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Big goals laid out

Pioneer estimates there are 30 to 50 million barrels of oil in Cosmopolitan

Posted: Wednesday, March 19, 2008

Pioneer Natural Resources Alaska estimates there is between 30 million and 50 million barrels of oil waiting to be tapped as part of the Cosmopolitan Project.

At Tuesday's meeting of the Alliance Kenai Chapter, Tadd Owens, director of government and public affairs for Pioneer, went over several aspects of the project.

Pioneer is the 100 percent interest owner and operator of Cosmopolitan, located on a 20-acre pad of land about six miles north of Anchor Point.

In January, Pioneer completed drilling and testing of its Hansen 1A-L1 well. The well is the longest extended reach drilling well in Cook Inlet at 22,650 feet and can produce 400 to 500 barrels per day.

"It wasn't the home run we were hoping for," Owens said, adding the results were encouraging nonetheless.

"We actually think this is a project that should be developed from onshore and now with (Hansen 1A-L1), we're confident that can happen."

Pioneer plans to drill and test a second appraisal well at the beginning of next year. Owens said construction of the second well is being delayed for various reasons, not the least of which is Pioneer's Oooguruk Unit offshore of the North Slope, which will begin production in a couple of months.

After testing is complete on the second well, Pioneer's board is expected to make a sanctioned decision about the project in the middle or end of 2009, allowing production to begin sometime in 2010.

When completed, Cosmopolitan will be a 12-well drill that will produce approximately 10,000 barrels of oil at its peak.

Pioneer currently is in the process of deciding whether to use a pipeline to transport the oil or carry it by truck to the Tesoro refinery in Nikiski.

"We're operating under the assumption that the trucking line option is ... what we'd go forward with," Owens said.

With peak production at 10,000 barrels, 50 truck trips of 200 barrels each would occur daily on the Sterling Highway. Owens said Pioneer is still doing its homework on traffic patterns and conducting a trucking assessment.

"We do not believe at this point that it will add a traffic concern," he said.

Since the reservoir does not lend itself to gas reinjection, a 16-mile pipeline will be constructed to transport gas to Ninilchik to connect to the Kenai-Kachemak pipeline.

The majority of jobs needed to facilitate Cosmopolitan will be during the construction phase, and the number of jobs will drop significantly once construction is complete, according to Owens.

"Jobs would certainly spike during construction," he said. "It would ramp down during the drilling phase. (The number of) permanent jobs to run the facility would be relatively small."

He estimated there would be about 12 permanent employees.

Owens also mentioned the benefits of property taxes paid to the Kenai Peninsula Borough, as well as royalty and corporate income taxes for the $400 million to $500 million capital project.

"We think this is a project that can be a pretty good shot in the arm on the peninsula," he said.

Hannahlee Allers can be reached at hannahlee.allers@peninsulaclarion.com.



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