Cordova-area oil project gets support

Early-20th-century producer gets Kenai approval for restart

Posted: Tuesday, November 12, 2002

KENAI - A Kenai-based company is pressing for permits needed to begin exploratory drilling in a part of Prince William Sound that was the site of Alaska's first commercial oil production.

Cassandra Energy Corp. recently won the Kenai City Council's support for federal approval of its plans to drill at Katalla, about 50 miles south of Cordova on the eastern side of Prince William Sound.

Oil was produced from 1902 to the early 1930s at Katalla. Exploration resumed in the 1980s, but production did not.

Cassandra Energy has started a permitting process to begin new exploration at the Katalla site. The site is in the Chugach National Forest and includes federal and private land. The surface is federally owned, while the Chugach Alaska Native Corp. gained the rights to the subsurface oil and gas in 1982.

However, if commercially viable volumes of oil or gas are not produced by the end of December 2004, those rights will revert back to the federal government.

Cassandra Energy has entered into a lease-option agreement with Chugach Alaska to use horizontal drilling techniques in the site with the goal of beginning commercial production.

But first Cassandra must get through a lengthy and complicated permitting process, which is in the stage of an environmental assessment being conducted by the U.S. Forest Service.

Although the public comment period for the assessment has ended, Bill Stevens, president of Cassandra Energy, addressed the Kenai City Council recently and asked for the resolution showing the Forest Service the city of Kenai supports the project.

"It's been 25 months now in permitting," Stevens said. "That's about four times as long as it should have been.

"Of interest to Kenai is that this operation will be basically worked out of Kenai," he said.

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