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USGS boosts estimate of Cook Inlet natural gas reserves

Erika Bolstad

Cook Inlet holds far greater natural gas reserves than government scientists estimated 16 years ago, the last time they studied the region's potential, the U.S. Geological Survey announced Tuesday.

The USGS estimates that the Inlet holds 600 million undiscovered barrels of oil, 19 trillion cubic feet of natural gas and 46 million barrels of natural gas liquids.

That's up from the 1995 USGS estimates, which suggested there were about 2.14 trillion cubic feet of recoverable gas in an area that's seen steadily declining commercial interest until recently.

The government attributes the new, higher numbers to more current geologic information and data, but new technology also plays a role. The amount of technically recoverable gas is greater simply because there's better equipment and technology for tapping it, particularly the unconventional resources.

"Our resource estimates are for undiscovered, technically recoverable" resources, said USGS spokesman Alex Demas. "So what is technically recoverable has changed."

The USGS conducted the survey to address what it described in its report as "increased public concern about possible shortages of natural gas supplies in Anchorage and nearby communities."

Natural gas from Cook Inlet is Southcentral Alaska's principal source of energy for heating and electrical power generation, the report notes. Because of declining exploration and production in the Inlet, the region faces a depletion of the natural gas supply used by utilities for electricity and home heating.

U.S. Sen. Lisa Murkowski, the top Republican on the Senate Energy and Natural Resources Committee, said if the estimates prove correct, and companies continue to invest in the region, Alaska will have a "reliable, long-term supply of natural gas to meet local power needs."

She also said it was good news that the potential reserves were in state waters and on state lands, rather than on federal property.

"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," she said.

Federal officials canceled a Cook Inlet lease sale this year for lack of interest. But the state of Alaska, which oversees the area covered in the USGS report, last week saw unusually high interest in leases it offered on 613,000 acres.

The state received just five bids for Cook Inlet tracts in 2009, and 37 in 2010. The number jumped to 110 in the recent sale, however, with Apache Alaska Corp. submitting 91 of the bids. Bids were valued at a total of $11 million.

Sen. Mark Begich, D-Alaska, called it "great news" for the state's energy industry.

"Of course, like all estimates, this one will take millions of dollars of investment and years of effort to capitalize on the enormous potential," he said. "For now, Southcentral utilities and their customers facing the prospect of dwindling gas supply may have reason to breathe a little easier."


By ERIKA BOLSTAD
ebolstad@adn.com