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Cook Inlet Energy scrambles for fuel gas as market tightens

Wesley LoyPetroleum News

Cook Inlet Energy LLC recently decided to delay its plans to repair a shut-in and potentially lucrative oil well to focus instead on reviving an idle natural gas well.

Why?

The company has been having trouble securing enough fuel gas for field operations. It hopes to restore production soon from the gas well known as RU-3 so the company won't have to rely on buying gas supplies that have become increasingly scarce.

"We need our own supply," David Hall, Cook Inlet Energy's chief executive, told Petroleum News on Nov. 20. "We need gas to turn the drill bit."

Cook Inlet Energy is a small, Anchorage-based oil and gas producer that operates a number of properties including the West McArthur River oil field and the offshore Redoubt unit with the Osprey platform.

Since late 2009, the company has been focused primarily on reviving shut-in assets it acquired in a bankruptcy sale. It recently installed a new rig atop the Osprey platform to revive idle wells and drill new ones.

The company has been purchasing nearly 1 million cubic feet of gas per day for operations, mainly to generate power. Hall declined to identify the supplier or specify the cost of the gas.

But he acknowledged the gas is expensive, with several supply disruptions in recent months.

Fortunately, Cook Inlet Energy hasn't had to shut down any operations for lack of fuel gas, he said. The company has backup diesel power, but that's not a cheap option.

The tight gas market has alarmed the company. So, Hall and his team recently made a decision to delay a planned sidetrack of the RU-2 oil well on the Osprey platform and instead perform a workover of RU-3, a previously producing gas well.

The RU-3 well started with considerable promise for the previous operator, showing initial production of more than 8 million cubic feet of gas per day, Hall said.

But production fell off dramatically. Hall believes RU-3 can be revived by recompleting the well, reassessing the zone of interest, and installing better equipment to control high pressures.

It's a fairly deep well at 14,000 feet, reaching into the Lower Tyonek gas sands, Hall said.

With luck, the RU-3 will come back strong enough not only to meet Cook Inlet Energy's internal gas needs, but to help the company become a net gas exporter, Hall said.

He's hoping the workover might be complete around the end of the year.

Cook Inlet Energy already is producing a small volume of gas from two wells in its West Foreland gas field. The company also has been trying to coax some gas from a well at its Kustatan production facility.

Cook Inlet's declining gas reserves, and the rising difficulty in delivering adequate rates of gas in the peak winter season, has become a well-chronicled story in recent years.

A new Kenai Peninsula gas storage facility, operated by Cook Inlet Natural Gas Storage Alaska, or CINGSA, is expected to help improve deliverability.

But Hall believes the effort to fill up the storage reservoir has contributed to tight gas supplies.


By WESLE LOY
Petroleum News