Wednesday, March 7, 2012

Buccaneer Energy says its new Kenai gas well will produce

By Tim Bradner
Alaska Journal of Commerce

Buccaneer Energy’s new Kenai Loop No. 1 gas well near the city of Kenai is performing, producing about 5 million cubic feet of gas per day after about two weeks of steady production, the company says.

Production began Jan. 14, and the gas is being sold to both Enstar Natural Gas Co. and ConocoPhillips Alaska Inc. under contracts Buccaneer has signed with both companies.

“Based on the available information the company is confident that the (Kenai Loop No. 1) well can be produced at higher rates,” Buccaneer spokesman Dean Gallegos said. “The current production rate will be maintained and monitored over the next 30 to 60 days and, if appropriate at that time, a decision will be made to increase production rates.”

Buccaneer’s discovery of gas at a location one mile from the long-producing Cannery Loop gas field on the Kenai Peninsula is being cited widely as proof that substantial amounts of gas are yet to be discovered in the Cook Inlet basin.

The company’s contract with Enstar allows the company to sell Enstar a minimum of 5 million cubic feet per day and a maximum of 15 million cubic feet per day as soon as a gas storage facility being constructed in the area is ready to accept gas, the statement said. Enstar will pay an annual average price of $6.24 per thousand cubic feet.

Cook Inlet Natural Gas Storage Alaska LLC, which is developing the underground gas storage facility, has informed Buccaneer that it expects to be ready to accept gas for injection in early April. In the meantime, Buccaneer has been offering gas to the utility under Enstar’s daily auction system.

The company is also supplying gas to ConocoPhillips, which has contracts to supply Chugach Electric Association, and owns and operates the Kenai natural gas liquefaction (LNG) plant. That facility is now in a suspended state but the making of LNG from gas will resume in April or May in anticipation of LNG cargo shipments to customers in Asia in the last half of 2012, ConocoPhillips spokeswoman Natalie Lowman said.

Four shipments are being planned for now, she said.

Meanwhile, Buccaneer has a 25-square-mile three-dimensional geophysical survey is under way in the immediate area to determine the best locations for future wells.

“With improved seismic imaging the company believes it will be possible to rapidly drill and place on line a number of wells from existing drilling pad sites,” Gallegos said.

Buccaneer is in the process of contracting for a drilling rig for the next well, with drilling expected to begin in April or May, he said.