gas. In existing production infrastructure, new techniques are being implemented to mitigate problem wells and manage system pressures, also raising estimates of remaining reserves in the Cook Inlet basin. Although large future sources of gas have been discovered, development of those new fields requires large investments to construct production infrastructure. The currently available resources will not meet the long-term demands of Southcentral utilities. Companies poised to develop resources that could supply gas to meet future energy demand are now wary of losing the incentives that helped make decisions to invest in Cook Inlet. C. Benjamin Johnson, president and CEO of BlueCrest Energy, Inc., headquartered in Fort Worth, Texas, says estimates indicate current gas production will meet local demand for four to five years. The development time frames for bringing new gas supplies to market are at least three to five years, he adds.
the Cook Inlet basin had produced 8,308 billion cubic feet of gas and 1.35 billion barrels of oil. The division’s estimate of “proven and probable remaining gas reserves” in existing fields at that time, excluding undeveloped fields such as the Kitchen Lights and Cosmopolitan units, was approximately 1,183 billion cubic feet of gas. According to data provided by the Alaska Oil and Gas Conservation Commission, Cook Inlet gas production declined annually from 2005 through 2013, dropping from 210.4 billion to 95.6 billion cubic feet of gas. In 2014, the commission tally of Cook Inlet gas production rose to 109.6 billion cubic feet. From 2004 through 2009, Alaska Oil and Gas Conservation Commission data for annual Cook Inlet oil production show a decline from 2004 to 2009, recording a fall from 8.2 million to 2.7 million barrels of oil, followed by increases through 2014, when 6.3 million barrels of oil were produced.
The Resource The Cook Inlet area contains thirty-four currently or historically producing oil and gas fields. The Division of Oil and Gas under the Alaska Department of Natural Resources reports that as of year-end 2014,
The economy of the Kenai Peninsula Borough (KPB) benefits from property taxes paid by lease holders and the jobs and income of borough residents created by oil and gas activities in Cook Inlet and operation of Tesoro’s refinery. McDowell Group,
Local Economic Impact
in its report “The Role of the Oil and Gas Industry in Alaska’s Economy,” prepared in May 2014 for AOGA, examines impacts of the Cook Inlet oil and gas industry on the KPB economy. The findings show that, in 2013, six thousand jobs and $430 million in wages can be attributed to positions with primary employers and support services, as well as jobs indirectly created by the Cook Inlet oil and gas industry in the public and private sectors and the presence of North Slope workers residing in the borough. Craig Chapman, KPB Finance Director, says that Cook Inlet oil and gas businesses represent eight of the ten top property tax payers in the KPB. Tax revenues collected from Cook Inlet oil and gas properties compose 20 percent of the borough tax base. State assessments of Cook Inlet oil and gas assets increased more than 60 percent from 2012 to 2015, contributing to higher revenues for the KPB. The KPB would receive a significant economic boost from the proposed Alaska LNG project. Nikiski, on the east side of Cook Inlet, has been identified as the site for the liquefaction plant and marine terminal. Larry Persily, a former presidential appointee to the Federal Office for Alaska Gas Line Projects and currently contracted
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December 2015 | Alaska Business Monthly
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