By Tim Bradner
Alaska Journal of Commerce
Buccaneer Energy Ltd., an Australian independent oil and gas company, has signed a contract to sell up to 15 million cubic feet per day of natural gas from the company's new Kenai wells in Southcentral Alaska to the Alaska Pipeline Co. and Enstar Natural Gas Co., Buccaneer said Aug. 15 in a press release.
Gas deliveries from Buccaneer's wells, on the Kenai Peninsula, will begin in April 2012, when the Cook Inlet Natural Gas Storage Facility being developed by SEMCO and Mid-American Energy Holdings is completed. The new gas storage facility is near Buccaneer's discovery well, Kenai Loop No. 1.
The sales price agreed on is an average of $6.03 per thousand cubic feet, a blend of $5.96 per thousand cubic feet for deliveries during the spring, summer and fall, from March through November, and $7.06 per thousand cubic feet for winter deliveries, from December through February. In the 2010-2011 winter period Enstar paid an average of $9 per thousand cubic feet for peaking gas purchased through its auction.
Buccaneer has also agreed to make additional gas available to Enstar during an auction process the utility operates during the winter to meet peaking needs.
Buccaneer drilled the well earlier this year and announced a gas discovery with estimated reserves of 40 billion cubic feet. Drilling on a second well is expected to begin within two weeks, company officials told local community leaders in a briefing.
Under the contract Buccaneer has committed to drill a third production well in late 2013.
The Kenai Loop gas field is approximately one and a half miles from the existing Cannery Loop gas field on the Kenai Peninsula. Cannery Loop is operated by Marathon Oil Co.
"This is major milestone for Buccaneer," company spokesman Dean Gallegos said. "This gas contract represents the first contract executed by Enstar to supply its capacity in the new gas storage faculty. Southcentral Alaska suffers from a shortage of natural gas, and the problem is expected to deteriorate over the next two to three years. Buccaneer looks forward to playing a major role in helping alleviate this shortage."
Buccaneer also has plans to move a jack-up rig from Asia to Cook Inlet later this year or in early 2012 to drill offshore prospects in Cook Inlet.
Republished with the permission of the Alaska Journal of Commerce. Tim Bradner can be reached at email@example.com.