Future bright for Chevron

Executive likes oil producer’s Cook Inlet, Alaska prospects

Posted: Wednesday, March 21, 2007

More than 80 oil industry support company representatives, including some top echelon executives, turned out to hear Chevron’s top Alaska manager describe the oil giant’s position in the state and its plans for future development.

Chevron’s Steve Wright, Alaska asset development manager, told members of the Kenai Chapter of the Alliance that Chevron is committed to significant investment to help stem the decline of oil production in Cook Inlet.

Wright painted a bright picture for the oil and gas industry support firms, saying Chevron’s presence on the Kenai Peninsula dates back to the 1950s when the company had an interest in the first exploration well that discovered the Swanson River field.

Wright, who became Alaska asset manager following Chevron’s merger with Unocal in 2005, said the company now ranks sixth on the Fortune 500 list of companies and employs 55,000 people throughout its Chevron, Texaco and Caltex companies.

In Alaska, the company has 400 employees and is the third-largest operator and fourth-largest producer, he said.

In the Cook Inlet basin, Chevron operates Granite Point, Trading Bay Field, Trading Bay Unit and Grayling Gas Sands offshore, as well as West Side Gas, Pretty Creek, Stump Lake and MacArthur River properties onshore. Chevron also has interest in the Beluga River field. The company’s combined oil and gas production in the inlet is 25,000 barrels of oil equivalent per day.

“We have a capital improvement budget of more than $200 million over three years for a multi-year development program to stabilize production and extend the life of the fields (in Cook Inlet),” Wright said.

He said Chevron plans to look at infills, waterfloods and step-out wells as secondary recovery methods as well as using what he termed “extended reach horizontal drilling.”

The extended reach method drills down, then diagonally and then horizontally through a producing zone.

Chevron also is looking at Jurassic interval tests, which Wright said address potential oil lying deep beneath existing fields.

Among challenges facing Chevron is the fact that some of its offshore platforms are 20 to 50 years old, including the drilling rigs that are mounted on the platforms.

“Chevron is looking at the possibility of bringing in a flexible rig that could move from platform to platform,” Wright said.

The company also is faced with limited resources in Alaska, specifically limited manpower and technical resources, for which he said he must compete with the company’s assets worldwide.

He said the company plans to kick-off its old oil re-drilling program in Cook Inlet this year.

In terms of natural gas, Chevron is looking at additional exploration and production in Cook Inlet, looking at importing LNG rather than exporting the liquefied natural gas product from Kenai, and keeping an eye on a spur line to tap stranded North Slope gas and bring it to Cook Inlet.

“Our gas opportunities include developing new supply at Granite Point and South Kenai; continuing field development at Beluga River, MacArthur River, West Side, Ninilchik and Happy Valley; and expand (natural gas) storage,” he said.

Wright said he would be remiss without mentioning Chevron’s North Slope assets.

With net production of 15,500 barrels of oil equivalent per day, Chevron holds a lease position on 430,000 acres, he said.

The company’s North Slope assets include: Alpine field, 1 percent; Kuparuk, 4.95 percent; Prudhoe Bay, 1.1 percent; Endicott, 10.52 percent; and Point Thompson, 25.1 percent.

“Chevron sees a bright future in Alaska,” Wright said.

Phil Hermanek can be reached at phillip.hermanek@peninsulaclarion.com.

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