Oil and gas: Oil field construction may pick up in 2005

ConocoPhillips has yet to announce its plans for the 2004-2005 winter exploration season

Posted: Thursday, December 30, 2004

Oil and gas activity continues at a modest pace around the state. The upcoming 2004-2005 winter exploration season looks to be a repeat of last year, with a handful of exploration wells drilled mainly by independent companies. ConocoPhillips Alaska, the one slope producer still exploring, has yet to announce its plans for the winter.

Oil field construction will pick up, however, if ConocoPhillips and partner Anadarko Petroleum Corp. give the final go-ahead for construction of production facilities on two satellite oil accumulations in the Colville Delta, near the Alpine oil field, which is producing.

In southern Alaska, Unocal Corp. started production at its new Happy Valley gas field on the Kenai Peninsula. The company is interested in further exploration in the area, but plans for 2005 are not yet firmed up, Unocal said.

Satellite, heavy oil projects

Work on new North Slope oil field satellites by ConocoPhillips and its partners will crank up this winter. The new Drill Site 1-J West Sak heavy oil production pad in the Kuparuk River field is in the final engineering stage. Construction will be underway in 2005, along with new field pipelines to connect with existing infrastructure.

Design and engineering on two new drill sites for the Alpine satellite project are also in progress, and construction is expected to be underway in 2005. ConocoPhillips is also finishing a major project to expand capacity of the Alpine production facility. When the project is completed in early 2005, production from the field will expand from 113,000 barrels per day to 140,000 barrels per day. ConocoPhillips is the operator for the Kuparuk River and Alpine fields.

BP Exploration Alaska also is planning an expansion of the Borealis satellite in the western end of the Prudhoe Bay oil field, which BP operates. The company is continuing to expand development of viscous oil resources in the Prudhoe Bay field and the adjacent Milne Point field, which BP also operates.

Steve Marshall, president of BP's Alaska subsidiary, said his company expects total heavy oil production from the North Slope, now at about 50,000 barrels per day, to double in a few years and triple within 10 years.

Unocal's new Kenai gas field

In Cook Inlet, Unocal Corp. is now producing natural gas from five wells in the company's new Happy Valley gas field, on the Kenai Peninsula south of Ninilchik. The field is expected to produce 12 million to 14 million cubic feet of gas per day through a new 12-inch extension of the Kenai-Kachemak Pipe Line.

Higher prices for gas being paid by Enstar Natural Gas Co., the Southcentral regional gas utility, are stimulating the search for new gas supplies. Marathon Oil Co. recently announced a new gas discovery at an exploration well drilled near Kasilof, also on the Kenai Peninsula. The company has not yet said whether the discovery will be developed, nor did it release any estimate of its possible reserves.

Marathon and Unocal are also continuing to develop the new Ninilchik gas field on the Kenai Peninsula. Aurora Gas LLC, a small independent company, is developing several small gas fields on the west side of Cook Inlet.

Alyeska pipeline, Flint Hills refinery

Alyeska Pipeline Service Co. is letting contracts for fabrication of equipment modules for its $250 million pump station reconfiguration project, and construction is expected to be underway in 2006. Meanwhile, preliminary engineering is in progress on a project to revamp the company's Valdez Marine Terminal. Construction at the Valdez terminal is expected in 2006.

Flint Hills Resources has engineering underway for a project to install gasoline desulfurization facilities at the company's North Pole refinery, near Fairbanks, and construction should begin in 2005. The project is intended to meet early 2007 deadlines for having low-sulfur gasoline available. The company expects to complete facilities to produce ultra-low sulfur diesel fuel in late 2007.

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