A new study by the state of Alaska released Friday indicates sufficient natural gas resources exist to meet local needs possibly through 2020 from existing fields assuming producing companies make investments in new drilling and compression.
Without new investment, gas production will fall below annual demand by local utilities by 2012, the study said.
The report was authored by a team in the state Division of Oil and Gas with assistance of two consulting firms, Ryder-Scott and SolstenXP.
"Based on currently available information and absent any exploration success, the Cook Inlet basin is capable, given sufficient continued investments, of supplying the regional natural gas needs until 2018-2020 at a price below that of currently contemplated alternatives," said the study, referring to the cost of bringing North Slope gas to southern Alaska by pipeline.
A revised estimate of a 24-inch gas pipeline from the North Slope to southcentral Alaska is due to be released Tuesday by a separate state team.
Electric and gas utilities in the southcentral region are discussing possible imports of liquefied natural gas, possibly as early as 2014, if the decline in local gas supply continues and producers do not make the needed investment.
Kurt Gibson, a state Department of Natural Resources official who was lead author of the study, said the work does not present a dollar figure for the required capital investment by producing companies but presents a range of alternatives at different prices for gas, all below $15/Mcf.
The current average price of gas sold in Cook Inlet is $5/Mcf, but more recent gas contracts negotiated have price brackets ranging from $6-$8/Mcf.
Gibson said the total capital investment would be over $1 billion and in range with similar private studies commissioned by utilities last year.
The study released Friday expands on a 2009 report by the Division of Oil and Gas that examined the potential of four largest producing fields in the region, the Beluga River, North Cook Inlet, Ninilchik and McArthur River Grayling Gas Sands.
The new report, examining available data on the same four fields, estimates that regional demand of about 90 Bcf a year could be met with 71 new wells or recompletions between 2011 and 2019, or an average of eight wells per year.
About $60 million will be needed for new compression also, the report said. The new wells needed are close to the historical average of 11 wells drilled per year in Cook Inlet since 2000.
However, the drilling rate has slowed in the last two years. Seven new gas development wells were drilled in 2010, according to the state study, and four are planned for 2011, according to industry sources.
The new study assumes only the potential in the four large producing fields and does not include any new gas from exploration for conventional or unconventional resources, such as tight gas or coal-bed methane.
A study by the US Geological Survey released a few days ago indicated the possibility of 17 Tcf of new gas in Cook Inlet as being technically available from all resources including conventional and unconventional sources.
