Popp: Local crude crucial

Posted: Wednesday, October 19, 2005

There is believed to be more than 1 billion barrels of undiscovered crude oil in Cook Inlet, yet Alaska's major supplier of gasoline and jet fuel gets almost a third of its crude oil from foreign sources such as Indonesia.

The statement was made by Bill Popp, oil, gas and mining liaison for the Kenai Peninsula Borough at Tuesday's Supports Industry Alliance luncheon in Kenai. He was citing statistics from the U.S. Minerals Management Service and the U.S. Geological Survey.

"What's the problem?" Popp asked.

He said he posed the question hoping to start a discussion among industry leaders — not to provide an answer himself.

Tesoro Alaska's North Kenai refinery supplies Alaska with 70 percent of its gasoline and 40 percent of the jet fuel to Ted Stevens International Airport, he said. The refinery, which was built in 1969 to refine Cook Inlet crude oil, is now faced with local oil reserves that have declined sharply.

He said right now the refinery is processing about 15,000 to 20,000 barrels per day from foreign sources, 20,000 to 25,000 from the North Slope and 20,000 from Cook Inlet.

Popp said crude oil production in the inlet peaked at just over 90 million barrels per year in the early 1970s. About 10 million barrels of oil will be produced from the inlet in 2005, he said. At the current rate, production will cease in 2016.

"We want to make sure that the public is aware of the fact that there is a changing dynamic in our energy supply picture that goes beyond natural gas," Popp said in an interview.

Tesoro's refinery was built to process Cook Inlet crude but has the ability to process other types, as well.

"Our ability to process Alaska crude reduces marine operations and allows the state a double benefit of both producing their resource and adding value to their resource," said Kip Knudson, external affairs manager for Tesoro Alaska.

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