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Reactions differ on USGS Cook Inlet oil and gas survey

Agency forecasts drastic increase in amount of untapped resources

Posted: June 29, 2011 - 9:15pm

Alaska’s U.S. senators have expressed delight at a recent assessment by the U.S. Geological Survey that reports a significant untapped natural gas reserve in Cook Inlet. Others say this may only be good news on the surface.

The agency reports an estimated 19 trillion cubic feet of natural gas, about 600 million barrels of oil and 46 million barrels of natural gas liquids. This is a drastic increase over the agency’s last assessment from 1995 that calculated a mean of 2.14 trillion cubic feet of gas in southern Alaska.

Once the announcement was made, press releases hit exclaimed that this was great news for the economy.

“This is more great news for Alaska’s energy industry,” Sen. Mark Begich stated in a release. “On the heels of last week’s strong Cook Inlet lease sales, drill rigs potentially headed to the Inlet this summer, and now a resource assessment that multiplies the 1995 estimate of natural gas reserves by nearly a factor of 10, prospects are strong for the industry in Cook Inlet.”

Sen. Lisa Murkowski concurred, stating this should provide a reliable, long-term supply.

“Perhaps the best news is that this new estimate reflects major reserves in state waters and state lands. 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 in her release.

Conservation groups appreciate the economic implications the assessment indicates but believe there is more to the story.

Executive Director Toby Smith of the Alaska Center for the Environment said this is good news for now and is needed for energy needs, but said there are problems in the stability in the numbers surrounding the oil and gas. For example, he said this could create jobs soon but they won’t last.

“For the short term, there is potential there, and we’re all in favor of more jobs. That’s certainly good news. For the long term, we should look at renewable solutions,” he said, saying this provides more permanent employment.

Smith also said the inconsistency of this assessment compared to the last one shows there is instability in calculating oil and gas that he says isn’t as present with renewable sources.

“Finding this now, it demonstrates the volatility around natural gas,” he said.

Bob Shavelson, executive director of the conservation organization Cook Inletkeeper, said it’s no surprise the area is underexplored but the state’s reliance on fossil fuels can lead to boom and bust economies. He cited closing fertilizer and LNG plants there as examples of an energy economy’s fleeting nature.

“When you develop fuels, they create jobs but those jobs will always go away and you always feel the dislocation of those jobs like those plants that have gone away,” he said. “So if we invest in renewable energy like wind or tidal or geothermal, we can have flat-cost power and the jobs it produces are forever.”

The assessment comes on the heels of Alaska Industrial Development and Export Authority’s execution of a joint ownership agreement with Buccaneer Energy Ltd. and Ezion Holdings Ltd. for a jack-up rig destined for Cook Inlet. A separate rig is slated to arrive through Escopeta Oil and Gas.

While AIDEA’s deal was completed before the release of the survey, spokesman Karsten Rodvik said it is still encouraging.

“Obviously it’s good new not just for Southcentral, but the entire state,” he said.

Rodvik said their objective is to accelerate exploration and drilling for the Alaska economy, which was a motivating factor in its partnership.

• Contact reporter Jonathan Grass at 523-2276 or at jonathan.grass@juneauempire.com.

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