North Slope, Cook Inlet output look steady

PHOTO/Courtesy VECO Corp.
Lower oil prices are casting a shadow over the state’s petroleum industry, but with new oil fields on line, production is actually increasing for the first time in years.

More oil is being produced in the Alpine field, now a year old, and the new Northstar field began producing this year. With oil from the older fields, a total of about 1.1 million barrels per day is now moving down the trans-Alaska oil pipeline.

Not too long ago, pipeline throughput had dipped as low as 950,000 barrels per day.

The near-term outlook for the state’s oil patch is for fairly steady levels of activity on the North Slope, with Phillips Alaska Inc., Anadarko Petroleum Corp. and Alberta Energy Co. planning new exploration drilling. BP Exploration (Alaska) Inc. will be concentrating on further development of the existing producing fields, according to President Steve Marshall.

One major project planned by BP is an expansion of the Schraeder Bluff heavy oil deposit that is part of the Milne Point oil field.

Much attention will focus on what decisions the three major North Slope producers, BP, ExxonMobil Production Co. and Phillips Alaska Inc., will make with results of a $100 million feasibility and engineering study of a natural gas pipeline from the North Slope to the Lower 48.

Preliminary indications are that the economics of the project are not attractive, but the three companies will complete their analysis early in the new year and will also consider ideas put forth by a consortium of pipeline companies being formed by Foothills Pipe Lines Ltd. of Calgary.

Foothills said the pipeline group hopes to make a proposal to the producers by the end of this month. The expectation, however, is that no decision will be made soon to move forward with the project.

Although there is still confidence that long-term market trends in North America will generate demand for gas from the Arctic, the short-term price weakness and a rush of new gas supply on the market will cause the industry to be cautious.

The oil and gas outlook in Cook Inlet is more upbeat. Forest Oil Corp. is moving ahead with development of its new 50 million barrels-plus Redoubt Shoals field.

Unocal and Marathon Oil Corp. say their proposed Kenai-Ninilchik gas pipeline on the southern Kenai Peninsula appears economic.

Permits for the pipeline have been applied for, and the first phase is expected to be in operation in 2004. Marathon and Unocal say their exploration drilling for gas has been successful in the Ninilchik area but did not disclose details.

Oil field construction companies expect their business to be down in 2002 compared with 2000 and 2001, but that’s because big module, pipeline and other oil field construction projects with the Alpine and Northstar fields are completed.

Aside from a possible gas pipeline, which is likely to be several years away, contractors are looking to a probable major expansion of the Alpine field processing facilities by Phillips and Anadarko to allow for more oil production there, and ExxonMobil’s gas recycling and condensate production project at Point Thomson.

Point Thomson has an estimated reserve of 9 trillion cubic feet of gas. Until a gas pipeline is built, ExxonMobil plans to produce the gas condensate, a hydrocarbon gas liquid that condenses out of the gas as it is produced. The dry gas, with condensate removed, will be reinjected into the underground reservoir.

12/30/2001 - 8:00pm