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Inlet natural gas discovery called largest in 25 years

Richard Mauer

An independent petroleum company, Escopeta Oil, said Friday it believes it has made the largest discovery of natural gas in Cook Inlet in 25 years.

In a prepared statement issued Friday, the Houston-based company said the discovery, estimated at 3.5 trillion cubic feet of natural gas, was large enough to justify commercial gas production from its exploration well, the Kitchen Lights Unit No. 1.

"Because of this discovery, which could be the largest discovery in the Cook Inlet for a quarter of a century, Escopeta is currently in the preliminary design stages of an accelerated natural gas development scenario that could bring new gas deliverability to the Cook Inlet as early as 2013," Escopeta vice president Bruce Webb said in a prepared statement sent to reporters at 5:30 p.m. Friday.

The company said it believes it has discovered more than 45 billion cubic feet of gas at that single well, with the 3.5 trillion cubic feet figure an estimate of its newly discovered gas in the larger Kitchen Lights Unit from two separate geologic formations. Escopeta's claims could not be immediately verified.

Fears that old wells in Cook Inlet are running out of gas have prompted strong pushes in the Legislature and the business community for construction of a gas pipeline to bring the vast North Slope gas reserves to the populated areas of the state. Declining local gas reserves have also been cited in renewal of a hydroelectric proposal for the Susitna River -- a project scuttled in the 1980s partly over cheap gas production in Cook Inlet.

Whether new drilling in Cook Inlet will erase concerns about long-term gas supplies is still a major question. Geologists have recently increased their estimates of gas that could be discovered in Anchorage's watery backyard, but it's a long cry from the opinion of experts to gas in a pipe. To boost exploration, the Legislature offered financial incentives to drillers, and Escopeta said those benefits were essential to its business plans.

Webb said the gas was discovered in two known geologic formations, Sterling and Beluga, in a well drilled to 8,805 feet about 10 miles north of Nikiski. The well was begun Sept. 2 using the Spartan 151 jack-up rig, brought to Alaska from Galveston, Texas, around the tip of South America.

That voyage might have cost the company a huge fine. Two weeks ago, the U.S. Customs and Border Protection said it would fine Escopeta $15 million for violating the Jones Act by using a non-U.S. carrier to haul the rig. The company indicated it would contest the fine.

If the fine sticks, it could eat up most of the $25 million tax incentive Escopeta would get from Alaska if it extended the well another 8,000 feet into the Jurassic Formation. The state offered the tax reward to the first company that tapped the formation, Webb said.

Due to seasonal drilling restrictions forced by ice, Escopeta suspended drilling Oct. 28. It plans to reopen the well next year and cut its way to the Jurassic. Three other known gas and oil formations -- Tyonek, Sunfish and Hemlock -- are expected to be encountered before the well bottom.

Reach Richard Mauer at rmauer@adn.com or 257-4345.


By RICHARD MAUER
Anchorage Daily News
Contact Richard Mauer at or on