cook Inlet capital spending this year and more to drill an exploratory well near Anchor Point.
The bulk of the capital money will go to install production equipment at the Moquawkie gas field in western Cook Inlet and to complete an upgrade to the Tyonek Platform. Money for the well near Anchor Point comes from a separate pot -- $50 million Phillips has budgeted for exploration statewide, including 12 to 15 wells on the North Slope.
Phillips spokesperson Dawn Patience said the acquisition of Arco Alaska Inc. last year gives Phillips an incentive to explore for oil and gas in Cook Inlet. The acquisition added Arco's 41,800 acres in undeveloped Cook Inlet leases to Phillips' 7,000 acres of Cook Inlet leases. Some leases have reverted to the state, she said, but Phillips still holds 47,440 undeveloped acres in Cook Inlet, including prospects offshore and on dry land.
Scott Jepsen, Phillips' Cook Inlet asset manager, said Phillips plans to drill the new well from a gravel pit seven miles north of Anchor Point, using directional drilling to tap an offshore prospect.
Patience said Phillips will not reveal the exact drilling site until it files for permit applications. That should happen within the next few months.
"When we drill, we're searching for gas and oil," she said. "It's too early to tell what we'll find or what the prospects are for commercialization until we drill the well."
Jepsen said Phillips hopes to begin production in January 2002 from the Moquawkie gas field in western Cook Inlet, where Phillips is a 50 percent partner with Anadarko Petroleum Corp. Anadarko is the exploration operator and Phillips is the production operator, he said.
Anadarko struck gas with its first Moquawkie well about two years ago. This year, Phillips plans to install a compressor, equipment to remove the water from the gas and six to 10 miles of pipeline to connect Moquawkie to the Enstar pipeline at Beluga or to a separate pipeline operated by Marathon Oil Co. Jepsen said he could not reveal the estimated cost of the project, since Phillips still must solicit construction bids.
He said Enstar Natural Gas Co. will buy the gas.
Plans for additional Moquawkie wells are on hold, he said.
"We just finished drilling a second well, but it didn't have commercial quantities of gas," he said. "It looks like this is probably all we're going to do. "
Phillips' 2001 capital budget also includes money to complete a $28 million project to stabilize production from its Tyonek Platform, which produces Phillips' share of gas for the liquefied natural gas plant in Nikiski. Phillips and Marathon, which own the plant, ship LNG to Tokyo gas and electric utility companies.
The upgrade, which began last year, includes installation of two gas turbine-driven compressors. Those will add about 12,600 horsepower to the platform's present 8,700 horsepower compressing capacity.
"'They lower the wellhead pressure so we can keep producing gas at a stable rate. They essentially suck the gas out of the ground," Arnie Holhjem, the company's Alaska regional manager, said last year.
Jepsen said the Tyonek project also includes installation of piping to reduce bottlenecks.
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