Buccaneer Energy begins gas production at Kenai Loop well in Alaska, US

Australia-based Buccaneer Energy said its Kenai Loop #4 well in Alaska, US, has commenced production at an initial rate of two million cubic feet of gas per day.

The well is expected to produce between three and four million cubic feet of gas in future.

Buccaneer said that Kenai Loop #1 well is producing at 6.5 million cubic feet of gas per day.

The company will sell the current total production of 8.5 million cubic feet of gas per day (1,400 barrels of oil equivalent per day) to the local gas utility Enstar.

The production rate has been restricted due to installation of temporary production facilities. The company started construction of permanent production facilities and pipeline connections at Kenai Loop in 2012, but these were suspended due to severe weather.

The company said that once installation of permanent facilities is complete, production is expected to increase by 10-11 million cubic feet of gas per day (1,666 – 1,833 barrels of oil equivalent per day), which represents about a 100% rise over the average production rate achieved in 2012.

Buccaneer Energy Alaska president Jim Watt said the well was put into service within 30 days after the successful flow test completed in mid-January.

"The speed and efficiency our team displayed in going from discovery to production with Kenai Loop #4 is a testament to our learned experience and expertise working in the Alaska marketplace," Watt added.

South central Alaska is currently facing severe gas shortages, where the winter peak pricing of increamental gas supply has reached $22/million cubic feet of gas in the last 60 days.

Buccaneer has a minimum deliverability of five million cubic feet of gas per day to Enstar, at an annual weighted price of $6.24/million cubic feet of gas, under the current gas sales agreement, while it is negotiating a new long-term gas sales agreement with potential purchasers.

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Image: Kenai Loop #4 well in Alaska, US, is producing at an initial rate of two million cubic ft of gas per day. Photo: Courtesy of Plazak.