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Presentation to the Joint Committee on Natural Gas
Pipelines
Bill VanDyke, Petroleum ManagerTim Ryherd, Geologist
Will Nebesky, Commercial Analyst
Alaska D.N.R. - Division of Oil and GasNovember 8, 2001
Alaska Department of
NaturalResources
http://www.dog.dnr.state.ak.us/oil/index.htm
Cook Inlet Activity
Oil Field / Accumulation
Gas Field / Accumulation
Unit Boundary
Map Legend
Platform
Production Facility
Proposed / Active Wells
Pipelines
Map Area
Selected Wells
tjr 11/20012
Cook Inlet Gas Production and
Reserves
FIELD NAME 2000 PRODUCTION RESERVES(BCF) (BCF)
(AS OF 1-1-01)
BEAVER CREEK 5 92
BELUGA RIVER 39 460
IVAN RIVER, STUMP LAKE,PRETTY CREEK, LEWIS RIVER 3 17
KENAI, CANNERY LOOP 18 207
MCARTHUR RIVER 65 318
NORTH COOK INLET 53 770
STERLING 0.3 30
SWANSON RIVER 29(net) 79
TRADING BAY 0.1 27
WEST FORELAND 0 20
ALL OTHERS 5 128
TOTAL 217(net) 2148
WVDDNR/DO&GNOV. 8, 2001
3
Gas Hypothetically Available for Local Utility Use ASSUMED DATES GAS USERS CEASE OPERATIONS
GAS USER SCENARIO 1 SCENARIO 2 SCENARIO 3 SCENARIO 4**
AGRIUM 2005 2010 2015 2015
LNG 2009 2009 2015 2015
OIL FIELDOPERATIONS 2009 2015 2015 2015
GAS REMAINING FOR UTILITY USE (BCF) 1060 690 -100 900**
YEARS OF SUPPLYFOR UTILITY USE 17 11 0 15**
NOTES:1) THESE SCENARIOS ARE HYPOTHETICAL. 2) ASSUMED SHUT DOWN DATES ARE NOT BASED ON ACTUAL GAS SUPPLY OR ECONOMIC REALITIES. 3) GAS REMAINING FOR UTILITY USE IS BASED ON CURRENT RESERVE AND USE ESTIMATES.4) YEARS OF UTILITY SUPPLY BASED ON CURRENT UTILITY CONSUMPTION RATES.5) POTENTIAL FUTURE GAS DELIVERABILITY CONCERNS ARE IGNORED.
**SCENARIO 4 ADDS AN ASSUMED 1000 BCF OF YET-TO-BE DISCOVERED GAS.
WVDDNR/DO&GNOV. 8, 2001
4
Cook Inlet Activity
Oil Field / Accumulation
Gas Field / Accumulation
Unit Boundary
Map Legend
Platform
Production Facility
Proposed / Active Wells
Pipelines
Map Area
Selected Wells
tjr 11/20015
Cook Inlet Exploration Summary – 2001• Ninilchik Unit and Falls Creek Unit – Marathon (Gas)
– G.O. #1 well completed as gas well, G.O. #2 well planned
• South Ninilchik Unit and Deep Ck. Unit – Unocal (Gas)– Possible State/CIRI joint administration, up to 3 wells planned for 2001-02
• Pretty Ck./Lewis Riv./Ivan Riv. – Unocal (Gas)– Re-entered 1 well each in Lewis Riv. and Ivan Riv., drilling P.C.U. #4, new well, in Pretty Ck. field
• Swanson River Unit Gas Satellites Project – Unocal (Gas)– Proposal to develop two gas fields north and east of Swanson River oil field on Federal and Native owned lands
• Redoubt Unit – Forest Oil (Oil discovered in 1968 by Pan Am)– R.U. #1, #2, & #3 wells completed by Forest, R.U. #4 is planned– Field is bigger than originally thought, up to 193 MMBO recoverable reserves– Forest has other prospects at Sabre, Corsair, and Valkyrie
• Pioneer Unit – Evergreen Exploration (Coalbed gas, no proven reserves)– Formerly operated by Ocean Energy, ownership and operations transferred to Evergreen in mid-2001.– 2 production wells & 1 injection well drilled in 1999; committed to drill 6 more wells, at least 1 in each of 2 new areas
• Cosmopolitan Unit – Phillips (Oil discovered in 1967 by Penzoil)– Hansen #1 well permitted to drill to bottom location on State lease
• Nikolai Ck. Unit – Aurora Gas (Gas)– Production started in Oct., NCU #3 well produces at rate of 2 MMCF/day
• North Fork Unit – Gas Pro (Gas)– Project apparently on hold
• Trading Bay Unit/McArthur River Field – Unocal (Oil)– T.B.U. #K-13 came on production at 7,100 BOPD, highest rate of any well in Cook Inlet
tjr 11/20016
Cook Inlet Areawide 2001Sale Results
Currently Leased Acreage
Cook Inlet Areawide 2001 Leases
mep 01/20017
Timeline of Cook Inlet Exploration
COOK INLET EXPLORATION WELL DATA AND IMPORTANT EVENTS
0
5
10
15
20
25
30
35
40
1950
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
YEAR
N0
. OF
EX
PL
OR
AT
ION
WE
LL
S D
RIL
LE
D Three year moving average.
