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PRA Conducts Study on Cook Inlet Resources, Estimates Ten Year Production Supply to Cost $1.85 – $2.8 Billion to Develop


ANCHORAGE – Petrotechnical Resources of Alaska (“PRA”), in an effort sponsored by Chugach Electric Association (“Chugach”), ENSTAR Natural Gas Company (“ENSTAR”) and Municipal Light & Power (“ML&P”), today announced completion of a comprehensive study that analyzed Cook Inlet natural gas resources and developed a forecast spotlighting requirements for future annual production to meet utility needs up to 2020.

The study was conducted to review the deliverability of Cook Inlet gas wells drilled between 2001 and 2009, forecast potential deliverability of future drilled gas wells, review the Alaska Department of Natural Resources (“DNR”) reserves analysis and analyze the timing of demand for a delivery of potential non-Cook Inlet gas sources, such as liquefied natural gas (“LNG”) imports or other in-state resources.

“The findings of our study regarding the remaining developed reserves are essentially the same as those of the DNR study conducted this winter. However, we also looked at the levels of prior and future development required to meet demand. Without robust future development, there will soon be supply shortages that will require gas be imported from sources outside of Cook Inlet,” said Tom Walsh of PRA. PRA concluded that in order to meet utility demand for the next ten years, it would require producers in the region to spend an estimated $1.9 to $2.8 billion in drilling and development costs, roughly two to three times what was spent in the previous decade.

A major assumption made by PRA was wells forecasted to be drilled over the next decade would experience the same success rate as those in the past decade. “This can be a somewhat dangerous assumption to make because the easy reserves in Cook Inlet have already been developed. If previously experienced activity levels and success rates are not met, Southcentral Alaskan utilities could find themselves looking for alternatives outside the Cook Inlet as early as 2013,” added Walsh.

About Continental Energy Systems

SEMCO Energy Gas Company and ENSTAR Natural Gas Company, serve approximately 410,000 natural gas customers in Alaska and Michigan. ENSTAR Natural Gas Company serves over 129,000 customers in Anchorage, Mat-Su and Soldotna. Both are affiliates of Continental Energy Systems LLC, a company with investments in local gas and electric distribution companies in Alaska, Michigan, and Texas

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Litigation Reform Act of 1995. This release contains forward-looking

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