The amount of undiscovered, technically recoverable natural gas resources in Alaska’s Cook Inlet region is “significantly more” than what was thought 16 years ago, the U.S. Geological Survey (USGS) said last week. However, increased production won’t be available in time to meet an upcoming supply shortfall predicted by a group of utilities in the region.

The new USGS estimate, which includes conventional and unconventional resources, is 19 Tcf of natural gas, about 600 million bbl of oil and 46 million bbl of natural gas liquids. The gas estimates are significantly more than the last USGS assessment of southern Alaska in 1995, in which a mean of 2.14 Tcf of gas was estimated, the agency said.

The increase in the undiscovered resource is attributed to new geologic information and data. “For the first time USGS has evaluated unconventional (or continuous) as well as conventional petroleum resources in the Cook Inlet region of Alaska,” said Brenda Pierce, USGS energy resources program coordinator.

USGS said the assessment is intended to provide an updated, scientifically based estimate of petroleum potential at a time of increased public concern about possible shortages of natural gas supplies in Anchorage and nearby communities where natural gas produced from the Cook Inlet region is the principal source of energy for heating and electric power generation.

“The new assessment is good news for Southcentral residents,” said U.S. Sen. Lisa Murkowski (R-AK). “If these estimates prove correct, and if companies continue to invest in the region, we should have a reliable, long-term supply of natural gas to meet local power needs.

“The problem is obviously one of timing. How quickly can this expectation of natural gas be developed, when we need it now to keep the lights on in Southcentral Alaska? While this new assessment holds great promise for the future in Southcentral, we still have a short-term supply problem that needs to be dealt with.”

Utilities in Southcentral comprise a group that believes the time is now to begin developing liquefied natural gas (LNG) import capability to head off a 2 Bcf supply shortfall projected to occur in 2014 and grow in the following years.

Jim Posey, general manager of Municipal Light & Power (ML&P), which is one of the Southcentral utilities that plans to seek LNG supply, has been waiting on North Slope gas for a long time, since before he even lived in Alaska. “I started working in Dallas for Arco in 1975 expecting the gas to be going off the Slope in 1987-1989. After 35 years of waiting it’s a long time,” he told NGI.

While it might come someday — either through a bullet pipeline or on a spur off a Lower 48 project — there’s no way North Slope gas will make it to Southcentral in time to meet the utilities’ near-term needs, they believe. In the meantime, ML&P, Enstar Natural Gas Co., Chugach Electric Association and gold mining concern Donlin Creek LLC are relying on supply from the Cook Inlet, which has been declining.

According to a recent presentation given by Daniel Helmick, ML&P manager of regulatory affairs, to the Regulatory Commission of Alaska (RCA), the utilities’ projected annual supply shortfall in the Cook Inlet climbs rapidly after 2014. In 2015 it is projected to be 10 Bcf and double the next year, growing to 64 Bcf in 2022 if new supply is not secured.

Chevron Corp., one of the producers active in the Cook Inlet, would not comment on its exploration/production plans there, nor would ConocoPhillips.

Posey said it’s not as though the utilities haven’t been trying to gain access to North Slope gas. “The problem is what you do between now and 2014 and 2015…[LNG] will supplement what we’re using in order to make sure that we don’t have any drops.”

Future sourcing of LNG is still up in the air, but the region needs dry gas that does not require processing, Posey said. “It has to match basically the gas that’s coming out of the [Cook] Inlet…That’s the heating value that works best for our equipment; otherwise you’ve got to go back and do some things. We have old equipment and new equipment; old equipment doesn’t like changes.”

An onshore regasification facility is probably what would be needed to allow for importation of LNG during the winter, Posey said.

In order to import LNG the utilities will need approvals from the RCA and their respective boards, as well as the Federal Energy Regulatory Commission. “The FERC piece is a little bit different because we don’t usually deal with FERC. But the people we deal with deal with FERC all the time,” Posey said.