First commercial oil discovery in Cook Inlet at Swanson River field (1957).
West McArthur River and Tyonek Deep (Sunfish) oil fields discovered (1991), last major oil discoveries in Cook Inlet.
First (and largest) commercial gas discovery in Cook Inlet at Kenai field (1959).
Cannery Loop and Pretty Creek gas fields discovered (1979), last commercial gas discoveries in Cook Inlet.
Largest oil discovery at McArthur River field (1965).
1
2
2
3
2
3
21
2 1
Number of GAS exploration wells drilled in this year.
11
3
tjr 11/20018
Cook Inlet Gas Exploration History
267 oil & gas exploration wells drilled in CI through 2000 Of these, 24 were GAS exploration wells
Of largest 10 CI gas fields (based on current gas reserves), only Cannery Loop (smallest of the 10) was found by exploring FOR gas
Much of Cook Inlet basin area is underexplored
tjr 01/20019
Areawide sales make entire area available for exploration and development
Independents will become an increasing influence More competition for prospects and leases New thinking and inventive technology and business climate
Independents will drive exploration and development costs lower This may mean less money for the State of Alaska, as well as service companies
Oil continues to be an elusive target in Cook Inlet
Conventional gas exploration will extend beyond the core developed areas
Coalbed gas will continue as an emerging exploration target Viability of this exploration play is yet to be determined
Outlook and Predictions For Cook Inlet
tjr 11/200110
Cook Inlet Historic Gas Consumption by Major Disposition Category1971 - 2000
wen 11/200111
Alaska D.N.R.0
50
100
150
200
250
1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999
Billion Cubic Feet (Bcf)
Field Operations and Other
Power generation
Gas Utilities
Ammonia-Urea
LNG
Royalty Value for Natural Gas Utility and Industry Dispositions in Cook InletVersus Henry Hub Spot Price
Aug 1997 - Aug 2001
Utility = Electric and Space Heat.Industrial = Urea, LNG, and Field Operations.Henry Hub located at U.S. Gulf of Mexico.
Alaska D.N.R.
wen 11/200112
Royalty Value for Natural Gas Utility and Industry Dispositions in Cook InletVersus Henry Hub Spot Price
Aug 1997 - Aug 2001
-
1.00
2.00
3.00
4.00
5.00
6.00A
ug-9
7
Oct-
97
Dec-9
7
Feb-9
8
Apr-
98
Jun-9
8
Aug-9
8
Oct-
98
Dec-9
8
Feb-9
9
Apr-
99
Jun-9
9
Aug-9
9
Oct-
99
Dec-9
9
Feb-0
0
Apr-
00
Jun-0
0
Aug-0
0
Oct-
00
Dec-0
0
Feb-0
1
Apr-
01
Jun-0
1
Aug-0
1
$ / M
cf
(No
min
al)
UTILITY
INDUSTRY
HENRY HUB
Royalty Value for Electricity and Space Heat Dispositions in Cook InletVersus Henry Hub Spot Price
Aug 1997 - Aug 2001
wen 11/200113Electric = CEA and MLP.Space Heat = Enstar, Aurora, and Other LDC Direct Sales.DOR PV for CEA, MLP, and ENSTAR.
