Forest Oil ready to spend millions

More money coming to inlet

Posted: Friday, January 05, 2001

Cook Inlet will see the lion's share of $85 million Forest Oil Corp. plans in 2001 Alaska capital spending.

Denver-based Forest Oil completed its purchase in December of Forcenergy Inc., which last summer installed the Osprey Platform near West Foreland in western Cook Inlet. The majority of the $85 million will go to drill exploratory wells from Osprey and install production facilities onshore, said Gary Carlson, Forest senior vice president, Alaska division.

Forest also is drilling a new well onshore at its West McArthur River oil field three miles south of Trading Bay.

It plans to acquire seismic surveys for several Cook Inlet leases, participate with Unocal in development at the McArthur River field and explore for oil and gas near Glennallen.

Forest has permits to drill four exploratory wells from Osprey to its Redoubt Shoal prospect, plus a fifth well where it can inject drilling muds and cuttings deep underground for disposal.

It has applied for permits to build pipelines and onshore production facilities.

"We would hope to build those this year," Carlson said. "It may stretch into next year, depending on permits, prices and delivery of equipment.

"And, of course, we have to be happy with what we find from our drilling."

He said he hopes Osprey will begin producing early next year.

Applications to the U.S. Environmental Protection Agency suggest Redoubt Shoal could produce up to 25,000 barrels of oil and 4.3 million cubic feet of natural gas per day. That would be a huge boost to the inlet's present oil production of roughly 32,000 barrels per day. It would also be a big boost to Forest, which projects 2001 production of 25,000 to 30,000 barrels per day, including 8,500 barrels per day from Cook Inlet and 160 barrels per day from Prudhoe Bay.

However, Forest really will not know how big the Redoubt Shoal reservoir is until it drills exploratory wells, Carlson said. The tentative 2001 budget includes roughly $25 million to drill exploratory wells, which will cost $5 million to $7 million each, Carlson said. The first well, already under way, has reached a depth of about 14,000 feet and should reach the target at 15,600 feet by the end of the month.

The 2001 budget includes $25 million to build pipelines and production facilities. If the exploration wells find sufficient reserves, Forest will build two undersea pipelines to carry the oil and gas roughly 3.3 miles to Kustatan on the inlet's west shore. There, it will build a power plant and facilities to remove the "produced water" that comes out of the ground with the oil and gas.

A third undersea pipeline will carry produced water back to Osprey for disposal through the injection well.

Forest also plans two 7.8-mile pipelines to carry natural gas and crude oil from Kustatan to Trading Bay. From there, it could sell gas through existing Cook Inlet gas lines, and oil through the existing pipeline to the tanker terminal at Drift River.

Forest has budgeted roughly $25 million for drilling and redrilling elsewhere around Cook Inlet. It already has started a new onshore well at its West McArthur River oil field. Carlson said the site was suggested by the success of a well drilled last year. West McArthur produces about 3,500 barrels of oil per day, of which Forest's share is 2,600 barrels per day.

Meanwhile, Forest holds roughly a 46 percent interest in the McArthur River field, tapped through the Dolly Varden, King Salmon, Steelhead and Grayling platforms. Unocal, which holds a 54 percent interest, is the operator. Carlson said the companies plan to redrill several wells and to drill a new well to a target between the McArthur and West McArthur fields.

Forest has budgeted roughly $10 million to acquire Cook Inlet seismic surveys and to pay for geological and geophysical work in the Copper River basin near Glennallen, where it holds a license to explore on nearly 400,000 acres of state land.

Carlson said Forest's 2001 spending plans have not been finalized and are subject to change depending on factors such as changing prices for crude oil and natural gas. In addition to Alaska spending, its tentative capital budget includes $50 million in Canada, $240 million in the Gulf of Mexico and $25 million overseas, for a worldwide total of $400 million.



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