Anchorage Looking For New Gas Source

Methane Possibilities?

Will Anchorage be left out in the cold?

Geological data, according to Charles B. Barker, research geologist with the U.S. Geological Survey in Denver, indicates that unless something is done quickly, Anchorage will be out of heat and electricity in seven to 13 years.

That's when the natural gas in the area around Anchorage will run out, Barker said.

Actually, the shortfall could begin as early as 2005, he added, for peak use comes during the winter, and there is not enough storage capacity. The estimates are based on the current annual consumption rate of 220 billion cubic feet (BCF) in the Anchorage area.

So why not just find some new natural gas fields in the area?

"New reserves have not been found that equal current consumption since the 1980s," Barker said.

Added to that, of course, is the ongoing factor of how energy companies have also been discouraged from further exploration in the area — especially now, since the gas prices there are lowest in the 50 states. When there was a price spike in early 2001, gas prices in the lower states reached nearly $10 per cubic foot, while in the Anchorage area the price reached only $1.80.

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Will Anchorage be left out in the cold?

Geological data, according to Charles B. Barker, research geologist with the U.S. Geological Survey in Denver, indicates that unless something is done quickly, Anchorage will be out of heat and electricity in seven to 13 years.

That's when the natural gas in the area around Anchorage will run out, Barker said.

Actually, the shortfall could begin as early as 2005, he added, for peak use comes during the winter, and there is not enough storage capacity. The estimates are based on the current annual consumption rate of 220 billion cubic feet (BCF) in the Anchorage area.

So why not just find some new natural gas fields in the area?

"New reserves have not been found that equal current consumption since the 1980s," Barker said.

Added to that, of course, is the ongoing factor of how energy companies have also been discouraged from further exploration in the area — especially now, since the gas prices there are lowest in the 50 states. When there was a price spike in early 2001, gas prices in the lower states reached nearly $10 per cubic foot, while in the Anchorage area the price reached only $1.80.

Another contributing factor, Barker said, is that there is no pipeline leading to the outside to sell potential additional discoveries. Anchorage is a stranded market that uses the gas for basically three reasons:

  • A fertilizer plant.
  • A liquefied natural gas facility.
  • Heating and electricity for Anchorage.

Pros and Cons

One option to help this situation is simply to bring in lines from the North Slope to supply Anchorage. Simple, but not without a price.

"The general consensus is that would be too expensive," Barker said.

Therefore the most feasible alternative, Barker continued, is to develop coal bed methane (CBM), which is in the Anchorage area.

The pro to this option, Barker said, is that "you can produce nearly pure methane at very inexpensive wells that can be developed very quickly."

Also, the region's existing pipeline system covers many of the onshore coal fields, so a new infrastructure need not be developed.

The main con: "You will have a lot of water produced with dissolved chemicals that has to be disposed of," he said.

The current history of coalbed methane exploration in the Cook Inlet region had its beginning and continues as a cooperative effort of the Alaska Department of Natural Resources and USGS. In 1994 the department used a USGS drill rig to drill AK-94, the first coalbed test in the area, near Wasilla. Desorption tests of core from this well used USGS canisters and methods modified for improved temperature control.

The results indicated 40 net feet of coal at less than 1,300-ft. depth, averaging about 160 standard cubic feet per ton (SCF/T), on a dry, ash-free (DAF) basis.

The resource estimate, Barker said, is about 140 trillion cubic feet (TCF) of gas in place.

"If 10 percent of this resource is accessible for production and 50 percent of the accessible resource is recoverable, then the geologically indicated reserve is about seven TCF," Barker said. "This is a 30-year supply to south-central Alaska based on the current 220 BCF/year consumption."

These discoveries provided incentives to energy companies, especially Unocal and Ocean Energy, which were the first to show signs of interest. They found good gas content, but they also found poor permeability and had difficulty completing the well.

That would seem to be a bad sign, but in fact the firms have sold their leases to companies that are currently active in the region — including Evergreen Reserves, Phillips, Marathon and Forest Oil.

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