Phillips sure of Inlet gas
Unlike many areas of the Lower 48, Alaska does not have gas storage facilities because the Cook Inlet gas fields are large enough to meet peak winter demands.
But as these fields mature and decline in production, they will soon no longer be able to meet winter peaks. Estimates now are that problems in daily "deliverability" of gas could begin as early as 2004.
In other states gas is stored during low demand summer months and used during winter. Such a capability could easily be established here, Jepson told the Alliance.
But exploration for gas is also just beginning in Southcentral Alaska, he said. New tools are available to the industry, like 3-D seismic, and exploration companies can now spot different indicators for gas and oil on seismic, Jepson said. These offer no guarantees of commercial discoveries, but they increase the chances of success, he said.
Also, gas prices in Southcentral Alaska are increasing.
"The new gas contracts Enstar has signed provide a price that is high enough to stimulate new exploration," Jepson said.
Southcentral Alaska has enjoyed very low gas prices for years because of the large fields’ lack of demand. Until the 1990s, gas in the Inlet was being sold for 30 cents per thousand cubic feet. Over the same period gas prices reached $2.50 and $3 per thousand cubic feet in the Lower 48, he said.
Most major producing basins go through phases of development with major discoveries made early and then years, sometimes decades, go by before new companies come in with new ideas, Jepson told the Alliance.
In the Inlet, gas was discovered in the 1960s while the industry searched for oil.
"All the big structures in the Inlet have been drilled," but there are many structures yet to be explored and undoubtedly smaller fields yet to be discovered, he said.
For example, Phillips and Anadarko Petroleum are now developing the small Moquawkie gas field discovered on the west side of the Inlet in 1998. The field will begin producing gas for Enstar in early 2002, Jepson said.
Smaller, independent companies like Anadarko, Forest Oil and Aurora are now exploring the Inlet, indicating the second phase of exploration is under way, he said.
"These are new players. More companies coming in will drill more wells," leading to more discoveries, Jepson said.
Phillips itself is exploring with a new test well in partnership with Forest, planned north of Anchor Point on the southern Kenai Peninsula, Jepson said.
However, one Cook Inlet oil exploration play now appears a dead end. Phillips plans no further work on its Tyonek Deep oil prospect near the Tyonek gas platform, Jepson said after speaking to the Alliance. The oil reservoir appears to be uneconomic at this time, he said.
Tyonek Deep is part of the Sunfish prospect in the Inlet for which there were once high hopes. ARCO Alaska Inc., which Phillips acquired last year, made an Inlet oil discovery that at first appeared large.
Subsequent drilling proved disappointing, however. Even before acquiring ARCO, Phillips continued work on a part of the Sunfish reservoir near the Tyonek platform, which it renamed Tyonek Deep. But even that was not viable to develop, Jepson indicated.