As natural gas shortfall looms, Cook Inlet producing companies get busy

Shortfalls in natural gas production in Cook Inlet are about two years away, and while utilities are preparing to import liquefied natural gas, or LNG, to meet consumers’ needs for electricity and heating for buildings.

The idea of having to import energy to an energy-rich state rankles most Alaskans, but electric utilities like Matanuska-Electric Association and Enstar Natural Gas Co., the gas utility, are required to be able meet regional consumers’ needs.

While the operating oil and gas companies in Cook Inlet are also moving to develop new gas to help meet the supply gap, the Inlet is a mature producing region and high costs, which means there’s uncertainty on whether new drilling will find enough gas to cover the gap.

This year HEX Alaska, an Alaska-based company, drilled two new gas wells at its offshore platform in the Inlet and is now planning more. BlueCrest Energy, a small Texas-based company, now produces oil at its offshore Cosmopolitan field near Anchor Point, on the Inlet’s east side, and hopes to develop a known gas deposit in the field.

Meanwhile, Hilcorp Energy, the major producer of oil and gas in Cook Inlet as well as a major oil producer on the North Slope, continues with a steady expansion of drilling and development of smaller gas prospects, mainly onshore, in Southcentral Alaska.

Whether this will be enough to forestall having to import gas is unknown, however. New Cook Inlet gas wells tend to decline rapidly in production after first being drilled with decline rates of 30% per year not uncommon, Hilcorp told state legislators in a briefing last January.

Many Alaskans hope that a North Slope natural gas pipeline project will move forward, bringing the large “stranded” gas reserves known on the North Slope, but the big project faces financing challenges and is an unknown, too.

The Southcentral Alaska regional gas supply deficit is fairly modest in 2027 and 2028 but by 2029 and 2030 it will be much larger. according to estimates prepared by the state Division of Oil and Gas.

But Hilcorp, the major regional gas producer, is very active this year in its work toward developing new supplies. The latest development is the company’s application Sept.9 to the state Division of Oil and Gas to build new infrastructure and drill new wells at the company’s Happy Valley gas field on the Kenai Peninsula.

Hilcorp plans for work to start Oct 20 and for it to be completed in April 2026. What is planned is a new 300 ft.-by-400 ft. gravel pad, the “Happy Valley Middle Pad,” as well as a new 3-mile gravel access road, two gas wells drilled from the new pad.

An additional well will be drilled to supply fresh water. There will also be related facilities like gas flowlines, electrical instrumentation, separators and other equipment to support production.

On a nearby project Hilcorp also received approval to install a pipeline to produce gas from its new Whiskey Gulch gas project near Anchor Point, also on the Kenai Peninsula on Cook Inlet’s east side. A 4,000-foot, 6-inch diameter will connect the Whiskey Gulch production pad to a nearby Enstar Natural Gas Co. pipeline.

In a third new gas development will be at the small Pretty Creek gas field, this one on Cook Inlet’s west side. At Pretty Creek Hilcorp will build its new “Diamond” production pad that will support five new production wells. The location is about nine miles northeast of the Beluga airport.

All three of these involve drilling into known gas deposits, which are relatively small, but Hilcorp also plans to drill two new exploration wells on newly-acquired state leases near Kenai on the Inlet’s east side. Success at these could help bring the small nearby Sterling gas field back into production.

The company also has plans for new gas exploration in the small North Fork field area east of Anchor Point. Hilcorp purchased assets in the area from two small companies, Vision Resources and Anchor Point Energy. The North Fork gas deposit has seen limited drilling and production, and has produced gas through a pipeline built to connect with Enstar’s pipeline near Anchor Point. Hilcorp believes North Fork has additional potential.

Hilcorp is also doing continued drilling in its existing gas fields in Cook Inlet to add incremental reserves shore up declining production, Hilcorp said in a presentation to the state Legislature last January. This included 21 new wells in 2024 and 18 wells in 2023. The company plans a steady program of 15 to 20 wells per year going forward, Hilcorp told legislators in January.

Hilcorp has invested $1 billion in drilling 174 wells and producing 700 billion cubic feet of gas since it began operations in Cook Inlet in 2012 after purchasing aging gas fields from Chevron Corp. and Marathon Oil Co.

Locally-owned HEX Alaska is now planning four new gas wells at its Allegra Leigh platform (formerly Julius R.) in the Kitchen Lights field after the company drilled two successful wells this year. The company is currently making modifications at the platform so that additional wells can be drilled. More gas wells are planned in 2027, HEX has said.

HEX is a small company, so the Alaska Industrial Development and Export Authority, or AIDEA, the state’s development finance corporation, has stepped in to help the company finance its new drilling work.

AIDEA is also discussing financing with BlueCrest Energy of the undeveloped gas deposit at the Cosmopolitan offshore field.