Alaska D.N.R.
Royalty Value for Electricity and Space Heat Dispositions in Cook InletVersus Henry Hub Spot Price
Aug 1997 - Aug 2001
-
1.00
2.00
3.00
4.00
5.00
6.00
Aug-9
7
Oct-
97
Dec-9
7
Feb-9
8
Apr-
98
Jun-9
8
Aug-9
8
Oct-
98
Dec-9
8
Feb-9
9
Apr-
99
Jun-9
9
Aug-9
9
Oct-
99
Dec-9
9
Feb-0
0
Apr-
00
Jun-0
0
Aug-0
0
Oct-
00
Dec-0
0
Feb-0
1
Apr-
01
Jun-0
1
Aug-0
1
$ / M
cf
(No
min
al)
HENRY HUB
DOR PV
ELECTRICITY
SPACE HEAT
Royalty Values for Urea Plant, LNG and Field Operations Gas Dispositions in Cook InletVersus Henry Hub Spot Price
Jan 1989 - Aug 2001
wen 11/200114Note: Royalty Values are Netted Back to the Wellhead.
Alaska D.N.R.
Royalty Values for Urea Plant, LNG and Field Operations Gas Dispositions in Cook InletVersus Henry Hub Spot Price
Jan 1989 - Aug 2001
-
1.00
2.00
3.00
4.00
5.00
6.00
Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01
$ p
er M
CF
LNG PLANT NB
UREA PLANT NB
FIELD OPS
HENRY HUB
Destination and Royalty Values for Ammonia-Urea Plant Dispositions in Cook InletJan 1991 - Aug 2001
wen 11/200115
Alaska D.N.R.
Destination and Royalty Values for Ammonia-Urea Plant Dispositions in Cook InletJan 1991 - Aug 2001
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
Jan-89 Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01
$ p
er M
CF
$0
$50
$100
$150
$200
$250
$300
$ p
er T
ON
NH
3 F
OB
New
Ore
lan
s
UREA PLANT NB
NH3 SPOT MARKET DV
Destination and Royalty Values for LNG Gas Dispositions in Cook Inlet Jan 1991 - Aug 2001
wen 11/200116
Alaska D.N.R.
Destination and Royalty Values for LNG Gas Dispositions in Cook Inlet Jan 1991 - Aug 2001
-
1.00
2.00
3.00
4.00
5.00
6.00
Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01
$ p
er M
CF
PAC-RIM LNG MARKET DV
LNG PLANT NB
wen 11/200117
Alaska D.N.R.
DOR Prevailing Value and Avg Royalty NB Value in Cook InletVersus Henry Hub Spot Price and US Avg WH Price
Jan 1992 - Aug 2001
Alaska D.N.R.
DOR Prevailing Value and Avg Royalty NB Value in Cook InletVersus Henry Hub Spot Price and US Avg WH Price
Jan 1992 - Aug 2001
-
1.00
2.00
3.00
4.00
5.00
6.00
Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01
$ p
er M
CF HENRY HUB
USWELLHEAD
DOR PV
AVG ROYALTY NB ALLDISPOSITIONS
wen 11/200118
Cook Inlet Supply and Demand Typical Production Scenario With 1 TCF Reserve Appreciation
Alaska D.N.R.
Cook Inlet Supply and Demand Typical Production Scenario With 1 TCF Reserve Appreciation
0
50
100
150
200
250
BC
F
Potential ANS Gas Demand
1000 Bcf Appreciation
No Reserve Appreciation
Demand
Potential ANS Gas Demand For Cook Inlet
wen 11/200119
Comparison of Gas Supply and Demand in Alaska
Alaska D.N.R.
Comparison of Gas Supply and Demand in Alaska
-
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
PBU Gas Recycling Major Gas Sale SOA Royalty Share Cook Inlet Demand Fairbanks PotentialDemand
Bcf
per
Day
8 Bcf / Day
4 Bcf / Day
0.5 Bcf / Day
0.6 Bcf / Day
0.04 Bcf / Day