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Could Cook Inlet's oil and gas renaissance transform Alaska?Thanks to favorable tax terms, high oil prices and a recently upgraded resource estimate, Cook Inlet could be on the cusp of an oil and gas revival, say a rush of independent prospectors punching holes into the big basin in Anchorage's backyard. Apache Corp., a global oil producer, is drilling acoustic holes in west Cook Inlet to seismic-test much of the area's geologic potential. Houston-based Escopeta Oil and Gas recently announced that it discovered what may be Cook Inlet's largest natural gas find in 25 years. NordAq Energy Inc., with headquarters in London, Anchorage and Kenai, recently announced that it expects to soon produce up to 50 million cubic feet of natural gas a day from the northern Kenai Peninsula. And other companies are in the hunt. If they can pump out even a fraction of the inlet's estimated natural gas and oil resources, their discoveries could be a game-changer for the state's energy plans. If enough natural gas can be produced from the inlet, does Alaska really need a multi-billion-dollar, state-supported pipeline from the North Slope to Southcentral? Could there be enough Cook Inlet gas to supply Fairbanks and some of Bush Alaska, reducing soaring energy prices beyond the Railbelt? And could there really be a big oil field lying in wait? The independents sure hope so. A one-time US energy heavyweightCook Inlet is like any maturing basin, said Jim Watts, chief executive for Buccaneer Energy Alaska. Major companies are moving out and smaller independents are moving in. But there are big differences between Cook Inlet and other old plays around the world. For one, it's largely unexplored. And the potential is vast. It's an ideal situation with huge promise, said Watts, one of several Cook Inlet explorers presenting at the Resource Development Council for Alaska's annual meeting this week in Anchorage. Cook Inlet, the 180-mile-long water body known for its bore tides and beluga whales, once supplied a good portion of the nation's domestic oil. Since oil and gas production began there in 1958, companies have pumped out more than 1.3 billion barrels of oil. But production peaked in 1970, shortly after the mother lode discovery on the North Slope. By 2010, oil production in Cook Inlet had fallen to an average of about 10,000 barrels a day, about one-sixtieth of North Slope production these days. Interest in Cook Inlet waned in the 1970s because the most obvious sources of oil had already been produced, said Kevin Banks, a petroleum market analyst for Alaska's oil and gas division in the Department of Natural Resources. "Further production would have to wait until the price of oil rose enough," drilling technology improved, and smaller companies were willing to come in and explore, Banks said. All of that's happening now, with oil above $100 a barrel stoking interest, as well as generous state incentives that include tax credits for exploration work and a production-tax structure that falls under the state's old system. There's apparently much more to explore. During Cook Inlet's heyday, explorers discovered oil in relatively shallow areas, said Ethan Schutt, an executive with CIRI Native Corp., a major landowner in the region working with independents and exploring the basin's vast coal potential. After the discoveries, the companies turned their attention to production, leaving untapped several thousand feet of potential reservoirs throughout the basin. As Schutt described it, there's essentially another basin and a half waiting to be explored.
Does anyone know how much gas Armstrong has found on the Kenai? The pipe heading north from their find near Anchor Point is much larger in diameter than the pipe it joins heading north from Marathon's finds around Clam Gulch. Just wondering. Escopeta's discovery would have happened 2 years ago were it not for the Parnell Administration's delays in renewing leases. The question is, why were there any delays, given Parnell's alleged support of the oil industry? If they start a pipeline heading North and keep going they will have half of one going to the slope done. Designate state taxes on that gas to go to a pipeline heading north and to further reaches. We need to call for a full investigation into non-reportable Alaskan "subfunds" into private equity where private equity holdings benefit from legislation, receive preferential treatment, and direct subsidization... Which private equity companies hold state money to invest in these Junior players like; Enstar, Buccaneer, Cook Inlet Energy, Great Bear, Linc Energy, etc???..... Something tells me that private equity would be a great place for our beloved representatives to commingle personal funds with state funds. http://juneauempire.com/stories/102807/let_20071028011.shtml You are exactly right, but most people don't know how this works or what is going on yet. Basically, it's this--- the government keeps two sets of books, just like Al Capone. They split reporting their income into "budgeted" and "non-budgeted" income. All we ever see or talk about is the budgeted portion. All the rest of their income comes in under the radar and is reinvested in all sorts of things, including private companies. Once the government is invested in a private company (like Enstar) then the temptation for the politicos is to use the government's ability to tax and regulate to specifically benefit the company that they own an interest in. Or, as in the case of the State of Alaska having a controlling interest in Enstar Natural Gas Company, the politicians tried (beginning with Sarah Palin and now Mike Chenault and Rep. Hawker) to give "their" company the contract to build the in-state gas pipeline. See how this works? They use "non-budgeted" money to invest in private companies, then finagle taxes, regulations, and construction contracts to benefit that company. Then the rats who have engineered this cushy little "return on investment" for the State, invest in that same company themselves as individuals, and profit from their insider knowledge. Naturally, too, those legislators who know where the money is going and who is benefiting, then have the chance to place side bets ahead of anyone else and get in on the ground floor via a form of insider trading. The worst thing is that most people don't even know that this is going on, or that the public sector has MASSIVE investments in private companies, such that a lot of "private" companies are OWNED or controlled by public sector investors. The solution to a question speckelfoot raises is a Texas Railroad Commission approach to marketing of Cook Inlet gas You get to market your gas in proportion to your reserves that way everybody obtains piece of pie and nobody is locked out. It is the locking out by Conoco/ Enstar that has Stifled gas exploration. The RCA, Regulatory Commission of Alaska, also needs to be overhauled. It could and should transform a lot. And a lot of people should be wondering----why did it take so long for this to happen? There is something profoundly fishy about all this. We always knew that Cook Inlet had a lot more gas and oil in it, but somehow, nobody bothered to develop it aggressively. The state sat on its butt, the oil companies sat on their butts. Nobody did anything much, except Armstrong and now, Escopeta. And Senator Thomas Wagoner, God bless him forever. Strange, that, with millions of barrels of oil and billions of cubic feet of gas, right there, close in, ripe for taking....and needed sorely by the people in South Central----all the large oil companies were ready to close up shop, just roll up the rug, with all that oil and gas just laying there in plain sight.... Wagoner led a largely one-man effort to get the tax credits together to encourage the northward migration of a jack up rig or rigs, that could transform Cook Inlet back into a highly productive and profitable oil and gas field. Others in the legislature felt sorry for the Kenai (and needed the Kenai votes) so he was able to get enough money together to push the plan through. Now, surprise, surprise, we've got a gas strike. Who knew? It was only number 48 on the USGS list of largest gas fields in the United States. How could we expect to find oil or abundant gas there? The real numbers are--an estimated 350 million remaining barrels of oil and a minimum of 19 trillion cubic feet of gas lie under Cook Inlet. That's enough to keep South Central Alaska going for at least a couple hundred years. So---why did our state government and our vaunted oil companies sit around on their duffs all these years? ANSWER: The major oil companies WANT to restrict oil and gas supplies so that they make higher profits. They are purposefully slacking back on production and price gouging us. The State of Alaska loses, because it gets less in production taxes. We lose, because we have to have heat and lights and are forced to pay higher and higher energy costs. The oil companies rake in higher and higher profits in return for producing LESS oil and gas. They gain in two ways---higher profits, and more oil and gas left in their lease portfolios for sale. Next time you see an oil company official, don't grovel in awe. Don't trust a word those jackals say. And especially, don't be taken in by their yammering about ACES. The tax reform just takes away their incentive to continue sitting on their butts, and that's a good thing. |
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