Dry Unocal wells hurt chances for Homer gas

Posted: Friday, April 26, 2002

ANCHORAGE (AP) -- Hopes for natural gas service in Homer dimmed this week when Unocal Corp. announced it would halt drilling efforts in the Anchor Point area after three wells south of Ninilchik failed to pan out.

''We were unsuccessful in finding gas in commercial quantities in the three wells,'' said Roxanne Sinz of Unocal. Two of the wells are near Ninilchik and one is at Anchor Point.

For Enstar Natural Gas Co., which hopes to serve the southern Kenai Peninsula, that means ''we've got to go back and look at all the options,'' said Enstar vice president Dan Dieckgraeff.

''A well at Anchor Point is an easy answer,'' Dieckgraeff said, since Unocal and Marathon Oil Co. had planned to run a pipeline down to that well to move gas north. Enstar would have added a spur line to reach Homer.

''Now the easy answer is out of the way and we need to look at other options,'' he said. It's not clear how long Enstar's analysis will take.

But Homer and Anchor Point residents hoping for cheaper heat will at least have the fuel source 33 miles closer, since Marathon and Unocal are going ahead with developing a significant field just north of Ninilchik.

Three wells there have tested at a combined rate of nearly 30 million cubic feet daily. Marathon has a 60 percent share of those wells, Unocal 40 percent.

The companies had earlier formed Kenai Kachemak Pipeline LLC to build a $100-million, 62-mile line along the Sterling Highway as far south as Anchor Point, linking up with the Southcentral Alaska network.

''However, based on exploratory drilling results on the Southern Kenai Peninsula, KKPL will not extend the pipeline beyond the Ninilchik Unit,'' said Chris Keene of Unocal and the pipeline group.

Pipeline construction is expected to begin this year, with gas shipments starting in January 2004. It's not clear how much the shorter line will cost, said Sinz of Unocal.

Dieckgraeff of Enstar said his company had offered higher prices for gas so companies would go after new sources in the region. Gas supplies have tightened as the huge Cook Inlet fields discovered in the 1960s start to play out.

Southcentral Alaska could have faced natural gas shortages by the middle of the decade without new reserves, according to a 2001 study.

''We've seen a lot of activity for gas in Cook Inlet the last couple of years,'' Dieckgraeff said. ''We hope the contracts we've signed the last couple of years with higher prices have helped that.''

Unocal isn't giving up on the Cook Inlet region, and plans to spend $13.7 million on Alaska exploration this year, Sinz said.

''We intend to follow through with a Ninilchik Unit development program and to aggressively pursue other exploration opportunities in the Cook Inlet area,'' said Chuck Pierce, vice president of Unocal Alaska.

Unocal said earlier that the Southern Peninsula fields could contain 100 billion to 600 billion cubic feet of gas. With the three dry wells, the upper end of that estimate will come down, according to Unocal.

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