Marathon fuels customers in Alaska, Japan

Posted: Saturday, April 22, 2000

Marathon Oil Co. ranks among Cook Inlet's top producers of natural gas, with production last year averaging 140 million cubic feet per day.

It sells most of its gas to the liquefied natural gas plant it owns with Phillips Petroleum Co. in Nikiski and to Enstar Natural Gas Co. for distribution to residential and business customers from Anchorage to Soldotna.

Phillips operates the LNG plant and owns a 70 percent interest in that and in the ships that carry 1.1 million tons of LNG each year to Japan. Marathon owns the other 30 percent and operates the ships.

Phillips and Marathon have been shipping LNG to Japan since 1969. The 1,000th ship sailed in 1998. Their customers are Tokyo Electric Power Co. Inc., Japan's largest electric utility, and Tokyo Gas Co. Ltd., its largest natural gas utility.

The two present tanker ships, built in 1993 and 1994, hold 23 percent more LNG than the original ships. Phillips and Marathon recently won extension until 2009 of the federal license that allows them to export Cook Inlet gas.

Marathon has been active in the Cook Inlet oil and gas industry since the 1950s. It now operates the peninsula's Beaver Creek, Cannery Loop, Kenai and Sterling gas fields and the North Trading Bay gas field in Cook Inlet, tapped from the Spark Platform offshore. Marathon also owns the Spurr Platform, which is now dormant.

In 1996, Marathon announced an agreement to sell its Alaska oil interests, including roughly 50 percent interests in the inlet's Trading Bay and McArthur River fields, to Forcenergy Inc. The sale closed, but Marathon still holds a 51 percent working interest in natural gas from the Grayling Platform in the McArthur River field. Unocal operates the platform.

Marathon spokeswoman Susan Landreneau of the company's Houston, Texas, headquarters, said managers plan to drill up to five wells, and maybe more, in the Cook Inlet area this year. The company is considering seismic surveys but has not yet finalized any plans.

Marathon also is seeking permits to develop natural gas by Wolf Lake, roughly 10 miles north of Sterling, on subsurface holdings leased from Cook Inlet Region Inc. The Kenai National Wildlife Refuge holds the surface rights.

Jim Frates, operations officer for the refuge, said Marathon plans to produce natural gas from the Wolf Lake No. 2 well. Arco drilled that in the 1980s, looking for oil, but did not find commercially viable quantities. Frates said Marathon reworked it last year and found enough natural gas to warrant development.

Now, the company proposes to build 5.5 miles of pipelines to carry Wolf Lake gas and the water that comes up with it to existing production facilities at the Beaver Creek Field. It plans to inject produced water back underground through a permitted disposal well at Beaver Creek.

If the permits are approved, Marathon will build the pipelines next winter, Landreneau said. Construction will take about two months. She said she could not say how much gas the Wolf Lake area is expected to produce. Information Marathon provided for a recent public hearing suggests that the pipeline will operate for 20 years.

Landreneau said Marathon is still reviewing geological information from the Wolf Lake area but plans to drill at least one well there after the pipelines are finished. Frates said Marathon has at least two prospects near Wolf Lake. The Galena well site, first drilled in the 1960s, has not yet been reworked, he said. A second site by Mosquito Lake has never been drilled at all.

The Wolf Lake area was the site of a bear attack that killed a worker helping with seismic surveys in February 1998.

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