“I think by this fall we’ll have things pretty nailed down on what we’re going to do and who we’re going to do it with.”

Alaska has been exporting LNG to Japan from a liquefaction terminal at Kenai, but that facility is to be mothballed soon after it sends out one more cargo, a spokeswoman for operator ConocoPhillips said, adding that converting the facility to regasification in the future is one option being considered (see NGI, Feb. 14).

Since oil and gas production began in the Cook Inlet region in 1958, more than 1.3 billion bbl of oil and 7.8 Tcf of gas have been produced, according to the USGS. Included in the USGS assessment are coalbed methane and tight gas formations, as well as resources beneath both onshore and offshore areas of the Cook Inlet region, excluding the federal offshore and beneath areas where accessibility may be limited by policy and regulations.

The assessment of undiscovered gas resources ranges from 4.976 to 39.737 Tcf (95% and 5% probability, respectively. About 72% is estimated to be found in conventional accumulations, 25% in coalbed accumulations, and 3% in tight accumulations.

The assessment of undiscovered oil resources ranges from 108 to 1,359 million bbl of oil (95% and 5% probability, respectively). These resources are all conventional as there are no unconventional oil resources assessed in the region, according to USGS.

“Perhaps the best news is that this new [USGS Cook Inlet] estimate reflects major reserves in state waters and state lands,” Murkowski said. “That means Alaska residents can expect the jobs, revenues and energy security benefits from these resources within just a few years, compared to the endless delays that plague development in federally held areas.

Also last week, Alaska Gov. Sean Parnell and state Natural Resources Commissioner Dan Sullivan touted a plan to tap the state’s oil reserves and refill the Trans Alaska Pipeline System (TAPS), with the hope of shipping 1 million b/d of oil on TAPS within a decade.

Much of the undeveloped acreage in the state’s Central North Slope is to be made available in a lease sale this October, Sullivan said. The region holds 3-6 billion bbl of oil and 24-45 Tcf of natural gas, according to federal estimates of undiscovered, technically recoverable resources. The resources on state land include dozens of pools of conventional oil that range in size from 50 to 150 million bbl, tens of billions of bbl of heavy and viscous oil, and potentially enormous shale oil deposits, the governor’s office said.

“For nearly 35 years, Alaska has been one of the most critical sources of domestic energy for American citizens, via the 800-mile Trans-Alaska Pipeline,” Sullivan said. “More than 15 billion barrels of oil from Alaska’s North Slope have been produced for the Lower 48 since TAPS’ creation. “We are laying out a plan to enhance America’s energy security by aggressively marketing additional state lands for development.”

Sullivan said that in cases where state lands are abutting federal lands [the National Petroleum Reserve (NPR) and the Arctic National Wildlife Refuge (ANWR)] where drilling is prohibited it would be legally possible for an operator to drill straight down on state land and tap the reservoir, even that underlying the federal lands. Directional drilling to target the reserves under federal lands would be illegal, though, he told reporters during a briefing in Washington, DC.

The governor’s five-point plan for refilling TAPS calls for:

Parnell used the speaking opportunity to take a swipe at the Obama administration’s plan to release 30 million bbl of oil over the next 30 days from the SPR to address supply disruptions from Libya. “This decision only provides the nation with 30 days of additional oil supply,” Parnell said. “It will have no long-term impact. The real strategic petroleum reserve is Alaska, which has the potential to provide more than 30 billion bbl of oil over three decades.

“Developing Alaska’s vast hydrocarbon resources will supply the nation with billions of barrels of domestic crude. It will provide tens of thousands of high-paying jobs, and it will generate hundreds of billions of dollars in revenue for the federal government. The right policy call for the nation is to develop Alaska’s resources.”

Parnell and Sullivan spoke during a briefing at the Institute for 21st Century Energy at the U.S. Chamber of Commerce in Washington, DC.

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