Unocal gearing up for busy year

Posted: Thursday, March 01, 2001

Unocal Alaska expects to double capital spending for 2001 in Cook Inlet and is aggressively hiring new employees as the company's oil and gas division gears up for a busy year.

Headquarters:

El Segundo, Calif.

Alaska manager:

Charles Pierce

Employees: 350

Production in 2000:

12,285 barrels of oil per day; 124.9 million cubic feet of gas per day.

Capital spending in 2001:

$60 million in Cook Inlet

Local phone:

283-7505

Web site: M/b>

www.unocal.com

Outlook for 2001:

Unocal Alaska plans to double its capital spending to $60 million in Cook Inlet for 2001. The company signed a gas sale contract with Enstar and is part of a joint study to determine the feasibility of

building a natural gas pipeline to the

southern peninsula.

"Our gross capital spending in Cook Inlet will be around $60 million this year," said company spokesperson Roxanne Sinz. "That is double last year's total and the highest since 1995."

Included in the projects are drilling, workover and upgrade projects at Cook Inlet platforms, drilling two unproven reservoirs, gas exploration projects and participation in a feasibility study for a possible gas pipeline to the southern Kenai Peninsula.

"It's going to be a busy year," Sinz said.

Last fall, Unocal completed the sale of its Nikiski agricultural products business to Agrium Inc. of Calgary, Alberta, for $321 million. The sale also included Unocal facilities in Washington, Oregon and California. Unocal's Cook Inlet oil and gas operations include 10 oil and gas production platforms and six of the inlet's 11 gas fields. Unocal will continue to supply natural gas to the Nikiski plant under a contract that runs until 2009.

For the year 2000, Sinz said, Unocal added substantially to its gas exploration acreage and completed rig and facility projects at Ivan River and Swanson River gas fields and at the Steelhead Platform. The bulk of those improvements came in the form of additional compression units to boost production.

She said the company started investments in a multi-year gas exploration drilling program.

"The program is approved to drill and test two Unocal operated projects in 2001," Sinz said. "If exploration is successful, we plan to start development of the new field or fields in 2002 and begin production in 2003 or 2004." She declined to give a location for the prospects.

Projects slated for 2001 include a nine-month program to increase production at the King Salmon Platform.

"We have four drilling projects and four workovers planned," Sinz said. "They are going to be aggressive programs to boost production."

Other plans call for installation of up to eight more submersible pumps on Trading Bay Unit platforms as well as seismic and drilling projects at Pretty Creek, just west of the Ivan River field on the west side of Cook Inlet.

"There will be three for sure this year and maybe another five later this year or early next year," Sinz said of the platform pumps. "They're just more aids to production as the pressure of the reserves declines."

Another workover project is planned for the Swanson River field and a compression project is planned for the Steelhead Platform, Sinz said. She added plans for drilling two "unproven reservoirs with additional potential" in the Trading Bay Unit and the Granite Point field were on tap.

Unocal announced the 600-million-barrel cumulative production milestone of the Trading Bay Unit last month. Sinz said the unit encompasses the McArthur River field, the largest offshore oil field now in production in Cook Inlet. The unit produces from four of the 10 platforms Unocal operates in the inlet.

"The milestone puts the field in the ranks of Unocal's all-time biggest producers," Sinz said.

Current production is 12,500 barrels of crude oil per day. Unocal's working interest is 54 percent, with the remaining interest held by Forest Oil Corp.

The Swanson River field also will see an expansion of Unocal's propane facilities in 2001, an effort to increase production to target imported propane.

"The state of Alaska currently imports 30 percent of its propane, mostly from Canada," Sinz said. "We want to expand production to displace those imports."

Unocal also will take part in a joint pipeline study with Homer Electric Association and Enstar Natural Gas Co. to determine the feasibility of building a natural gas pipeline to the southern peninsula. Unocal signed a gas sales contract with Enstar last year.

The joint study was announced in December. The proposed $45 million pipeline would run to Ninilchik, then farther to Anchor Point and Homer. According to reports, not only would the pipeline bring natural gas service to southern peninsula residents, it also would transport and deliver gas from exploration sites on the southern peninsula to existing commercial and residential customers on the Railbelt.

Under the proposed plan, Alaska Electric Generation and Transmission Inc., of which HEA is the primary owner, would own the natural gas transmission line. Enstar would own and operate retail distribution spurs and Unocal would be a shipper of gas on the system.

HEA General Manager Norm Storey said in December the study will look at the overall feasibility of the plan and consider other factors, like the scope of the project as well as different construction phases. He said the pipeline would probably be built in stages and follow the path of existing HEA transmission lines and Sterling Highway right of way.

Construction on portions of the project could begin by 2002, he said.



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